Yahoo!, Google online gambling civil trial nears

Yahoo! and Google, the Internet's top search engines, recently settled with the U.S. government for promoting illegal online gambling, but a civil trial is still set to begin Feb. 11.

According to a press release from Hagens Berman Sobol Shapiro, the lead law firm in the case, the trial will further test the liability of Yahoo! and Google in California and will ask the courts to further restrict the potential for these companies to engage in similar action in the future.

The class-action lawsuit was filed in California Superior Court in August 2004, and it alleges that Yahoo! and Google, along with other popular Web sites, made hundreds of millions of dollars by allowing advertisements for illegal online gambling Web sites to appear on the search engine pages.

The two sites reached a multi-million dollar settlement Dec. 19 that resolved federal criminal charges against them, but the companies neither contested nor admitted that they received payments from Internet gambling advertisers.

"We believe these companies have been profiting from this illegal practice for more than a decade, and we believe the agreement with the government does not go far enough," said Reed Kathrein, lead attorney in the case and partner at HBSS.

"The settlements are a great victory and a tacit admission by these online advertisers, but there is still more work to do in holding these companies accountable for the harm they have done to Californians and to keep them and others from continuing these practices."

Kathrein also said the law firm believes the amount Yahoo! and Google have had to forfeit so far in penalties was relatively small and won't deter them in the future.

Kathrein intends to argue for injunctive and declaratory relief at the February trial in hopes of stopping Google and Yahoo! from allowing the online gambling ads to appear on their sites in the future. He also seeks to force the companies to acknowledge that the practice is illegal.

The civil complaint also calls for the company to disclose the profits it earned from online advertisers looking to attract gamblers to their Web sites. HBSS would like to see those profits go to benefit education and rehabilitation efforts aimed at gambling addiction.

HBSS' case is based on the fact that under the federal aiding and abetting statute, procuring participants for illegal activities, such as online gambling, is unlawful.

Google, Yahoo! and Microsoft all paid a part of $31.5 million to the U.S. Department of Justice in their deal earlier in December.

Microsoft paid the biggest chunk, giving up $21 million in the settlement. That includes $4.5 million forfeited to the government plus $7.5 million donated to the International Center for Missing and Exploited Children, and $9 million in public service ads over the next three years.

Yahoo! will pay $7.5 million, with $3 million forfeiture and $4.5 million in public service ads over the next three years. Google will pay $3 million total.

Related Article: Search Engines Settle with U.S. DOJ

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