A class action has been filed against Internet search engines Altavista, Ask Jeeves, Business.com, CNet Networks, FindWhat.com, Google, Jupitermedia, Kanoodle.com, LookSmart.com, Overture Services, Sex.com, Terra Lycos, and Yahoo!, on behalf of all California residents who used one of the Internet search engines named, or an affiliate’s webpage, to facilitate a visit to an Internet gambling website, and who incurred losses between August 3, 2000, and August 3, 2004. The action alleges that the search engines facilitate illegal gambling in California, and to make hundreds of millions of dollars annually from the practice, which amounts to nothing less than conspiracy to violate California business and professional laws. The action seeks restitution of all losses incurred, and disgorgement of all profits wrongly made.

The action alleges that the search engine businesses make as much as $12.97 each time a gambler uses a search engine to find and then “click through” to gambling websites. As of 2003, there were at least 1,800 gambling website locations, with an estimated revenue of some $5 billion per year. The California Business & Professional Code prohibits unregulated gambling businesses, including commercially operated lotteries, banked or percentage games, gambling machines, and pari-mutuel wagering on horse racing. Though there is lawful gambling in California, it is heavily regulated. The lawsuit alleges that the Internet gambling businesses mentioned in the action are not licensed in California to provide legal gambling services-- however, they are not named as defendants. Rather, the Internet search engines that assist California gamblers in finding the gambling businesses are the defendants here, because they generate revenues and profits by inducing gamblers to use their search engines to find places to gamble illegally. The search engines allegedly knowingly facilitate illegal Internet gambling by advertising for the illegal Internet gambling businesses.

The lawsuit alleges that the search engines have the capacity to limit advertising geographically, but choose not to do so because of the tremendous profits they make. For instance, Yahoo!’s Overture website has expressly barred advertising for gambling web sites on its Australian service since at least 2002, when that country forced it to stop. Furthermore, Yahoo! has allegedly admitted in a Form 10-Q to potential liability because of the derivation of revenue from illegal gambling. According to the suit’s allegations, it is exactly this ability to target consumers by interest and geographically that puts the defendant search engines at the fore of their business in terms of profitability. By targeting California gamblers specifically, the businesses have allegedly stepped over the bounds of state law.