DOJ Fines Microsoft, Google, and Yahoo $31.5 Million for Advertising of Internet Gambling
December 19, 2007. The Department of Justice's (DOJ) Office of the U.S. Attorney for the Eastern District of Missouri released a settlement agreement [7 pages in PDF] with Microsoft that provides for payments by Microsoft totaling $21 Million in return for settlement of government claims that Microsoft violated laws related to internet gambling.
The agreement states that this results "from the conduct of Microsoft Corporation involving its' alleged acceptance, processing and use of payments received for advertising on-line gambling activities in the United States from, or attributable to, on-line gambling businesses operating in violation of state or federal law."
The agreement further states that the government alleged that Microsoft "received payments from, or attributable to, on-line gambling businesses for advertising in the United States on-line gambling activities, ... the transmission and receipt of which funds the business operators knew, or should have known, were derived from criminal offenses, or funds intended to be used to promote or support unlawful activity, including violations of the Federal Wire Wager Act, of federal wagering excise tax laws, and of various states' statutes and municipal laws prohibiting gambling, either outright or absent regulation, licensing and/or taxation by the particular states and municipalities."
Under this agreement, Microsoft agrees to pay penalties, cooperate with the government in its ongoing investigations and prosecutions (including providing retained electronic data), and refrain from making any public statements refuting any part of the agreement. The government agrees not to bring any criminal or civil action against Microsoft under federal law.
Microsoft admits no wrongdoing in this agreement.
This agreement does not settle any state or local claims or allegations.
The DOJ released a similar settlement agreement [6 page in PDF] with Google, and another similar settlement agreement [7 pages in PDF] with Yahoo and related companies.
Microsoft's fine is $21 Million, payable as follows: $4.5 Million to the U.S., $7.5 Million to the International Center for Missing and Exploited Children (ICMEC), and $9 Million for internet advertising of the illegality of online gambling enterprises.
Google's fine is $3 Million.
Yahoo's fine is $7.5 Million, payable as follows: $3 Million to the U.S., and $4.5 Million for internet anti-gambling advertising.
These actions involve several government agencies, including the DOJ, its Federal Bureau of Investigation (FBI), and the Internal Revenue Service (IRS). The DOJ's accompanying release reflects a variety of governmental goals. These include protection of onshore gambling operations from competition form offshore gambling operations, and maximization of tax revenues.
Catherine Hanaway, the U.S. Attorney for the Eastern District of Missouri, stated in this release “Honest taxpayers and gambling industry personnel who do follow the law suffer from those who promote illegal online behavior."
The IRS's James Vickery stated that "Illegal internet gaming operations continue to be areas of IRS compliance concern", and that it "will continue to play an enforcement role in the illegal gaming industry and to support regulatory and legislative initiatives aimed at eliminating an environment conducive to illegal gambling."