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Kevin Smith

Yahoo, Google Targeted in Class Action Suit for Taking Online Gambling Ads

4 August 2004

Although leading search engines Google and Yahoo pulled advertising content from online gaming operators in April both sites are named as defendants in a class action lawsuit filed Tuesday in California.

The suit alleges that 13 different search engines and portal sites illegally accepted advertising revenue from online casino and sport book operators over the last two-plus years.

One of the lead lawyers on the case, Ira Rothken, admitted that some of the plaintiffs in the case have distanced themselves form the online gaming industry, but it might be a case of too little, too late.

"The advertising has been reduced or discontinued by some of them," he said. "But these operators received millions of dollars in ill-gotten gains and we are trying to get that money returned back to the people of California."

The 60-plus-page complaint alleges that the search engine operators, many of whom are based in California, knowingly accepted advertising revenues from companies whose services were clearly illegal in the state.

"There is no state in the U.S. where the activity of online gambling is legal," Rothken said. "There are some where steps have been made in the process by they are nowhere near getting it legalized."

The case was filed as a class-action suit in the San Francisco Superior Court. Rothken hopes an injunction hearing can be heard in the next 30-60 days that would bar any of the plaintiffs from carrying paid online gambling advertising.

Representatives from Yahoo and Google did not return calls to IGN seeking comment.

Back in March both companies announced they would stop taking advertisements from online gambling operators, or companies associated with the business. The announcements came months after a Grand Jury Investigation was convened to investigate the online gaming industry.

Subpoenas were issued to portal sites, print publications, radio and TV outlets and others that had either accepted advertising for the industry or worked for operators. Marketing companies and business consultants were also subpoenaed as part of the investigation. Google and Yahoo wouldn't comment in April on whether or not they were targeted by the Grand Jury investigation or if the ongoing subpoenas were a reason for them pulling the advertising content.

Although the case was filed in Superior State Court of California Rothken feels the outcome of his latest battle with the online gambling world will be felt across the U.S.

"This case will have a ripple effect for sure," he said. "There will be a clear message sent that you can't advertise gambling sites for a fee."

Rothken pointed out that there was little, legally, anyone could do about sites that use "spidering" or simply list links with gambling URLs on a site.

"There is a whole issue of privacy and other concerns there," he said. "This is simply about accepting money, and lots of it, from companies who are conducting an illegal business in the state of California."

Although no exact sums of money are mentioned in the complaint the case could cost a lot to the portal and search engine operators.

"The emphasis isn't on damages as it is on seeking restitution and returning the ill-gotten gains back to the state of California," Rothken said.

As part of the restitution claim the complaints seeks to have the defendants pay back to the state all revenues acquired from online gambling sites. The complaint also seeks restitution from taxes and fees avoided by the gambling operators who operated in California.

That figure could be tough to determine, but Rothken said he is hopeful the two sides can reach an agreement.

"These are publicly traded companies and something tells me they won't want to be arguing in court why they should be allowed to accept advertising revenue from illegal gambling operators on the Internet," he said. "I am hopeful that the parties could resolve this case."

Some of the other plaintiffs named in the case are Alta Vista, Ask Jeeves and Lycos.

Rothken said after the injunction hearing is heard the rest of the case could go on for sometime. The courts will determine of the case should move forward as a class action suit first, but Rothken said he is hopeful both sides could reach an agreement to avoid a long-term court battle.

Click here to view the full complaint.

Yahoo, Google Targeted in Class Action Suit for Taking Online Gambling Ads is republished from
Kevin Smith
Kevin Smith