Sweepstakes Casino Controversy - And Celebrities' All-important Role

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The smiling faces of Paris Hilton and Ryan Seacrest made surprise looks before the Louisiana Senate for Friday's hearing on unlawful gaming.

The smiling faces of Paris Hilton and Ryan Seacrest made surprise looks before the Louisiana Senate for Friday's hearing on unlawful gaming.


No, they weren't personally in presence, but the world-famous stars were notably included in a slide discussion on social and sweepstakes gambling establishments - the questionable websites providing both complimentary casino-style video games and financially rewarding rewards, such as cash, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.


The websites are just two cogs in the multibillion-dollar industry that now discovers itself besieged by lawsuits. In the eyes of lots of video gaming corporations, not to point out lawsuit complainants and state regulators, sweepstakes gambling establishments serve as standard gambling establishments, just without the oversight, consumer protections and tax laws. So not just can they avoid the steep 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulative obstacles like anti-money laundering and responsible-gaming defenses.


One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits last year alone. Now the business deals with allegations of unlawful gambling in a New York lawsuit that declares VGW utilizes celeb endorsers to 'create a veneer of legitimacy' around its item. (See VGW's declaration listed below)


'I'm uncertain" if you do not trust us, you can rely on Paris Hilton" is a winning message for business running multibillion-dollar prohibited operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of video gaming corporation Light & Wonder, told DailyMail.com.


Sweepstakes endorsers include a series of stars from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom use any differences between traditional sports betting and sweepstakes play.


Paris Hilton is seen plugging Wow Vegas, one of numerous sweepstakes gambling establishments found online

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Ryan Seacrest urges fans to dip into Chumba Casino, where numerous - but not all - games are totally free

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Drake has a handle social sweeps casino, Stake, that he frequently promotes on social networks


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Instead, ads typically center around the social aspect of the gambling establishments, while leaving out the potential for actual sports betting losses.


Others tempt clients with guarantees of rewards. One such operator, Stake, ran a social media advertisement revealing off Drake's cars and trucks, aircrafts and estates before rotating to video footage of the rap artist playing online casino-style games.

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'Daddy, why do we have so much cash?' read the very first caption on the screen.


Another caption described: 'Because I never gave up.'


The inconsistency in between gambling websites and social or sweepstakes gambling establishments is a bit complex, however operators of the latter insist they're not included with the former.


A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, the majority of the players on social-sweepstakes gambling establishments are sports betting totally free.


'Most social sweeps clients never purchase,' the SPGA representative informed DailyMail.com. 'The minority of customers who make purchases do so in amounts far smaller sized than the typical deposit or bet size at real-money online gaming websites.'


Social casinos provide customers a possibility to play casino-style video games with friends. Players have the option to purchase valueless currency typically described as 'gold coins,' which can not be exchanged for genuine cash, however can be utilized to unlock various features within the games.


But within the world of social casinos exists sweepstakes video gaming, enabling customers to obtain other currency called 'sweeps coins' that can be exchanged for money or other prizes.


And therein lies the potential for monetary losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York. One gamer told the Washington Post he lost more than $100,000 on sweepstakes casinos in the past year after continuing to purchase more coins in pursuit of money and other things of worth.


The Philadelphia 76ers' Paul George is seen promoting a Worldwide Poker occasion


Social sweeps casino Stake ran an ad revealing off Drake's automobiles, aircrafts and mansions


Karl-Anthony Towns of the New York City Knicks is another NBA star plugging VGW's Global Poker


Traditional online gambling establishments are prohibited in all but seven states, which has helped to sustain the popularity of sweepstakes casinos.

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Anyone over the age of 18 can access the sweepstakes websites, which don't require normally require identification. However, websites like Chumba will ask for IDs from gamers attempting to withdraw any funds.


Many websites, like the crypto-compatible Stake, allow customers to submit mail-in ask for complimentary sweeps coins, provided the gamers follow painfully particular guidelines. What's more, gamers are frequently rewarded with sweeps coins just for signing up, thereby providing a reason to attempt their hands at any number of gambling establishment video games for a possibility to win - or lose - genuine money.


So why are sweepstakes sites enabled to operate in 48 states, while online casinos are prohibited in all however 7?


According to the stakeholders, their item is the free casino-style gaming, and the real-stakes competitors is simply a method of promoting their bread and butter.


'Social sweepstakes games are just a kind of online home entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is required to dip into social gambling establishments with sweepstakes rewards. Consumers never need to pay for an opportunity to win prizes. That lack of a purchase requirement - or" consideration" - is an essential difference between social sweeps and traditional online gambling sites like gambling establishments.'


Think about the method that McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're buying hamburgers and french fries that provide them the chance to win rewarding rewards, such as a $1 million prize.


And without a purchase requirement, or 'factor to consider', the video game itself does not meet the meaning of sports betting in the US.


'Sweepstakes are a long-standing approach for promoting all sort of everyday companies in the United States, whatever from hamburgers to publication subscriptions to coffee and home improvement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are regularly utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'


But to many sports betting industry insiders, that argument does not cut it.


For starters, gaming attorney Daniel Wallach points out, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a well-defined beginning and end, therefore recommending the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being utilized to promote real items like french fries, shakes, and the Filet-O-Fish.


'They don't last forever and they're normally not tied to casino-style games of chance,' Wallach told DailyMail.com. 'They're just money free gifts.


'The sweepstakes [casinos] possess none of the attributes commonly related to McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos offer" casino-like" payments, normally 80 percent or more of revenues, whereas the normal payment percentage for a temporary marketing sweepstakes is an insignificant share of the revenue earned by the business [typically less than one percent]'


Wallach fasts to liken the online social sweeps gambling establishments to the internet coffee shops that emerged in Florida, using clients the opportunity to play casino-style video games for genuine prizes. Many of those brick-and-mortar facilities have actually considering that been shuttered over allegations of prohibited gaming.


DJ Khaled is among numerous celebrity spokespeople for VGW's Global Poker brand name


Now, Wallach argues, social sweeps gambling establishments ought to deal with similar analysis.


'These differences are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have actually consistently been pointed out by courts and state attorney general of the United States as key consider identifying that a sweepstakes promo was in reality a guise for illegal gaming.'


Among the casino market's leading trade companies, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, in many cases, enact new legislation on the problem.


'Consumers are being denied of protections and states are passing up considerable tax and profits chances as this gambling changes that performed through controlled channels,' checked out a well-circulated AGA memo.


And after that there are the plaintiffs who have actually taken legal action against social casinos in more than a dozen states.


Sweepstakes gambling establishment operators paid a combined $14.2 million in four different cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action suit, stating the settlement was made to avoid legal expenses and continued litigation.


Michael Phelps has actually signed an offer with the VGW Group, which owns Global Poker


In the newest lawsuit, which is mostly similar to its predecessors, New York state homeowners Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is described in the filing as an 'illegal gambling enterprise. '


Apple and Google have actually likewise been named as defendants in suits for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for comment.


'We usually do not comment on matters before the courts,' a VGW spokesperson informed DailyMail.com by means of e-mail. 'However, we note that this claim has only simply been filed with the court and VGW has actually not been formally served.


'We have complete confidence in our compliance with all laws and policies where we operate, and stay positive about the future,' the representative continued. 'We continue to offer our free-to-play video games throughout the majority of North America, as we have for more than a decade, developing not just terrific games, user experiences and home entertainment, however also ensuring this is done securely, properly and at the highest level of requirements.


'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are fairly typical throughout the online social games industry (and the US more broadly), and our basic practice is that we intend to strongly defend any claim which might be brought versus us.'


The issues between conventional online gambling and sweepstakes casinos could prove troublesome for some star endorsers.


Towns, a star center with the Knicks, and the 76ers' George both back VGW's Global Poker brand while the NBA is partnered with conventional video gaming titans like FanDuel and DraftKings.


'It's ironic that professional athletes are hawking illegal sports betting wagering 'sweeps' sites while at the very same time the leagues desire to project a strong position versus unlawful gaming - particularly when trying to tamp down the occasional gaming scandal,' Glaser told DailyMail.com.


It was simply 8 months ago that Toronto Raptors forward Jontay Porter received a life time restriction from the NBA over claims he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes gambling establishments.


Together with VGW, Apple and Google are being demanded hosting presumably prohibited gambling websites


Regardless, Glaser sees sweepstakes casinos as a significant problem for leagues such as the NBA.


'I 'd expect that a league crackdown on athletes endorsing sweepstakes sites refers when, not if,' Glaser added.


Neither an NBA spokesperson nor the players' representatives reacted to DailyMail.com's requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise disregarded to respond to DailyMail.com e-mails.


Asked if their celebrity endorsers have an obligation to discuss to consumers the differences and similarities between iGaming and sweepstakes casinos, VGW insisted there is nothing more that needs to be done.


'We have full self-confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the spokesperson said. 'A few of our worths are" our players precede" and" we do what's right", and we put our values at the core of everything we do.'


Glaser, an outspoken challenger of sweepstakes sites, sees things differently.


'Celebrities who lend their names to shady prohibited gambling sites are, at a minimum, putting their track records at danger along with courting civil and class actions by customers who allege harm,' Glaser stated. 'There is also some danger that state regulators and state lawyers general rope star endorsers into enforcement efforts for assisting in prohibited gaming.'


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