Sweepstakes Casino Controversy - And Celebrities All-important Role

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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 attendance, however the world-famous stars were conspicuously included in a slide presentation on social and sweepstakes casinos - the questionable websites offering both totally free casino-style video games and profitable rewards, such as money, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for free,' 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 market that now finds itself besieged by suits. In the eyes of many gaming corporations, not to discuss lawsuit complainants and state regulators, sweepstakes casinos act as standard gambling establishments, only without the oversight, customer securities and tax laws. So not just can they prevent the steep 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulatory hurdles 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 business deals with accusations of illegal gaming in a New york city claim that claims VGW uses star endorsers to 'create a veneer of legitimacy' around its item. (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 companies operating multibillion-dollar unlawful operations out of places like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.


Sweepstakes endorsers consist of a range of celebrities from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom provide any distinctions between standard gambling and sweepstakes play.


Paris Hilton is seen plugging Wow Vegas, among numerous sweepstakes gambling establishments discovered online


Ryan Seacrest advises fans to dip into Chumba Casino, where lots of - but not all - games are free


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


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


Others tempt consumers with guarantees of rewards. One such operator, Stake, ran a social media advertisement flaunting Drake's cars and trucks, airplanes and mansions before rotating to video footage of the rap artist playing online casino-style video games.


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


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


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


A representative for an industry trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, the majority of the players on social-sweepstakes gambling establishments are playing for complimentary.


'Most social sweeps clients never purchase,' the SPGA representative 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 gambling websites.'
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Social casinos provide consumers a chance to play casino-style video games with friends. Players have the choice to purchase valueless currency typically referred to as 'gold coins,' which can not be exchanged genuine money, however can be utilized to open numerous features within the video 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 money or other rewards.


And therein lies the potential for financial losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York City. One gamer informed 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 cash and other things of value.


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


Social sweeps gambling establishment Stake ran an ad displaying Drake's cars, aircrafts and mansions


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


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


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


Many sites, like the crypto-compatible Stake, allow consumers to send mail-in ask for free sweeps coins, supplied the gamers follow painfully specific guidelines. What's more, players are frequently rewarded with sweeps coins merely for signing up, therefore providing a reason to try their hands at any variety of gambling establishment video games for an opportunity to win - or lose - real cash.


So why are sweepstakes websites allowed to run in 48 states, while online gambling establishments are prohibited in all but 7?


According to the stakeholders, their product is the complimentary casino-style video gaming, and the real-stakes competition is simply a means of promoting their bread and butter.


'Social sweepstakes games are just a form of online entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is needed to dip into social gambling establishments with sweepstakes rewards. Consumers never need to spend for an opportunity to win rewards. That lack of a purchase requirement - or" consideration" - is an essential distinction between social sweeps and conventional online gambling sites like casinos.'


Think of the manner in which McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're buying hamburgers and fries that offer them the possibility to win profitable prizes, such as a $1 million jackpot.


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


'Sweepstakes are an enduring method for promoting all type of daily businesses in the United States, everything from burgers to magazine subscriptions to coffee and home improvement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are routinely used by a who's who of family 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, video gaming lawyer Daniel Wallach mentions, McDonald's Monopoly video game does not run indefinitely. Rather, it has a distinct beginning and end, consequently suggesting the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being used to promote genuine items like fries, shakes, and the Filet-O-Fish.


'They do not last forever and they're normally not tied to casino-style video games of possibility,' Wallach told DailyMail.com. 'They're just money free gifts.


'The sweepstakes [casinos] have none of the qualities typically associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos offer" casino-like" payments, typically 80 percent or more of revenues, whereas the common payout portion for a temporary marketing sweepstakes is a minor share of the income made by the company [normally less than one percent]'


Wallach fasts to liken the online social sweeps gambling establishments to the web cafes that sprang up in Florida, providing customers the possibility to play casino-style video games for real prizes. A lot of those brick-and-mortar facilities have actually given that been shuttered over accusations of prohibited gambling.


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


Now, Wallach argues, social sweeps casinos need to deal with comparable scrutiny.


'These distinctions are not arbitrary,' Wallach stated of social sweeps casinos. 'They have repeatedly been cited by courts and state attorney general of the United States as essential consider figuring out that a sweepstakes promo remained in truth a guise for illegal gaming.'


One of the casino market's leading trade organizations, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, sometimes, enact brand-new legislation on the concern.


'Consumers are being deprived of defenses and states are giving up considerable tax and earnings chances as this gambling changes that performed through managed channels,' checked out a well-circulated AGA memo.


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


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


Michael Phelps has actually signed an offer with the VGW Group, which owns Global Poker


In the most current claim, which is largely 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 'unlawful gaming business. '


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


'We typically don't discuss matters before the courts,' a VGW spokesperson informed DailyMail.com by means of e-mail. 'However, we note that this claim has only just been submitted 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 representative continued. 'We continue to offer our free-to-play video games across many of The United States and Canada, as we have for more than a years, developing not only fantastic games, user experiences and entertainment, but likewise ensuring this is done safely, responsibly and at the greatest level of requirements.


'More broadly, we 'd restate that class actions and other litigations and arbitrations are reasonably common throughout the online social video games market (and the US more broadly), and our basic practice is that we plan to vigorously safeguard any claim which may be brought versus us.'
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The issues in between traditional online sports betting and sweepstakes gambling establishments could show problematic for some celebrity 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 conventional gaming titans like FanDuel and DraftKings.


'It's paradoxical that professional athletes are hawking illegal sports betting wagering 'sweeps' websites while at the very same time the leagues wish to forecast a strong position against unlawful gambling - particularly when trying to tamp down the periodic gambling scandal,' Glaser told DailyMail.com.


It was just 8 months ago that Toronto Raptors forward Jontay Porter got a life time restriction from the NBA over claims he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes gambling establishments.


Along with VGW, Apple and Google are being demanded hosting supposedly prohibited gambling sites


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


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


Neither an NBA representative nor the players' representatives reacted to ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also overlooked to react to DailyMail.com e-mails.


Asked if their celeb endorsers have an obligation to explain to customers the distinctions and similarities 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 service practices more broadly,' the representative said. 'Some of our values are" our gamers come first" and" we do what's right", and we put our values at the core of whatever we do.'


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


'Celebrities who provide their names to shady unlawful sports betting websites are, at a minimum, putting their reputations at risk in addition to courting civil and class actions by customers who declare harm,' Glaser said. 'There is likewise some danger that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for facilitating illegal gaming.'


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