April 5, 2004

In a move that could hurt the Internet gambling industry, the two powerful web firms on Friday said they will stop running ads for online casinos by the end of April.

The action comes as US authorities threaten to crack down on US companies doing business with online gambling firms located overseas and whose operations are illegal in the US, the Times said.

Yahoo and Google declined to say if they have been subjects of the gambling probe, the Times said.

The prosecutors are arguing that the American companies are "aiding and abetting" offshore Internet casinos, whose operations are illegal in the United States. Prosecutors started a grand jury investigation last year, issuing subpoenas to American broadcasters, publishers and Web sites that run advertisements for the casinos.

Executives from Yahoo, based in Sunnyvale, California, and Google, based in Mountain View, California, declined to say whether they had been subjects of the investigation. The fact that both companies announced the change in policy on Friday appeared to be coincidental.

Jennifer Stephens, a spokeswoman for Overture, a Yahoo subsidiary that sells paid sponsored links for Yahoo, said the policy change was the result of a "lack of clarity" in the legal and regulatory environment.

Overture also provides advertising links to MSN, the Internet access division of Microsoft. Stephens said that it would no longer provide casino advertising to MSN, and MSN confirmed it would, as a result, stop running the advertisements.

Stephens said Yahoo would cease running casino advertisements on its U.S. Web site, but it would continue to run online casino advertising on its Web sites published in dozens of countries where Internet casinos are legal.

Google executives, however, said Friday that they would stop running Internet gambling advertisements in all markets. A spokesman for Google, David Krane, said the policy change was part of an effort to "reflect the growth of our company and ensure we provide the best search experience for our users and advertisers."

A spokeswoman for Lycos, another large search engine, also said Friday that the company had decided in the past few months to stop running gambling advertisements but declined to give details on when the company stopped publishing the ads or why it had made the decision.

Search engine companies, broadcasters and experts who follow the Internet gambling industry said the loss of advertising was not big enough to make a major difference to the profits of U.S. broadcasters and publishers. But some industry experts said the policy change could have a big impact on the online casinos.

"The Department of Justice is being very effective," said Sue Schneider, publisher of Interactive Gaming News, an online newsletter focusing on the online gambling industry. "It's unfortunate. It doesn't leave many outlets" for casinos to reach American customers.

The new policies angered some representatives of the Internet gambling industry who contend the search engine providers were bullied by prosecutors wielding an untested legal theory.

"I urge these search engines and other service providers to stand up for themselves and challenge these pressure tactics by federal prosecutors," said David Carruthers, chief executive of BetonSports.com, an online casino and sports betting site based in Costa Rica. The site took some 33 million bets last year from people in North America, mostly in the United States, the company said.

Although operating an online casino is illegal in the United States, state laws vary as to whether it is illegal for an individual to place a bet. In New York, for example, it is not a crime to place a bet over the Internet, state prosecutors said.

Critics of the grand jury investigation, including several legal experts, said that American companies were within their free speech rights to publish online casino advertisements because they were disseminating information.

A decision by a panel of the World Trade Organization issued on March 24 said that the United States' prohibition on Internet gambling violated the country's free trade obligations.

But companies do not appear eager to test the aiding and abetting theory. Several major media companies - including the radio giants Clear Channel Communications and Infinity Broadcasting and Discovery Networks - have recently stopped taking online gambling advertisements.

Some companies that continue to accept those advertisements, like LookSmart, a San Francisco-based search engine, said they were reviewing their policies. "There's been a general message sent to publishers from various agencies in the government that the legality of this advertising is unclear," said Dakota Sullivan, vice president for marketing at LookSmart. Sullivan declined to say whether LookSmart had received a subpoena.

"There's been a general shift in the atmosphere," he said. "There's a question of whether it's legal, and, beyond that, whether it's right."

The New York Times SAN FRANCISCO Google and Yahoo, two of the most widely used Web search engines, have decided to stop running advertisements for online casinos, a shift that could dampen the growth of Internet gambling.

The move, which the companies said would go into effect by the end of April, comes as U.S. prosecutors are threatening action against American companies that do business with Internet casinos that are based abroad.

The prosecutors are arguing that the American companies are "aiding and abetting" offshore Internet casinos, whose operations are illegal in the United States. Prosecutors started a grand jury investigation last year, issuing subpoenas to American broadcasters, publishers and Web sites that run advertisements for the casinos.

Executives from Yahoo, based in Sunnyvale, California, and Google, based in Mountain View, California, declined to say whether they had been subjects of the investigation. The fact that both companies announced the change in policy on Friday appeared to be coincidental.

Jennifer Stephens, a spokeswoman for Overture, a Yahoo subsidiary that sells paid sponsored links for Yahoo, said the policy change was the result of a "lack of clarity" in the legal and regulatory environment.

Overture also provides advertising links to MSN, the Internet access division of Microsoft. Stephens said that it would no longer provide casino advertising to MSN, and MSN confirmed it would, as a result, stop running the advertisements.

Stephens said Yahoo would cease running casino advertisements on its U.S. Web site, but it would continue to run online casino advertising on its Web sites published in dozens of countries where Internet casinos are legal.

Google executives, however, said Friday that they would stop running Internet gambling advertisements in all markets. A spokesman for Google, David Krane, said the policy change was part of an effort to "reflect the growth of our company and ensure we provide the best search experience for our users and advertisers."

A spokeswoman for Lycos, another large search engine, also said Friday that the company had decided in the past few months to stop running gambling advertisements but declined to give details on when the company stopped publishing the ads or why it had made the decision.

Search engine companies, broadcasters and experts who follow the Internet gambling industry said the loss of advertising was not big enough to make a major difference to the profits of U.S. broadcasters and publishers. But some industry experts said the policy change could have a big impact on the online casinos.

"The Department of Justice is being very effective," said Sue Schneider, publisher of Interactive Gaming News, an online newsletter focusing on the online gambling industry. "It's unfortunate. It doesn't leave many outlets" for casinos to reach American customers.

The new policies angered some representatives of the Internet gambling industry who contend the search engine providers were bullied by prosecutors wielding an untested legal theory.

"I urge these search engines and other service providers to stand up for themselves and challenge these pressure tactics by federal prosecutors," said David Carruthers, chief executive of BetonSports.com, an online casino and sports betting site based in Costa Rica. The site took some 33 million bets last year from people in North America, mostly in the United States, the company said.

Although operating an online casino is illegal in the United States, state laws vary as to whether it is illegal for an individual to place a bet. In New York, for example, it is not a crime to place a bet over the Internet, state prosecutors said.

Critics of the grand jury investigation, including several legal experts, said that American companies were within their free speech rights to publish online casino advertisements because they were disseminating information.

A decision by a panel of the World Trade Organization issued on March 24 said that the United States' prohibition on Internet gambling violated the country's free trade obligations.

But companies do not appear eager to test the aiding and abetting theory. Several major media companies - including the radio giants Clear Channel Communications and Infinity Broadcasting and Discovery Networks - have recently stopped taking online gambling advertisements.

Some companies that continue to accept those advertisements, like LookSmart, a San Francisco-based search engine, said they were reviewing their policies. "There's been a general message sent to publishers from various agencies in the government that the legality of this advertising is unclear," said Dakota Sullivan, vice president for marketing at LookSmart. Sullivan declined to say whether LookSmart had received a subpoena.

"There's been a general shift in the atmosphere," he said. "There's a question of whether it's legal, and, beyond that, whether it's right."

The New York Times SAN FRANCISCO Google and Yahoo, two of the most widely used Web search engines, have decided to stop running advertisements for online casinos, a shift that could dampen the growth of Internet gambling.

The move, which the companies said would go into effect by the end of April, comes as U.S. prosecutors are threatening action against American companies that do business with Internet casinos that are based abroad.

The prosecutors are arguing that the American companies are "aiding and abetting" offshore Internet casinos, whose operations are illegal in the United States. Prosecutors started a grand jury investigation last year, issuing subpoenas to American broadcasters, publishers and Web sites that run advertisements for the casinos.

Executives from Yahoo, based in Sunnyvale, California, and Google, based in Mountain View, California, declined to say whether they had been subjects of the investigation. The fact that both companies announced the change in policy on Friday appeared to be coincidental.

Jennifer Stephens, a spokeswoman for Overture, a Yahoo subsidiary that sells paid sponsored links for Yahoo, said the policy change was the result of a "lack of clarity" in the legal and regulatory environment.

Overture also provides advertising links to MSN, the Internet access division of Microsoft. Stephens said that it would no longer provide casino advertising to MSN, and MSN confirmed it would, as a result, stop running the advertisements.

Stephens said Yahoo would cease running casino advertisements on its U.S. Web site, but it would continue to run online casino advertising on its Web sites published in dozens of countries where Internet casinos are legal.

Google executives, however, said Friday that they would stop running Internet gambling advertisements in all markets. A spokesman for Google, David Krane, said the policy change was part of an effort to "reflect the growth of our company and ensure we provide the best search experience for our users and advertisers."

A spokeswoman for Lycos, another large search engine, also said Friday that the company had decided in the past few months to stop running gambling advertisements but declined to give details on when the company stopped publishing the ads or why it had made the decision.

Search engine companies, broadcasters and experts who follow the Internet gambling industry said the loss of advertising was not big enough to make a major difference to the profits of U.S. broadcasters and publishers. But some industry experts said the policy change could have a big impact on the online casinos.

"The Department of Justice is being very effective," said Sue Schneider, publisher of Interactive Gaming News, an online newsletter focusing on the online gambling industry. "It's unfortunate. It doesn't leave many outlets" for casinos to reach American customers.

The new policies angered some representatives of the Internet gambling industry who contend the search engine providers were bullied by prosecutors wielding an untested legal theory.

Source: International Herald Tribune

        

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