Advertisers Punished for Promoting Online Gambling
For years, the Justice Department has been taking a crack at websites that promote illegal online gambling services. Advertisers seem to think they could get a free pass by keeping an arm’s length between themselves and the casinos. Not anymore.
New Developments in the War on Online Gambling
The FBI and the IRS have been investigating illegal gaming companies for the past few months. As of June, this investigation has led to five companies and 10 operators have being indicted. The buck doesn’t stop with them.
The Justice Department has decided to make an example of Google, Yahoo and Microsoft. These firms have recently been charged with promoting illegal gambling.
Authorities claim the technology conglomerates have been providing advertisements to gambling sites since 1997. These companies will not confirm nor deny the charges. They simply wish to move on and have agree to pay fines and restitution.
Microsoft, Google and Yahoo have collectively paid $31.5 million to settle the claims. Microsoft will be paying the bulk of the settlement. The software company agrees to pay $21 million, which will include a $4.5 million fine and a $7.5 million donation to the Center for Missing and Exploited Children. The remaining $9 million will be spend on an advertising campaign which will teach people that gambling is still illegal, despite how popular it’s become online.
The decision comes around the same time that Google settled a lawsuit over promoting illegal online pharmacies. They paid $500 million after an investigation by the Justice Department.
The Justice Department has clearly decided to step up to the plate on companies’ advertising policies. Companies that advertise illegal services are guilty of aiding and abetting. The Justice Department may take an even harder position in the future.
Advertisers are not the only ones on the Justice Department’s naughty list. In March, federal authorities announced Paypal has been under investigation. They have been charged with transferring money to offshore accounts for gambling sites. Recently, they settled with the federal government for $10 million.
These companies clearly will have to change their business practices in the coming months. The revenue losses may be significant. However, the ramifications of future lawsuits may be far worse. When Google was forced to pay for illegally promoting pharmacies, they felt their revenues drop more than 20%. Although the fines for advertising to gambling firms were only $3 million, they may be much higher next time around.
How Will This Change Business Practices?
These settlements come as a wakeup call for many businesses. They seem to think they could absolve themselves of responsibility. Law enforcement authorities clearly feel otherwise. They say that companies cannot jeopardize the well being of American consumers without being held liable. In the past, many companies have treated fines as an additional cost of doing business. When the government starts talking about the Patriot Act and RICO, they tend to take them more seriously.
The government will probably continue to be hard on large companies that promote unregulated online gambling or other illegal operations. This may change the methodology for advertising in the near to distant future.