The US government is cracking down on companies accepting advertisements from online gambling Web sites and has started with three of the largest online advertising companies - Microsoft, Google and Yahoo! In a settlement announced in December 2007, Microsoft, Google and Yahoo! have agreed to pay the US government a total of $31.5 million to resolve claims that these companies received payments from online gambling Web sites during 1997 to 2007.

The three companies negotiated a settlement with the US attorney for the Eastern District of Missouri, Catherine Hanaway. Essentially, they have agreed to pay the $31.5 million; however, they have not admitted nor contested the charges that they received advertising money from online-gambling operations. It also appears that several of the companies stopped accepting the advertisements years ago, but in some instances they were still running through sponsored links or network sites.

Microsoft settled for the largest portion of the total settlement, with its contribution being over $21 million. The Microsoft settlement will be split, with $4.5 million going to the US federal government and $7.5 million going to the International Center for Missing and Exploited Children. Microsoft will also provide $9 million of the settlement to an online public service advertising campaign to help inform young adults that online gambling is illegal under US law.

Yahoo! settled for $7.5 million, with $3 million going directly to the US government and $4.5 million going toward the online advertising campaign. Google's portion of the settlement was $3 million.

Government officials argue that the promotion of these online gambling sites harms the legal and law-abiding gambling operations. Thus, the government appears to be targeting those companies that are advertising illegal gambling Web sites and does not seem to be challenging those companies accepting advertisements from lawful gaming sites.

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Anthony V. Lupo
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Sarah L. Bruno
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202.775.5760