A handful of leading sites, including Yahoo and Google, have been served with a class action lawsuit for accepting advertisements for illegal Internet gambling, say the law firms that filed the suit.
The lawsuit alleges the companies are accepting money to promote illegal Internet gambling sites on their search engines through paid or sponsored entries.
The lawsuit earlier this week, filed in California Superior Court, names as defendants Yahoo, Google, Overture, Ask Jeeves, Looksmart, CNet, Altavista, Terra Lycos, Jupitermedia, FindWhat.com, Kanoodle.com, Business.com, and Sex.com.
Few Responses
A Yahoo spokesperson says the company will not comment on pending litigation, but adds, "Yahoo, nor Overture, nor Altavista, nor any other Yahoo network [property] accepts paid listings for online gambling."
Lycos, Ask Jeeves, and Grant Media, which owns Sex.com, also decline to comment. Scott Reinke, associate corporate counsel at FindWhat.com, says his company had not yet received any notice of a class action suit, and had no comment. Calls placed to the other defendants weren't immediately returned.
Internet gambling companies are prepared to pay highly to get sales leads from these search engines, the lawsuit alleges.
"Under the search term 'Internet gambling,' the highest price per lead was an astounding $12.97 per click through ... The next four highest price click throughs (also gambling sites) were all at or above $12 per click through," the lawsuit notes.
The lawsuit states: "The defendants conspired with the Internet gambling Web sites to create and provide Internet advertisements to areas such as California in which Internet gambling is illegal with the knowledge and intention of persuading and directing California residents to visit these illegal gambling Web sites so as to illegally gamble in California."
In fact, studies have shown Internet gambling sites are big advertisers. And some states are not pleased with sites that aggregate lotteries.
Indian Casinos Cheated?
The lawsuit alleges that Internet gambling sites avoid a 15-percent tax on gambling revenue which would otherwise go to the state coffers. It also claims Internet gambling deprives California's indigenous Indian tribes of revenue from gambling that was guaranteed to them under a deal signed on June 21 with California Governor Arnold Schwarzenegger.
When ratifying that deal, Schwarzenegger said, "The new agreement respects the tribes' sovereignty. It protects their exclusive gaming rights and it begins a new financial partnership between the tribes, local communities, and the great state of California."
The lawsuit asks for a permanent injunction against the alleged wrongdoing and for "restitution ... for all illegal gambling proceeds" received by the defendants "and/or the Internet gambling operations," including state taxes and fees.
The suit was filed by the law offices of Lerach Coughlin Stoia Geller Rudman and Robbins in San Francisco and San Diego, and The Rothken Law Firm of San Rafael, California.
Juan Carlos Perez of the IDG News Service contributed to this report.
