Sweepstakes Casino Controversy - And Celebrities All-important Role

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


No, they weren't personally in attendance, however the world-famous stars were notably consisted of in a slide presentation on social and sweepstakes casinos - the questionable websites offering both complimentary casino-style video games and lucrative prizes, such as cash, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The sites are simply two cogs in the multibillion-dollar industry that now finds itself besieged by lawsuits. In the eyes of lots of video gaming corporations, not to point out lawsuit complainants and state regulators, sweepstakes casinos serve as conventional casinos, only without the oversight, consumer defenses and tax laws. So not only can they avoid the steep 24-percent federal gaming levy, however sweepstakes operators aren't based on regulatory difficulties like anti-money laundering and responsible-gaming protections.


One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits last year alone. Now the company faces accusations of illegal sports betting in a New york city claim that declares VGW uses celebrity endorsers to 'produce a veneer of authenticity' around its item. (See VGW's statement below)


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


Sweepstakes endorsers consist of a series of celebs 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 offer any distinctions in between traditional gambling and sweepstakes play.


Paris Hilton is seen plugging Wow Vegas, one of many sweepstakes casinos found online


Ryan Seacrest urges fans to dip into Chumba Casino, where lots of - however not all - video games are complimentary


Drake has an offer with social sweeps gambling establishment, Stake, that he frequently promotes on social media


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Instead, ads usually center around the social element of the casinos, while omitting the potential for actual gambling losses.


Others lure customers with pledges of rewards. One such operator, Stake, ran a social networks advertisement revealing off Drake's vehicles, planes and estates before pivoting to video of the rap artist playing online casino-style video games.


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


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


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


A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, the majority of the gamers on social-sweepstakes casinos are playing for free.


'Most social sweeps customers never ever purchase,' the SPGA spokesperson told DailyMail.com. 'The minority of clients who make purchases do so in amounts far smaller than the normal deposit or wager size at real-money online sports betting sites.'


Social casinos use clients a possibility to play casino-style games with good friends. Players have the option to buy valueless currency often described as 'gold coins,' which can not be exchanged genuine money, however can be utilized to unlock various features within the video games.


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


And therein lies the potential for financial losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York City. One player informed the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the previous year after continuing to buy more coins in pursuit of cash and other things of value.


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


Social sweeps gambling establishment Stake ran an ad showing off Drake's vehicles, aircrafts and mansions


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


Traditional online casinos are prohibited in all however 7 states, which has helped to fuel the popularity of sweepstakes casinos.


Anyone over the age of 18 can access the sweepstakes websites, which do not need generally need identification. However, sites like Chumba will ask for IDs from players attempting to withdraw any funds.


Many websites, like the crypto-compatible Stake, allow customers to send mail-in requests for totally free sweeps coins, provided the gamers follow painfully particular directions. What's more, gamers are often rewarded with sweeps coins simply for signing up, thereby providing a reason to try their hands at any number of gambling establishment video games for a chance to win - or lose - real cash.


So why are sweepstakes sites permitted to operate in 48 states, while online casinos are prohibited in all however 7?
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According to the stakeholders, their item is the totally free casino-style video gaming, and the real-stakes competitors is just a method of promoting their support.


'Social sweepstakes games are simply a kind of online home entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is needed to dip into social gambling establishments with sweepstakes rewards. Consumers never ever need to spend for a chance to win rewards. That absence of a purchase requirement - or" factor to consider" - is a vital difference between social sweeps and standard online gaming sites like gambling establishments.'


Think about the method that McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to gamble, but rather they're buying hamburgers and fries that use them the possibility to win financially rewarding rewards, such as a $1 million jackpot.


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


'Sweepstakes are an enduring method for promoting all sort of everyday organizations in the United States, everything from hamburgers to publication memberships to coffee and home improvement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are frequently utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'


But to lots of gambling market insiders, that argument doesn't cut it.


For beginners, video gaming attorney Daniel explains, McDonald's Monopoly game does not run indefinitely. Rather, it has a distinct start and end, thereby suggesting the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being utilized to promote genuine items like french fries, shakes, and the Filet-O-Fish.


'They don't last permanently and they're usually not tied to casino-style games of possibility,' Wallach informed DailyMail.com. 'They're simply cash free gifts.


'The sweepstakes [casinos] have none of the attributes commonly associated with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments offer" casino-like" payouts, usually 80 percent or more of revenues, whereas the normal payout portion for a momentary promotional sweepstakes is a trivial share of the profits earned by the company [normally less than one percent]'


Wallach fasts to liken the online social sweeps casinos to the internet coffee shops that sprang up in Florida, providing consumers the opportunity to play casino-style games for genuine prizes. A number of those brick-and-mortar facilities have considering that been shuttered over accusations of prohibited sports betting.


DJ Khaled is among several star spokespeople for VGW's Global Poker brand


Now, Wallach argues, social sweeps casinos ought to deal with similar analysis.
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'These distinctions are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been pointed out by courts and state chief law officer as essential consider identifying that a sweepstakes promo remained in truth a guise for unlawful sports betting.'


Among the gambling establishment industry's leading trade companies, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, sometimes, enact new legislation on the problem.


'Consumers are being denied of protections and states are giving up significant tax and revenue opportunities as this gaming changes that performed through regulated channels,' checked out a well-circulated AGA memo.


And then there are the complainants who have actually sued social casinos in more than a dozen states.


Sweepstakes casino operators paid a combined $14.2 million in 4 separate cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action lawsuit, saying the settlement was made to avoid legal costs and continued lawsuits.


Michael Phelps has actually signed a handle the VGW Group, which owns Global Poker


In the latest claim, which is mainly comparable to its predecessors, New York state residents Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is described in the filing as an 'prohibited sports betting enterprise. '


Apple and Google have actually likewise been named as defendants in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech business responded to DailyMail.com's request for remark.


'We usually do not discuss matters before the courts,' a VGW representative informed DailyMail.com by means of email. 'However, we note that this claim has actually only just been filed with the court and VGW has actually not been officially served.


'We have full confidence in our compliance with all laws and guidelines where we run, and stay confident about the future,' the representative continued. 'We continue to offer our free-to-play games throughout most of The United States and Canada, as we have for more than a years, creating not only great video games, user experiences and entertainment, however likewise ensuring this is done safely, responsibly and at the highest level of requirements.


'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are reasonably common across the online social video games market (and the US more broadly), and our basic practice is that we mean to vigorously protect any claim which may be brought against us.'


The problems between standard online gambling and sweepstakes gambling establishments could prove problematic for some star endorsers.


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


'It's paradoxical that expert athletes are hawking illegal sports betting wagering 'sweeps' websites while at the same time the leagues desire to predict a strong position versus unlawful sports betting - especially when trying to tamp down the occasional gambling scandal,' Glaser told DailyMail.com.


It was simply 8 months ago that Toronto Raptors forward Jontay Porter received a lifetime restriction from the NBA over allegations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes casinos.


Together with VGW, Apple and Google are being demanded hosting allegedly illegal gambling websites


Regardless, Glaser sees sweepstakes casinos as a major issue for leagues such as the NBA.


'I 'd anticipate that a league crackdown on athletes backing sweepstakes sites refers when, not if,' Glaser included.
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Neither an NBA representative nor the gamers' agents reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also ignored to react to DailyMail.com e-mails.


Asked if their celebrity endorsers have a responsibility to explain to clients the distinctions and resemblances in between iGaming and sweepstakes casinos, VGW insisted there is nothing more that requires to be done.


'We have complete confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the representative said. 'Some of our values are" our players come first" and" we do what's right", and we put our values at the core of whatever we do.'
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Glaser, an outspoken challenger of sweepstakes websites, sees things in a different way.
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'Celebrities who lend their names to dubious prohibited sports betting websites are, at a minimum, putting their credibilities at danger as well as courting civil and class actions by consumers who allege damage,' Glaser said. 'There is also some threat that state regulators and state chief law officers rope star endorsers into enforcement efforts for helping with prohibited gambling.'


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