Californians File Class Action to Recoup Gambling Losses Spurred by Online Ads

In a sweeping class-action complaint, two California residents represented by the Lerach law firm allege that numerous Internet search-engine providers have knowingly facilitated illegal Internet gambling by advertising Internet gaming businesses on their search result pages.

According to the complaint, the defendant companies - most notably Yahoo, Google, Ask Jeeves and Terra Lycos - conspired with various Internet gaming businesses to promote illegal gambling activity by allowing those companies to purchase "paid" or "sponsored" priority placement among users’ search results. For each “click-through” of an ad, the online gambling companies allegedly paid the defendants more than 10 times the amounts paid by other businesses. The plaintiffs claim the defendants allowed the Internet gaming businesses specifically to target California residents with their advertising.

The two named plaintiffs purport to represent overlapping classes of California residents who claim to have been victimized by the defendants’ conduct. The larger class, allegedly represented by both named plaintiffs, seeks disgorgement of all revenues and profits acquired by the defendants and the Internet gaming businesses as a result of the “sponsored” links and advertisements. These funds could then be transferred to licensed businesses and Indian tribes that operate casinos in California – on the theory that such entities are the “rightful owner[s]” of gaming proceeds – as well as to the state of California to compensate it for “wrongfully avoided” taxes and fees.

Michael Voight, one of the named plaintiffs, claims he reached various gambling Web sites through the defendants’ search engines, generating at least $100,000 in gambling losses. He purports to represent a distinct class of similarly situated California residents. On behalf of the class, Voight seeks to have the defendants forfeit all revenues and profits derived from the challenged advertising, including gambling losses suffered by California residents who viewed the advertisements and gambled at the advertised Internet gaming Web sites.  

Although the lawsuit does not specifically address compulsive gambling issues, several portions of the complaint allege that Internet gambling is particularly likely to cause pathological gambling. According to the complaint, online gaming is “readily available to anyone with an Internet connection at all hours of the day or night” and is a “solitary activity, which makes it even more dangerous; people can gamble uninterrupted and undetected for unlimited periods of time.”