Plaintiffs, Mario Cisneros and Michael Voight bring this action on behalf of themselves, all others similarly situated and/or the general public. The allegations pertaining to plaintiffs are made upon personal knowledge. The allegations pertaining to defendants Yahoo!, Inc. ("Yahoo"); Google, Inc. ("Google"); Overture Services, Inc. ("Overture"); Ask Jeeves, Inc. ("Ask Jeeves"); LookSmart, Ltd. ("LookSmart"); AltaVista Inc. ("AltaVista"); Terra Lycos Inc. ("Lycos"); JupiterMedia Corporation ("Jupiter"); CNET Networks, Inc. ("CNET"); FindWhat.com ("FindWhat"); Kanoodle.com, Inc. ("Kanoodle"); Business.com Inc. ("Business.com"); Sex.com Inc. ("Sex.com").
This is a private Attorney General action brought as a class action and on behalf of the California general public against the major Internet search engine websites which advertise illegal Internet gambling in California.
Internet gambling is a growing business. Since the mid-1990s, Internet gambling operators have established approximately 1,800 gambling website locations with revenue in 2003 estimated to be $5.0 billion. See GAO Report, Internet Gambling, an Overview of the Issues, December 2002 . The websites at issue in this complaint are leading Internet gambling websites which have been in operation for many years and are large operations involving numerous employees, agents, and owners, which make millions of dollars annually conducting illegal gambling in California.
The longstanding public policy of the State of California prohibits the unregulated business of gambling as noted in Cal. Bus. & Prof. Code §19801:
The Legislature hereby finds and declares all of the following:
(a) The longstanding public policy of this state disfavors the business of gambling. State law prohibits commercially operated lotteries, banked or percentage games, and gambling machines, and strictly regulates pari-mutuel wagering on horse racing. To the extent that state law categorically prohibits certain forms of gambling and prohibits gambling devices, nothing herein shall be construed, in any manner, to reflect a legislative intent to relax those prohibitions.
(b) Gambling can become addictive and is not an activity to be promoted or legitimized as entertainment for children and families.
(c) (1) Unregulated gambling enterprises are inimical to the public health, safety, welfare, and good order. Accordingly, no person in this state has a right to operate a gambling enterprise except as may be expressly permitted by the laws of this state and by the ordinances of local governmental bodies.
So too, Article IV, Legislative Section 19 of the California Constitution provides:
(a) The Legislature has no power to authorize lotteries and shall prohibit the sale of lottery tickets in the State.
* * *
(e) The Legislature has no power to authorize, and shall prohibit, casinos of the type currently operating in Nevada and New Jersey;
(f) Notwithstanding subdivisions (a) and (e), and any other provision of state law, the Governor is authorized to negotiate and conclude compacts, subject to ratification by the Legislature, for the operation of slot machines and for the conduct of lottery games and banking and percentage card games by federally recognized Indian tribes on Indian lands in California in accordance with federal law. Accordingly, slot machines, lottery games, and banking and percentage card games are hereby permitted to be conducted and operated on tribal lands subject to those compacts.
These principles are enforced through a myriad of California Penal Code provisions including §§320-322, 330, 337 and 337(a). These provisions make the advertisement of gambling a principal crime in California.
Notably, lawful gambling establishments in California are heavily regulated to ensure that any gambling that occurs in California is beneficial to the citizens of California. Defendants and the Internet gambling businesses at issue in this complaint are not licensed in California to provide legal gambling services in the state of California as required by the Gambling Control Act, Cal. Bus. & Prof. Code §§19800, et seq., and therefore, have no right to conduct a gambling business in the state of California.
Defendants are the major Internet search engines and advertising information content providers who generate revenues and profits by creating, co-creating, targeting, positioning, formatting, highlighting, publishing, distributing and giving premium advertisements to other websites. In most cases, defendants earn advertising fees only when an enduser “clicks-through” to gambling websites.
Despite the illegal nature of unlicensed Internet gambling in California, and the United States in general, each of the defendants actively and knowingly advertise and facilitate illegal Internet gambling by advertising illegal Internet gambling businesses. Each of the defendants actively and knowingly accepts payment to produce advertisements and paid links for websites of unlicensed Internet gambling businesses. This advertising revenue is determined by the search term input by the user. Hence, defendants expressly sell rights to advertise based on such search terms as “illegal gambling,” “Internet gambling,” and “California gambling.” Further, each of the defendants either expressly uses, or has access to, geo-tracking software which permits defendants to be able to target illegal gambling advertisements to particular locations such as California.
Defendants’ advertisements have resulted in substantial illegal Internet gambling in California during the past four years, substantial unlawful profits by defendants and their co-conspirators, and substantial gambling losses to California residents. Defendants’ conduct has also resulted in the depletion of substantial tax resources for the State of California, as Internet gambling evades California regulation and taxation contrary to the laws and public policy of this state. The general public has also been harmed, as the net effect of defendants’ illegal actions has been to extract resources out of the legitimate sectors of the California economy and has created financial ruin with its attendant social costs for Californians.
By this action, plaintiffs seek to have defendants’ paid advertisement of Internet gambling in California declared illegal, seek to enjoin defendants from advertising unlicensed Internet gambling businesses to persons in California, and seek to have defendants disgorge and forfeit all revenues and profits from such illegal activity to a fund to be used for purposes to be directed by the court, to be given in restitution to California Indian Tribes or other licensed gambling businesses in California, to be given in restitution to the spouses of gamblers who have had community property improperly taken from them as a result of illegal gambling, or to be given to the state treasury as forfeited gambling proceeds in the form of restitution for unpaid license fees, gambling taxes, and/or as an escheat directly to the State of California of disgorged profits or unclaimed, or unclaimable common funds created by this action.
To see the entire complaint, click:
internet_gambling_complaint.pdf
Gambling lawsuit filed against top Web content sites
Wednesday, August 04 2004 @ 03:38 PM GMT
By David Legard, IDG News Service
UPDATE: A handful of leading online content providers, including Yahoo Inc. and Google Inc., have been served with a class action lawsuit in the U.S. for accepting advertisements for illegal Internet gambling, several law firms which filed the lawsuit said Tuesday.
The lawsuit alleges that the companies are accepting money to promote illegal Internet gambling sites on their search engines through paid or sponsored entries.
The lawsuit, filed in the Superior Court of the State of California, names as defendants Yahoo, Google, Overture Services Inc., Ask Jeeves Inc., Looksmart Ltd., CNet Networks Inc., Altavista Inc., Terra Lycos Inc., Jupitermedia Corp., FindWhat.com, Kanoodle.com Inc., Business.com Inc., and Sex.com Inc.
A spokeswoman for Yahoo said the company would not comment on pending litigation, but added, "Yahoo, nor Overture, nor Altavista, nor any other Yahoo network (property) accepts paid listings for online gambling."
Lycos, Ask Jeeves and Grant Media LLC, which owns Sex.com, also declined to comment. Scott Reinke, associate corporate counsel at FindWhat.com, said his company had not received any notice of a class action suit and also 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 alleged.
"Under the search term 'Internet gambling,' the highest price per lead was an astounding US$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 noted.
The lawsuit stated: "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."
The lawsuit alleged that Internet gambling sites avoid a 15-percent tax on gambling revenue which would otherwise go to the state coffers, and also that Internet gambling deprives California's indigenous Indian tribes of revenue from gambling which was guaranteed to them under a deal signed on June 21 with California Governor Arnold Schwarzenegger.
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 asked 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 & Robbins LLP in San Francisco and San Diego, and The Rothken Law Firm of San Rafael, California.
Juan Carlos Perez in Miami contributed to this article.