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 gaming.

No, they weren't personally in attendance, but the world-famous stars were conspicuously included in a slide discussion on social and sweepstakes gambling establishments - the controversial sites offering both complimentary casino-style video games and rewarding rewards, such as cash, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The sites are simply 2 cogs in the multibillion-dollar market that now discovers itself besieged by suits. In the eyes of lots of gaming corporations, not to point out lawsuit complainants and state regulators, sweepstakes gambling establishments act as standard casinos, only without the oversight, consumer securities and tax laws. So not just can they avoid the steep 24-percent federal gambling levy, but sweepstakes operators aren't based on regulatory difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the company deals with allegations of unlawful gambling in a New york city lawsuit that declares VGW utilizes celebrity endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's declaration below)

'I'm not sure" if you do not trust us, you can rely on 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 speaker, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a series of stars from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions between conventional gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among numerous sweepstakes casinos found online

Ryan Seacrest prompts fans to dip into Chumba Casino, where many - but not all - games are free

Drake has an offer with social sweeps gambling establishment, Stake, that he routinely promotes on social media

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Instead, ads usually focus around the social element of the gambling establishments, while leaving out the capacity for real sports betting losses.

Others lure customers with guarantees of prizes. One such operator, Stake, ran a social media advertisement revealing off Drake's vehicles, planes and mansions before rotating to footage of the rapper playing online casino-style games.

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

Another caption described: 'Because I never quit.'

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

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

'Most social sweeps customers never ever buy,' the SPGA spokesperson told DailyMail.com. 'The minority of customers who make purchases do so in amounts far smaller sized than the common deposit or bet size at real-money online gambling sites.'
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Social gambling establishments offer customers a possibility to play casino-style video games with friends. Players have the option to purchase valueless currency often referred to as 'gold coins,' which can not be exchanged genuine cash, but can be utilized to open different features within the games.

But within the world of social gambling establishments exists sweepstakes video gaming, permitting customers to acquire other currency called 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the capacity for monetary losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York City. One player informed the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the previous year after continuing to purchase more coins in pursuit of money and other things of worth.

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

Social sweeps casino Stake ran an ad displaying Drake's vehicles, planes 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 prohibited in all however seven states, which has actually helped to fuel the appeal of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, permit clients to submit mail-in ask for totally free sweeps coins, offered the players follow painfully specific instructions. What's more, players are often rewarded with sweeps coins merely for registering, consequently giving them a reason to try their hands at any variety of casino video games for a possibility to win - or lose - genuine money.

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

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

'Social sweepstakes video games are just a type of online entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is required to dip into social casinos with sweepstakes prizes. Consumers never ever need to spend for a chance to win prizes. That lack of a purchase requirement - or" factor to consider" - is a vital distinction in between social sweeps and conventional online gaming sites like casinos.'

Think of the method that McDonald's uses its yearly Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're buying hamburgers and fries that provide them the opportunity to win financially rewarding 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 gaming in the US.

'Sweepstakes are a long-standing approach for promoting all sort of daily organizations in the United States, whatever from burgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are regularly used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling market experts, that argument does not cut it.

For starters, gaming attorney Daniel Wallach explains, McDonald's Monopoly game does not run indefinitely. Rather, it has a well-defined start and end, thereby suggesting the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being utilized to promote real items like french fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [casinos] possess none of the attributes typically connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes casinos offer" casino-like" payouts, normally 80 percent or more of profits, whereas the normal payout percentage for a momentary advertising sweepstakes is a minor share of the revenue earned by the business [generally less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the web coffee shops that emerged in Florida, using consumers the opportunity to play casino-style video games for genuine rewards. A lot of those brick-and-mortar establishments have because been shuttered over claims of prohibited gaming.

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

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

'These distinctions are not approximate,' Wallach said of social sweeps casinos. 'They have actually consistently been pointed out by courts and state attorney generals as key elements in figuring out that a sweepstakes promotion was in truth a guise for illegal gaming.'

Among the casino industry's leading trade companies, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, in some cases, enact brand-new legislation on the concern.

'Consumers are being denied of securities and states are forgoing considerable tax and revenue chances as this sports betting replaces that conducted through controlled channels,' checked out a well-circulated AGA memo.

And then there are the complainants who have sued social gambling establishments in more than a lots states.
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Sweepstakes gambling establishment operators paid a combined $14.2 million in four different cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action claim, stating the settlement was made to avoid legal expenses and continued lawsuits.

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

In the current claim, which is mainly similar to its predecessors, New York state residents 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 gaming business. '
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Apple and Google have also been named as offenders in claims for hosting the sweepstakes websites. But unlike VGW, neither tech company responded to DailyMail.com's ask for comment.

'We normally don't discuss matters before the courts,' a VGW representative told DailyMail.com via 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 complete self-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 video games across most of The United States and Canada, as we have for more than a years, developing not only terrific video games, user experiences and entertainment, however also 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 common throughout the online social video games industry (and the US more broadly), and our basic practice is that we intend to intensely protect any claim which may be brought against us.'

The problems between traditional online sports betting and sweepstakes casinos could show bothersome for some star 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 standard gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking illegal sports betting 'sweeps' websites while at the exact same time the leagues wish to project a strong stance versus illegal gaming - particularly when attempting to tamp down the occasional sports betting scandal,' Glaser told DailyMail.com.

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

Along with VGW, Apple and Google are being demanded hosting allegedly unlawful sports betting 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 is a matter of when, not if,' Glaser included.

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

Asked if their star endorsers have an obligation to discuss to clients the distinctions and similarities in between iGaming and sweepstakes gambling establishments, VGW insisted there is 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 spokesperson said. 'A few of our values are" our gamers come initially" 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 differently.

'Celebrities who provide their names to shady illegal gaming websites are, at a minimum, putting their reputations at risk along with courting civil and class actions by consumers who allege harm,' Glaser said. 'There is likewise some risk that state regulators and state attorneys basic rope celeb endorsers into for assisting in prohibited gambling.'

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