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 illegal sports betting.
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No, they weren't personally in attendance, but the world-famous celebs were notably consisted of in a slide presentation on social and sweepstakes gambling establishments - the controversial websites offering both complimentary casino-style video games and lucrative prizes, such as money, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.


The sites are simply 2 cogs in the multibillion-dollar industry that now finds itself besieged by suits. In the eyes of numerous gaming corporations, not to discuss lawsuit plaintiffs and state regulators, sweepstakes gambling establishments function as traditional casinos, only without the oversight, consumer securities and tax laws. So not only can they prevent the high 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 revenue last year alone. Now the business deals with accusations of unlawful sports betting in a New York claim that declares VGW uses celebrity endorsers to 'develop a veneer of legitimacy' around its item. (See VGW's statement below)


'I'm not sure" if you don't trust us, you can rely on Paris Hilton" is a winning message for business running multibillion-dollar prohibited operations out of places 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 celebs from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom provide any differences between conventional sports betting and sweepstakes play.


Paris Hilton is seen plugging Wow Vegas, one of many sweepstakes gambling establishments discovered online


Ryan Seacrest prompts fans to play at Chumba Casino, where many - but not all - video games are complimentary


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


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Instead, ads generally center around the social element of the casinos, while leaving out the potential for real sports betting losses.


Others tempt clients with pledges of prizes. One such operator, Stake, ran a social networks ad showing off Drake's vehicles, airplanes and estates before rotating to video footage of the rapper playing online casino-style games.


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


Another caption discussed: 'Because I never quit.'


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


A representative 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 casinos are playing for complimentary.


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


Social casinos offer clients a possibility to play casino-style video games with buddies. Players have the choice to purchase valueless currency frequently referred to as 'gold coins,' which can not be exchanged genuine money, however can be utilized to open various functions within the games.


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


And therein lies the capacity for financial losses, like the ones claimed by complainants 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 buy more coins in pursuit of money and other things of worth.


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


Social sweeps gambling establishment Stake ran an advertisement displaying Drake's automobiles, aircrafts and estates


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 seven states, which has helped to fuel the appeal of sweepstakes gambling establishments.


Anyone over the age of 18 can access the sweepstakes sites, which do not need normally require recognition. However, sites like Chumba will request IDs from players attempting to withdraw any funds.


Many websites, like the crypto-compatible Stake, enable customers to send mail-in requests for totally free sweeps coins, supplied the gamers follow painfully particular directions. What's more, players are typically rewarded with sweeps coins just for signing up, thus providing a factor to attempt their hands at any variety of casino games for a chance to win - or lose - genuine money.


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


According to the stakeholders, their product is the complimentary casino-style video gaming, and the real-stakes competitors is merely a way of promoting their support.


'Social sweepstakes video games are merely a form of online entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is needed to play at social gambling establishments with sweepstakes prizes. Consumers never need to pay for a chance to win prizes. That lack of a purchase requirement - or" factor to consider" - is an essential distinction between social sweeps and traditional online sports betting websites like gambling establishments.'


Consider the manner in which McDonald's utilizes its annual Monopoly 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 financially rewarding prizes, such as a $1 million jackpot.


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


'Sweepstakes are a long-standing approach for promoting all sort of everyday businesses in the United States, everything from burgers to publication memberships to coffee and home enhancement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are routinely used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'


But to many sports betting market experts, that argument does not cut it.


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


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


'The sweepstakes [casinos] possess none of the characteristics frequently connected with promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos offer" casino-like" payments, usually 80 percent or more of incomes, whereas the normal payment portion for a temporary marketing sweepstakes is a minor share of the earnings made by the company [typically less than one percent]'


Wallach is quick to liken the online social sweeps gambling establishments to the web cafes that emerged in Florida, offering clients the possibility to play casino-style games for genuine prizes. A number of those brick-and-mortar establishments have actually considering that been shuttered over allegations of illegal gaming.


DJ Khaled is amongst numerous celeb spokespeople for VGW's Global Poker brand name


Now, Wallach argues, social sweeps gambling establishments ought to deal with comparable examination.


'These differences are not arbitrary,' Wallach said of social sweeps casinos. 'They have actually repeatedly been cited by courts and state chief law officer as key aspects in identifying that a sweepstakes promotion was in truth a guise for illegal sports betting.'


Among the gambling establishment market's leading trade organizations, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, in some cases, enact brand-new legislation on the problem.


'Consumers are being denied of defenses and states are giving up substantial tax and income opportunities as this gambling changes that carried out through managed channels,' checked out a well-circulated AGA memo.


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


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


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


In the most recent 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 'unlawful sports betting business. '


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


'We generally don't discuss 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 not been officially served.


'We have complete confidence in our compliance with all laws and policies where we operate, and remain positive about the future,' the representative continued. 'We continue to provide our free-to-play video games across most of North America, as we have for more than a decade, creating not only great games, user experiences and entertainment, however likewise guaranteeing this is done securely, responsibly and at the highest level of standards.


'More broadly, we 'd reiterate 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 standard practice is that we mean to vigorously protect any claim which may be brought versus us.'


The issues between conventional online sports betting and sweepstakes gambling establishments could show troublesome for some celeb endorsers.


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


'It's paradoxical that expert athletes are hawking prohibited sports betting 'sweeps' websites while at the very same time the leagues wish to predict a strong position versus unlawful sports betting - especially when trying to tamp down the periodic sports betting scandal,' Glaser informed DailyMail.com.


It was simply 8 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 involving social or sweepstakes gambling establishments.


In addition to VGW, Apple and Google are being taken legal action against for hosting apparently illegal gambling websites


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


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


Neither an NBA spokesman nor the gamers' representatives reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to respond to DailyMail.com e-mails.


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


'We have full confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the spokesperson stated. 'A few of our worths are" our players come initially" and" we do what's right", and we put our worths at the core of whatever we do.'


Glaser, an outspoken opponent of sweepstakes sites, sees things in a different way.
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'Celebrities who provide their names to shady illegal gaming websites are, at a minimum, putting their track records at threat as well as courting civil and class actions by consumers who declare damage,' Glaser said. 'There is also some threat that state regulators and state lawyers basic rope celebrity endorsers into enforcement efforts for facilitating unlawful sports betting.'


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