The Internet's top sports destination and most-used search service eliminated sports gambling ads from its site on December 31, a month after they appeared, said Dean Jutilla, a Yahoo spokesman.
"We're discussing the issues directly with the leagues," Jutilla said.
Advertising produces about 90 percent of Yahoo's sales, and the company was trying to boost slowing growth with gambling ads, which are among the most lucrative in sports on the Internet. In doing so, the site was risking relationships with US sports leagues that see betting on their games as a conflict of interest.
"The leagues need Yahoo as much as Yahoo needs the leagues, but the NBA, NHL, or other sports won't put up with gambling ads," said Christopher Todd, an analyst with Jupiter Media Metrix Inc, an Internet research firm. "These had to come down."
Yahoo is one of seven companies vying for rights to produce the NFL's Web site and is seeking to extend or enhance agreements with baseball, basketball and hockey leagues.
The NHL and NFL told Yahoo as early as December 7 to remove the ads for about nine offshore Internet sports gambling companies but the company continued to run the ads until December 31 in areas that didn't include league-supplied content.
Contracts end
Yahoo said it removed the sports gambling-related ads from its site because contracts with on-line sports bookmakers had expired.
"The terms of these agreements have run their course," Jutilla said. He declined to say whether the ads would appear again.
David Grouse, marketing manager for UK tax-free bookmaker Sportingbet.com Plc, said waiting to the end of December allowed Santa Clara, California-based Yahoo to collect payments on advertising contracts that had to run for at least 30 days for Yahoo to get paid.
The move wasn't popular with Yahoo's competitors.
"They kept these up, and told the leagues they want to do business with: 'Be damned," said Mark Mariani, president of sales and marketing for sports Internet site SportsLine Inc, a Yahoo rival. "Someday, you figure they're going to have to atone for this."
Yahoo's main competitors, Walt Disney Co's ESPN, and SportsLine, 22 percent owned by Viacom Inc's CBS Corp, won't take gambling ads because they fear alienating sports leagues as partners. For that reason, sports gambling companies are willing to pay twice the published rates to get on US sites, Internet executives said.
Officials from the National Basketball Association, the NCAA, and the PGA Tour also complained to Yahoo about the sports gambling ads.
MLB talks
The Internet search company's agreement with Major League Baseball to provide audio for broadcasts of games on baseball's Web site expired at the end of last season, and MLB said it's negotiating with the company on a possible new agreement.
"I couldn't see us doing business with them if they were running gambling ads. It would go against everything baseball stands for," said Rich Levin, a spokesman for baseball.
Yahoo shares have fallen 83 percent over the past year. Shares of Yahoo rose US$2.88 to US$30.25 in Nasdaq trading.
The company in October signed an agreement with the NFL to broadcast 220 of 248 NFL games this season through the league's Internet site, NFL.com. Yahoo is also competing with ESPN.com and Sportsline.com for rights to the NFL's Web site, most popular among US sports leagues.
NFL spokesman Brian McCarthy said Yahoo's refusal to remove all gambling ads until the end of December won't affect the Internet search company's negotiations with the league.
"We're pleased with their decision, and it emphasizes that they value the relationship with the NFL," McCarthy said.
Yahoo's contract with the NHL to provide audio broadcasts of games on the league's Web site expires after this season.
"We voiced our displeasure with Yahoo over these types of ads, and we were assured that they would remedy the situation immediately," said Jon Litner, the NHL's executive vice president. "They've done that."
Yahoo ranked second to America Online Inc's AOL Network with 56.5 million visitors in October, according to Media Metrix's most recent statistics.
If Yahoo wants to expand current agreements with leagues or sign new ones, the company shouldn't run gambling ads again, said Geoff Reiss, ESPN's senior vice president of Internet ventures, which operates ESPN.com, the second-most popular sports site.
"They got away with it for a while. I wouldn't think they'd want to try their luck a second time," Reiss said.
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