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 unlawful sports betting.

No, they weren't personally in presence, however the world-famous celebs were conspicuously included in a slide presentation on social and sweepstakes gambling establishments - the questionable websites providing both free casino-style games and financially rewarding prizes, such as cash, present 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 just two cogs in the multibillion-dollar industry that now discovers itself besieged by claims. In the eyes of many video gaming corporations, not to discuss suit complainants and state regulators, sweepstakes casinos serve as conventional gambling establishments, only without the oversight, consumer defenses and tax laws. So not only can they prevent the high 24-percent federal sports betting levy, however 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 income in 2015 alone. Now the business faces accusations of prohibited gaming in a New York claim that declares VGW utilizes star endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's declaration listed below)
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'I'm not sure" if you don't trust us, you can trust 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 consist of a range 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 use any distinctions in between standard 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 - video games are free

Drake has a handle social sweeps casino, Stake, that he regularly touts on social media

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Instead, advertisements generally center around the social aspect of the gambling establishments, while omitting the potential for actual gaming losses.

Others lure consumers with promises of rewards. One such operator, Stake, ran a social media advertisement revealing off Drake's automobiles, airplanes and estates before rotating to footage of the rapper playing online casino-style video games.

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

Another caption discussed: 'Because I never quit.'

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

A spokesperson for a market trade group, the Social and Promotional Gaming Association (SPGA), discussed 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 gambling establishments are sports betting totally free.

'Most social sweeps clients never ever buy,' the SPGA representative informed 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 sports betting sites.'

Social gambling establishments provide customers a possibility to play casino-style video games with pals. Players have the choice to buy valueless currency typically referred to as 'gold coins,' which can not be exchanged for genuine cash, however can be utilized to unlock various features within the games.

But within the world of social casinos exists sweepstakes gaming, permitting consumers to obtain other currency called 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the capacity for financial losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York. One gamer told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the past 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 casino Stake ran an advertisement displaying Drake's vehicles, planes and mansions
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Karl-Anthony Towns of the New York Knicks is another NBA star plugging VGW's Global Poker

Traditional online casinos are banned in all however 7 states, which has assisted to sustain the popularity of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, allow consumers to submit mail-in ask for totally free sweeps coins, supplied the gamers follow painfully particular instructions. What's more, players are often rewarded with sweeps coins simply for registering, consequently providing a reason to try their hands at any number of gambling establishment games for a chance to win - or lose - real cash.

So why are sweepstakes websites permitted to run in 48 states, while online casinos are banned in all but 7?

According to the stakeholders, their item is the totally free casino-style video gaming, and the real-stakes competitors is simply a means of promoting their bread and butter.

'Social sweepstakes video games are simply a kind of online home entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is required to dip into social gambling establishments with sweepstakes rewards. Consumers never need to spend for a chance to win rewards. That lack of a purchase requirement - or" factor to consider" - is an important distinction in between social sweeps and conventional online gaming sites like gambling establishments.'

Think of the method that McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and french fries that use them the opportunity to win financially rewarding rewards, such as a $1 million jackpot.

And without a purchase requirement, or 'factor to consider', the game itself does not satisfy the definition of gaming in the US.

'Sweepstakes are an enduring technique for promoting all sort of everyday organizations in the United States, whatever from burgers to publication memberships to coffee and home improvement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are frequently used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling industry insiders, that argument doesn't cut it.

For starters, gaming attorney Daniel Wallach mentions, McDonald's Monopoly game does not run forever. Rather, it has a distinct start and end, thus recommending the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being utilized to promote real items like fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're usually not tied to casino-style games of possibility,' Wallach told DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [gambling establishments] possess none of the characteristics frequently connected with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos offer" casino-like" payouts, normally 80 percent or more of incomes, whereas the typical payment percentage for a short-lived marketing sweepstakes is an unimportant share of the earnings earned by the company [usually less than one percent]'

Wallach is quick to compare the online social sweeps casinos to the web cafes that sprang up in Florida, providing consumers the opportunity to play casino-style video games for real prizes. Many of those brick-and-mortar establishments have actually considering that been shuttered over claims of unlawful gambling.

DJ Khaled is among numerous celebrity spokespeople for VGW's Global Poker brand

Now, Wallach argues, social sweeps casinos should face comparable examination.

'These distinctions are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have consistently been pointed out by courts and state attorney general of the United States as key factors in figuring out that a sweepstakes promo was in truth a guise for unlawful sports betting.'

Among the gambling establishment industry's leading trade companies, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, in many cases, enact new legislation on the issue.

'Consumers are being deprived of protections and states are passing up considerable tax and profits opportunities as this gaming changes that carried out through managed channels,' read a well-circulated AGA memo.

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

Sweepstakes gambling establishment 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 lawsuit, saying the settlement was made to prevent legal expenses and continued litigation.

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

In the current claim, which is mostly comparable to its predecessors, New york city 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 'illegal sports betting . '

Apple and Google have actually also been named as offenders in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com's demand for comment.

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

'We have complete self-confidence in our compliance with all laws and policies where we run, and remain positive about the future,' the representative continued. 'We continue to offer our free-to-play games across many of North America, as we have for more than a years, developing not only fantastic video games, user experiences and home entertainment, but likewise guaranteeing this is done securely, responsibly and at the greatest level of requirements.

'More broadly, we 'd restate that class actions and other litigations and arbitrations are fairly typical throughout the online social games industry (and the US more broadly), and our basic practice is that we mean to vigorously protect any claim which might be brought against us.'

The issues between standard online sports betting and sweepstakes casinos might prove problematic for some star 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 paradoxical that expert athletes are hawking prohibited sports betting 'sweeps' sites while at the same time the leagues wish to project a strong position versus illegal gambling - especially when trying to tamp down the occasional sports betting scandal,' Glaser told DailyMail.com.

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

Together with VGW, Apple and Google are being demanded hosting allegedly unlawful gambling websites

Regardless, Glaser sees sweepstakes gambling establishments as a significant problem for leagues such as the NBA.

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

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

Asked if their star endorsers have a duty to describe to consumers the distinctions and similarities 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 partnerships, and our business practices more broadly,' the representative said. 'Some of our worths are" our gamers come initially" 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.

'Celebrities who lend their names to shady illegal gambling websites are, at a minimum, putting their reputations at threat in addition to courting civil and class actions by customers who declare harm,' Glaser stated. 'There is likewise some danger that state regulators and state chief law officers rope celebrity endorsers into enforcement efforts for assisting in unlawful gaming.'

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