The settlement could serve as a warning to adult website operators and affiliates that run banner ads and other advertisements for potentially illegal products and services, making for a poignant reminder that publishers are liable for the content of their websites.
The companies will pay a combined $31.5 million for running the gaming ads in violation of U.S. law and have agreed to cease accepting sports wagering as well as other advertisements for online gambling – a practice they insist they ended several years ago.
According to U.S. Attorney Catherine L. Hanaway, the case, which involved her office, the F.B.I. and the I.R.S., began in 2000, with the settlement being negotiated over the past year.
Hanaway described online gambling, saying, "This is a very profitable business that had a lot of money to spend on marketing."
Google's settlement amount was the lowest, at $3 million, or around one-third of a single day's profit for the search giant.
"While we did not admit any wrongdoing, the Justice Department has advised that online gambling is illegal in the U.S. and ads to promote it are improper," Google spokesman Jon Murchinson said. "Google voluntarily discontinued running such ads, which were a very small part of our AdWords business, in April 2004."
Microsoft was hit hardest, being forced to pay $21 million, including a $4.5 million forfeiture, plus $7.5 million to the International Center for Missing and Exploited Children and a further $9 million to be spent on public service ads aimed at keeping younger users from online gambling websites.
According to Microsoft, which ceased running online gaming ads four years ago, "This agreement reflects our ongoing commitment to online safety. We're hopeful that our educational campaign will stop young people from gambling before they start."
The settlement requires Yahoo to pay $7.5 million, of which $3 million is a forfeiture of ad revenue with the remaining $4.5 million allocated to public service ads that will run over the next three years.
"Yahoo stopped accepting online gambling advertisements years ago," Kelley Benander, a spokeswoman for Yahoo said. "And after the U.S. attorney's office contacted Yahoo with its concerns, we worked cooperatively over several years to reach this settlement."