• by Wendy Davis  @wendyndavis, December 1, 2008

A California court has dismissed a lawsuit against Google and Yahoo for displaying gambling ads in search results.

California Superior Court Judge Richard Kramer ruled that search engines are immune from liability based on the federal Communications Decency Act, which shields Web sites from liability for material provided by outside companies.

Kramer also ruled that there was no reason to issue an injunction against the companies because they had already stopped accepting gambling ads in the U.S.

"Without comment on whether defendants' sponsoring online gambling sites in the past was wrongful, it is clear from the evidence that each defendant has ceased such sponsorship," Kramer wrote.

The lawsuit, which was quietly dismissed last month, dated back to 2004, when two California residents sued Google, Yahoo and a host of other companies. The complaint alleged that the gambling ads violated California state law. One of the plaintiffs reportedly lost $100,000 gambling online.

The lawsuit originally asked for monetary damages, but the court earlier rejected that claim and said that the plaintiffs would only be able to obtain an injunction against the search engines if they prevailed.

Last year, Microsoft, Google and Yahoo paid $31.5 million to settle with the Justice Department for promoting gambling. In that instance, the Communications Decency Act didn't protect the companies because the law contains an exception for some federal criminal cases.