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 illegal betting.

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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 gaming.


No, they weren't personally in presence, however the world-famous stars were notably consisted of in a slide presentation on social and sweepstakes gambling establishments - the controversial websites offering both complimentary casino-style games and rewarding prizes, such as cash, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for complimentary,' 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 many video gaming corporations, not to mention suit plaintiffs and state regulators, sweepstakes gambling establishments act as conventional gambling establishments, only without the oversight, customer protections and tax laws. So not just can they prevent the high 24-percent federal gaming levy, however sweepstakes operators aren't subject to regulatory obstacles like anti-money laundering and responsible-gaming protections.


One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the business deals with allegations of unlawful sports betting in a New york city lawsuit that declares VGW utilizes celebrity endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's statement listed below)


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


Sweepstakes endorsers include a series of stars from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions between standard sports betting and sweepstakes play.


Paris Hilton is seen plugging Wow Vegas, among lots of sweepstakes casinos discovered online

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Ryan Seacrest advises fans to dip into Chumba Casino, where numerous - however not all - games are free


Drake has a deal with social sweeps casino, Stake, that he routinely promotes on social networks


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Instead, ads generally focus around the social aspect of the casinos, while omitting the capacity for real gambling losses.


Others lure clients with pledges of rewards. One such operator, Stake, ran a social media advertisement displaying Drake's automobiles, airplanes and mansions before rotating to footage of the rap artist playing online casino-style video games.


'Daddy, why do we have a lot cash?' check out the very first caption on the screen.

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Another caption discussed: 'Because I never quit.'


The inconsistency in between gaming sites and social or sweepstakes casinos is a bit intricate, but operators of the latter insist they're not included with the former.


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


'Most social sweeps consumers never purchase,' the SPGA spokesperson told DailyMail.com. 'The minority of customers who make purchases do so in quantities far smaller sized than the typical deposit or bet size at real-money online gaming sites.'


Social casinos offer customers an opportunity to play casino-style games with good friends. Players have the alternative to buy worthless currency often referred to as 'gold coins,' which can not be exchanged for genuine cash, but can be used to unlock numerous functions within the games.


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


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


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


Social sweeps casino Stake ran an ad flaunting Drake's cars and trucks, planes and estates


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

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Traditional online gambling establishments are prohibited in all however seven states, which has actually assisted to fuel the appeal of sweepstakes casinos.


Anyone over the age of 18 can access the sweepstakes sites, which do not 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, permit consumers to send mail-in demands for totally free sweeps coins, provided the gamers follow painfully particular directions. What's more, gamers are frequently rewarded with sweeps coins simply for registering, thus providing a reason to try their hands at any variety of gambling establishment video games for a chance to win - or lose - genuine money.


So why are sweepstakes websites enabled to operate in 48 states, while online gambling establishments are banned in all however 7?


According to the stakeholders, their item is the totally free casino-style gaming, and the real-stakes competition is just a means of promoting their support.


'Social sweepstakes games are merely a type of online home entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is required to play at social gambling establishments with sweepstakes rewards. Consumers never need to spend for an opportunity to win rewards. That absence of a purchase requirement - or" factor to consider" - is a vital distinction in between social sweeps and conventional online sports betting websites like casinos.'


Think about the method that McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and french fries that provide them the possibility to win profitable rewards, such as a $1 million jackpot.


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


'Sweepstakes are an enduring method for promoting all kinds of daily organizations in the United States, everything from hamburgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are frequently used 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 experts, that argument does not cut it.


For beginners, gaming attorney Daniel Wallach mentions, McDonald's Monopoly game does not run indefinitely. Rather, it has a well-defined beginning and end, thus recommending the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being used to promote real products like french fries, shakes, and the Filet-O-Fish.


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


'The sweepstakes [casinos] possess none of the characteristics commonly related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes casinos provide" casino-like" payments, normally 80 percent or more of earnings, whereas the typical payout portion for a temporary marketing sweepstakes is a trivial share of the profits made by the business [usually less than one percent]'


Wallach is quick to liken the online social sweeps gambling establishments to the internet coffee shops that sprang up in Florida, using consumers the chance to play casino-style video games for real rewards. Much of those brick-and-mortar establishments have since been shuttered over accusations of unlawful sports betting.


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


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


'These distinctions are not approximate,' Wallach stated of social sweeps casinos. 'They have actually repeatedly been pointed out by courts and state lawyer generals as crucial factors in figuring out that a sweepstakes promo was in truth a guise for prohibited gaming.'


One of the casino industry's leading trade companies, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, sometimes, enact brand-new legislation on the problem.


'Consumers are being deprived of defenses and states are forgoing considerable tax and earnings opportunities as this gaming replaces that performed through regulated channels,' read a well-circulated AGA memo.


And after that there are the complainants who have actually taken legal action against social gambling establishments in more than a lots states.


Sweepstakes gambling establishment operators paid a combined $14.2 million in four different cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action claim, saying the settlement was made to prevent legal costs and continued litigation.


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


In the most current lawsuit, which is mainly similar to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'illegal gambling business. '


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


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


'We have full confidence in our compliance with all laws and policies where we operate, and remain positive about the future,' the spokesperson continued. 'We continue to use our free-to-play games across the majority of The United States and Canada, as we have for more than a years, developing not just fantastic video games, user experiences and home entertainment, however also ensuring this is done securely, properly and at the greatest level of requirements.


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


The problems in between conventional online gambling and sweepstakes casinos could show bothersome for some celeb 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 traditional gaming titans like FanDuel and DraftKings.


'It's ironic that expert athletes are hawking illegal sports betting 'sweeps' websites while at the very same time the leagues desire to forecast a strong position against illegal gambling - especially when trying to tamp down the occasional sports betting scandal,' Glaser informed DailyMail.com.


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


Together with VGW, Apple and Google are being taken legal action against for hosting allegedly illegal gambling sites


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


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


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


Asked if their celeb endorsers have a responsibility to discuss to customers the differences and resemblances in between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is absolutely nothing more that needs to be done.


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


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

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'Celebrities who provide their names to shady illegal gaming sites are, at a minimum, putting their credibilities at risk in addition to courting civil and class actions by consumers who allege damage,' Glaser said. 'There is also some threat that state regulators and state attorneys basic rope celeb endorsers into enforcement efforts for facilitating illegal sports betting.'


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