The US has failed to change legislation that unfairly targets offshore-based gambling websites, a World Trade Organization (WTO) panel has ruled.
The WTO said the US could only continue to block such websites if its laws were equally applied to US firms that offer off-track betting on horse racing.
Shares in UK online gambling firms rose on the news.
However, analysts said it was unlikely that the UK firms would be allowed back into the US, a very profitable market.
Washington could simply carry out the WTO ruling or lodge an appeal. Also, the WTO has yet to give its final verdict on the case.
The application against the US was taken to the WTO by the twin-island Caribbean nation Antigua and Barbuda, where a number of online gambling firms are based.
Antiguan Finance Minister Errol Cort welcomed the latest WTO ruling.
„It vindicates all that we have been saying for years about the discriminatory trade practices of the US in this area, and we look forward to the US opening its markets,“ he said.
However, the new ruling is just the latest twist in a long-running saga.
Back in 2005 the WTO initially ruled in favour of the US and against Antigua and Barbuda, saying the US had a right to prevent offshore betting as a means to protect public order and public morals.
Washington has yet to indicate whether it will enact or appeal the new finding from the WTO‘s compliance panel, but any final ruling against the US would allow Antigua and Barbuda to seek trade sanctions against America.
The US has increasingly moved in recent years to prevent overseas-based gambling websites from targeting US citizens.
In October of last year it bought in a law that made it illegal for banks and credit card companies to settle payments to online gambling websites.
Two UK internet gambling bosses were also arrested last year while travelling through the US.
Pete Dicks, the former chairman of Sportingbet was eventually released, but former BetOnSports chief executive David Carruthers remains under house arrest in St Louis.
Such moves saw UK gambling firms such as Partygaming and 888 leave the US market almost overnight.
While Washington argues that it simply wishes to limit gambling, the overseas firms counter that the US move is simply protectionism and means to remove foreign competition.