Microsoft to Pay $21 Million to Settle Gambling Charges

Microsoft, Google and Yahoo agreed Dec. 19 to pay a combined $31.5 million to resolve government claims that they promoted illegal gambling by receiving advertising payments from online sports books, casinos and poker sites between 1997 and June 2007.

All three online giants neither contested nor admitted to the charges, but Microsoft agreed to pay $21 million to settle the issue. Yahoo agreed to pay $7.5 million, while Google paid $3 million.

U.S. Attorney Catherine L. Hanaway of the Eastern District of Missouri said the government found that all three companies violated the Federal Wire Wager Act, federal wagering excise tax laws, and various states’ statutes and municipal laws prohibiting gambling. Unregulated commercial gambling is illegal throughout the United States.

Hanaway has headed a government initiative against online gambling over the last few years that has led to the arrests of offshore gambling executives and the closure of U.S. operations of most Web-based gambling sites.

“These sums add to the over $40 million in forfeitures and back taxes this office has already recovered in recent years from operators of these remote-control illegal gambling enterprises,” Hanaway said in a statement. “Honest taxpayers and gambling industry personnel who do follow the law suffer from those who promote illegal online behavior.”

The Microsoft settlement consists of $4.5 million to the United States and a $7.5 million contribution to the International Center for Missing and Exploited Children to establish a fund to assist the center with its national and international mission.

In addition, Microsoft agreed to pay $9 million for an online, public service advertising campaign focused on illegal online gambling enterprises. The campaign will target people of college age or younger. The advertising campaign is to run for three years, beginning early next year.

Yahoo will forfeit $3 million directly to the government while underwriting and promoting a $4.5 million advertising campaign similar to Microsoft’s.

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