A spokesperson for the Ministers' office told ZDNet Australia that: "[the ruling] does not appear to take account of the ability that is routinely preserved by governments in trade agreements to regulate on moral grounds."
The case was brought to the WTO by the small Caribbean nations of Antigua and Barbuda, with the argument that the US could not restrict online gambling in areas within its jurisdiction as such activity was protected in trade agreements.
However, the US has argued that at the time the agreements were made the Internet was still in its infancy, and that legislation to ban online gambling is currently being prepared by US Congress.
Online gambling businesses in Antigua suffered a major blow to their operations due to the US restrictions, with the industry downsizing by over 4,000 employees in a nation with a population of just over 67,000.
The current US legislation regarding online gambling is individual to each state. However the Federal Justice Department maintains that the action is illegal and has, in the past, prosecuted the hosts of gambling Web sites.
Australian law bans the provision of online gambling services to customers "physically present" in Australia. However, Web site operators are permitted to provide the service to overseas gamblers.
Peter Bridge, managing director of the online gambling site Lasseters, says the decision has little impact on Australian online casinos, even if Australia adopts the WTO ruling.
"There is a very small market [for online casinos] in Australia. It wouldn't do much for business if the rules changed," said Bridge.
According to the spokesperson for the Department of Communications, Information Technology and the Arts, Australia does not have the same obligations to the WTO's General Agreement on Trade and Services (GATS) as does the US, ensuring the ruling will have little effect on domestic legislation.
"Australia has not made similar commitments under GATS to those of the US, the WTO's preliminary decision is unlikely to have any impact in relation to Australia's Interactive Gambling Act 2001," stated the spokesperson. However, she said "we will continue to monitor the situation".
The decision is still considered to be a preliminary ruling, with the final decision expected in April. The US has indicated it will appeal.