Sweepstakes Casino Controversy - And Celebrities All-important Role

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The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on unlawful sports betting.
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No, they weren't personally in participation, but the world-famous celebs were conspicuously included in a slide presentation on social and sweepstakes casinos - the controversial websites providing both totally free casino-style video games and lucrative rewards, such as cash, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for complimentary,' 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 claims. In the eyes of numerous video gaming corporations, not to mention suit plaintiffs and state regulators, sweepstakes casinos serve as conventional casinos, just without the oversight, customer securities and tax laws. So not only can they avoid the steep 24-percent federal sports betting levy, but sweepstakes operators aren't subject to regulatory difficulties like anti-money laundering and responsible-gaming defenses.


One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income last year alone. Now the business faces allegations of prohibited gambling in a New york city claim that declares VGW uses celeb endorsers to 'produce a veneer of authenticity' around its product. (See VGW's declaration listed below)


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


Sweepstakes endorsers include 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 provide any distinctions between conventional gambling and sweepstakes play.


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


Ryan Seacrest prompts fans to play at Chumba Casino, where numerous - but not all - games are totally free


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


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Instead, ads typically center around the social aspect of the gambling establishments, while omitting the capacity for actual sports betting losses.


Others tempt customers with pledges of prizes. One such operator, Stake, ran a social media ad revealing off Drake's cars and trucks, planes and mansions before pivoting to video of the rap artist playing online casino-style video games.


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


Another caption explained: 'Because I never ever quit.'


The inconsistency between sports betting sites and social or sweepstakes casinos is a bit complicated, but operators of the latter insist they're not involved with the former.


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


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


Social gambling establishments offer consumers a chance to play casino-style video games with friends. Players have the option to purchase worthless currency frequently referred to as 'gold coins,' which can not be exchanged genuine money, but can be utilized to open various features within the video games.


But within the world of social casinos exists sweepstakes gaming, enabling clients to obtain other currency understood as 'sweeps coins' that can be exchanged for cash or other rewards.
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And therein lies the potential for monetary losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York. One player told the Washington Post he lost more than $100,000 on sweepstakes casinos in the past year after continuing to buy more coins in pursuit of money and other things of value.


The Philadelphia 76ers' Paul George is seen promoting an International Poker occasion


Social sweeps gambling establishment Stake ran an ad flaunting Drake's cars, airplanes and mansions


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


Traditional online gambling establishments are prohibited in all but 7 states, which has assisted to fuel the appeal of sweepstakes gambling establishments.


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


Many websites, like the crypto-compatible Stake, allow consumers to send mail-in ask for complimentary sweeps coins, supplied the gamers follow painfully specific instructions. What's more, players are frequently rewarded with sweeps coins merely for registering, therefore offering them a factor to attempt their hands at any variety of casino video games for a possibility to win - or lose - genuine cash.


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


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


'Social sweepstakes games are just a kind of online entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is required to dip into social gambling establishments with sweepstakes rewards. Consumers never ever have to pay for a chance to win rewards. That lack of a purchase requirement - or" consideration" - is an important difference in between social sweeps and standard online sports betting sites like gambling establishments.'


Think about the manner in which McDonald's utilizes its yearly to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and french fries that provide them the chance to win rewarding prizes, such as a $1 million jackpot.


And without a purchase requirement, or 'factor to consider', the video game itself doesn't fulfill the definition of sports betting in the US.


'Sweepstakes are an enduring approach for promoting all sort of everyday organizations in the United States, everything from hamburgers to magazine memberships to coffee and home improvement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are routinely utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'


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


For starters, video gaming lawyer Daniel Wallach points out, McDonald's Monopoly video game does not run forever. Rather, it has a distinct start and end, therefore recommending the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being used to promote real products like french fries, shakes, and the Filet-O-Fish.


'They do not last permanently and they're typically not tied to casino-style games of chance,' Wallach told DailyMail.com. 'They're just cash giveaways.


'The sweepstakes [casinos] have none of the qualities typically related to McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments offer" casino-like" payments, generally 80 percent or more of revenues, whereas the normal payment portion for a short-term promotional sweepstakes is a trivial share of the profits earned by the company [generally less than one percent]'


Wallach is fast to liken the online social sweeps gambling establishments to the web cafes that emerged in Florida, providing clients the possibility to play casino-style games for real rewards. A number of those brick-and-mortar facilities have actually since been shuttered over accusations of prohibited gaming.


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


Now, Wallach argues, social sweeps gambling establishments must face comparable analysis.


'These differences are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have actually repeatedly been pointed out by courts and state lawyer generals as essential elements in figuring out that a sweepstakes promo remained in truth a guise for unlawful gaming.'


One of the casino industry's leading trade organizations, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, in many cases, enact new legislation on the concern.


'Consumers are being denied of securities and states are passing up considerable tax and revenue opportunities as this gaming replaces that carried out through regulated channels,' read a well-circulated AGA memo.
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And then there are the plaintiffs who have taken legal action against social gambling establishments in more than a dozen states.


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


Michael Phelps has signed a deal with the VGW Group, which owns Global Poker


In the current claim, which is mainly comparable to its predecessors, New York state locals Lamar Prater and Rebecca Pratt both claim 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 also been named as defendants in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech company responded to DailyMail.com's ask for remark.


'We typically do not talk about matters before the courts,' a VGW representative informed DailyMail.com through e-mail. '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 self-confidence in our compliance with all laws and regulations where we run, and stay positive about the future,' the representative continued. 'We continue to offer our free-to-play games across the majority of The United States and Canada, as we have for more than a years, creating not only great games, user experiences and home entertainment, but also guaranteeing this is done securely, responsibly and at the highest level of standards.


'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are fairly common throughout the online social video games industry (and the US more broadly), and our standard practice is that we intend to strongly defend any claim which may be brought against us.'


The concerns in between traditional online sports betting and sweepstakes gambling establishments could prove troublesome for some celebrity 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 standard gaming titans like FanDuel and DraftKings.


'It's paradoxical that professional athletes are hawking prohibited sports betting 'sweeps' websites while at the very same time the leagues wish to forecast a strong stance against prohibited gaming - specifically when attempting to tamp down the periodic sports betting scandal,' Glaser informed DailyMail.com.


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


Together with VGW, Apple and Google are being sued for hosting apparently prohibited sports betting websites


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


'I 'd expect that a league crackdown on professional athletes backing sweepstakes websites refers when, not if,' Glaser included.


Neither an NBA spokesman nor the players' representatives reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also overlooked to respond to DailyMail.com emails.


Asked if their celeb endorsers have a duty to explain to consumers the distinctions and similarities in between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is absolutely nothing more that requires to be done.


'We have complete self-confidence in our influencer and ambassadorial collaborations, and our service practices more broadly,' the representative stated. 'A few of our worths are" our players precede" and" we do what's right", and we put our values at the core of whatever we do.'


Glaser, an outspoken challenger of sweepstakes websites, sees things in a different way.


'Celebrities who provide their names to shady prohibited gaming sites are, at a minimum, putting their credibilities at threat as well as courting civil and class actions by customers who allege harm,' Glaser stated. 'There is likewise some risk that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for helping with prohibited gaming.'


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