Sweepstakes Casino Controversy - And Celebrities All-important Role

The smiling faces of Paris Hilton and Ryan Seacrest made surprise looks before the Louisiana Senate for Friday's hearing on prohibited gaming.
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No, they weren't personally in presence, but the world-famous celebrities were conspicuously consisted of in a slide discussion on social and sweepstakes gambling establishments - the questionable sites using both free casino-style games and lucrative 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 sites are simply two cogs in the multibillion-dollar market that now discovers itself besieged by lawsuits. In the eyes of lots of gaming corporations, not to point out suit complainants and state regulators, sweepstakes gambling establishments act as conventional casinos, only without the oversight, customer protections and tax laws. So not just can they prevent the high 24-percent federal gambling levy, but sweepstakes operators aren't based on regulative difficulties like anti-money laundering and responsible-gaming defenses.


One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the business faces accusations of illegal sports betting in a New York claim that declares VGW utilizes celeb endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's declaration below)


'I'm not exactly sure" if you don't trust us, you can trust 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 presenter, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.


Sweepstakes endorsers include a variety of celebs from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions between conventional sports betting and sweepstakes play.


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


Ryan Seacrest advises fans to play at Chumba Casino, where many - however not all - games are totally free


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


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Instead, advertisements typically center around the social element of the gambling establishments, while omitting the capacity for actual gambling losses.


Others tempt customers with promises of rewards. One such operator, Stake, ran a social media ad showing off Drake's cars and trucks, planes and estates before pivoting to footage of the rap artist playing online casino-style games.


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


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


The inconsistency in between gambling websites and social or sweepstakes casinos is a bit complicated, but operators of the latter insist they're not included 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 casinos and sportsbooks. Furthermore, according to SPGA data, many of the gamers on social-sweepstakes gambling establishments are playing for totally free.


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


Social gambling establishments use customers a possibility to play casino-style games with buddies. Players have the choice to purchase worthless currency often referred to as 'gold coins,' which can not be exchanged genuine cash, however can be used to unlock numerous features within the video games.


But within the world of social gambling establishments exists sweepstakes video gaming, permitting 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 declared by plaintiffs in Florida, Georgia, New Jersey and New York. 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.
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The Philadelphia 76ers' Paul George is seen promoting a Worldwide Poker event


Social sweeps casino Stake ran an ad flaunting Drake's cars, aircrafts and mansions


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


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


Anyone over the age of 18 can access the sweepstakes sites, which don't need generally need identification. However, websites like Chumba will request for IDs from gamers trying to withdraw any funds.


Many sites, like the crypto-compatible Stake, enable clients to send mail-in requests for free sweeps coins, provided the players follow painfully specific directions. What's more, gamers are often rewarded with sweeps coins simply for registering, thus giving them a reason to attempt their hands at any variety of gambling establishment video games for a possibility to win - or lose - real cash.


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


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


'Social sweepstakes games are merely a type of online home entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is required to play at social casinos with sweepstakes prizes. Consumers never ever have to pay for a chance to win prizes. That lack of a purchase requirement - or" factor to consider" - is an essential difference in between social sweeps and standard online gambling websites like casinos.'


Consider the way that McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and french fries that offer them the chance to win lucrative rewards, such as a $1 million prize.


And without a purchase requirement, or 'consideration', the game itself does not satisfy the meaning of gambling in the US.


'Sweepstakes are a long-standing approach for promoting all kinds of everyday services in the United States, everything from hamburgers to publication memberships to coffee and home enhancement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are frequently utilized by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'


But to numerous sports betting industry experts, that argument does not cut it.


For starters, gaming attorney Daniel Wallach points out, McDonald's Monopoly video game does not run forever. Rather, it has a well-defined start and end, thus recommending the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being utilized to promote genuine products like french fries, shakes, and the Filet-O-Fish.


'They don't last permanently and they're typically not connected to casino-style games of opportunity,' Wallach told DailyMail.com. 'They're simply money giveaways.


'The sweepstakes [gambling establishments] possess none of the attributes typically related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes casinos provide" casino-like" payouts, normally 80 percent or more of revenues, whereas the normal payout percentage for a short-lived promotional sweepstakes is an unimportant share of the income earned by the company [usually less than one percent]'


Wallach is fast to liken the online social sweeps gambling establishments to the web coffee shops that emerged in Florida, offering clients the opportunity to play casino-style video games for real prizes. Many of those brick-and-mortar facilities have actually since been shuttered over claims of unlawful sports betting.


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


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


'These distinctions are not approximate,' Wallach stated of social sweeps casinos. 'They have consistently been cited by courts and state attorney generals as key factors in figuring out that a sweepstakes promo was in fact a guise for illegal sports betting.'


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


'Consumers are being deprived of defenses and states are giving up considerable tax and income chances as this sports betting changes that carried out through controlled channels,' read a well-circulated AGA memo.


And after that 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 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 costs and continued lawsuits.


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


In the current suit, which is mostly similar to its predecessors, New York state citizens Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'illegal sports betting enterprise. '


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


'We normally do not discuss matters before the courts,' a VGW representative told DailyMail.com via e-mail. 'However, we keep in mind that this claim has actually only simply been submitted with the court and VGW has actually not been formally served.


'We have full self-confidence in our compliance with all laws and regulations where we operate, and stay confident about the future,' the spokesperson continued. 'We continue to use our free-to-play games throughout most of The United States and Canada, as we have for more than a decade, developing not only great video games, user experiences and home entertainment, however also guaranteeing this is done safely, responsibly and at the greatest level of requirements.
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'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are fairly typical throughout the online social video games market (and the US more broadly), and our standard practice is that we mean to intensely safeguard any claim which may be brought versus us.'


The problems between traditional online gaming and sweepstakes gambling establishments could prove problematic for some celebrity endorsers.


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


'It's paradoxical that expert athletes are hawking unlawful sports betting wagering 'sweeps' sites while at the same time the leagues wish to project a strong stance versus illegal sports betting - specifically when attempting to tamp down the periodic gambling scandal,' Glaser told DailyMail.com.


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


In addition to VGW, Apple and Google are being demanded hosting allegedly illegal sports betting sites


Regardless, Glaser sees sweepstakes gambling establishments as a major concern for leagues such as the NBA.


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


Neither an NBA spokesperson nor the players' agents reacted to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise disregarded to react to DailyMail.com emails.


Asked if their star endorsers have a responsibility to explain to clients the differences and resemblances between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that needs to be done.


'We have complete confidence in our influencer and ambassadorial collaborations, and our service practices more broadly,' the representative said. 'A few of our values are" our gamers 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 differently.


'Celebrities who provide their names to shady prohibited gambling sites are, at a minimum, putting their reputations at threat along with courting civil and class actions by customers who allege damage,' Glaser said. 'There is likewise some danger that state regulators and state attorneys basic rope star endorsers into enforcement efforts for facilitating prohibited gaming.'


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