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 prohibited gambling.
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No, they weren't personally in presence, but the world-famous stars were conspicuously included in a slide discussion on social and sweepstakes casinos - the questionable websites providing both free casino-style games and profitable rewards, such as cash, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The websites are simply 2 cogs in the multibillion-dollar market that now discovers itself besieged by suits. In the eyes of many video gaming corporations, not to discuss claim complainants and state regulators, sweepstakes casinos act as conventional gambling establishments, just without the oversight, consumer protections and tax laws. So not only can they avoid the steep 24-percent federal sports betting levy, however sweepstakes operators aren't subject to regulative 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 company faces allegations of unlawful gambling in a New York suit that claims VGW utilizes star endorsers to 'create a veneer of legitimacy' around its product. (See VGW's statement below)

'I'm unsure" if you don't trust us, you can rely on Paris Hilton" is a winning message for companies running multibillion-dollar unlawful 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 include a series of celebrities from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom use any differences in between traditional gaming and sweepstakes play.

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

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

Drake has a handle social sweeps gambling establishment, Stake, that he routinely touts on social media

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Instead, advertisements generally center around the social element of the gambling establishments, while leaving out the capacity for real sports betting losses.
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Others tempt consumers with pledges of rewards. One such operator, Stake, ran a social networks advertisement displaying Drake's cars and trucks, planes and mansions before rotating to footage of the rapper playing online casino-style games.

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

Another caption described: 'Because I never quit.'

The inconsistency in between gambling websites and social or sweepstakes casinos is a bit complex, but operators of the latter insist they're not involved with the previous.

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

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

Social casinos provide clients an opportunity to play casino-style games with good friends. Players have the option to purchase worthless currency frequently described as 'gold coins,' which can not be exchanged for genuine cash, however can be used to unlock different functions within the games.

But within the world of social casinos exists sweepstakes gaming, enabling clients to acquire other currency understood as 'sweeps coins' that can be exchanged for cash or other prizes.

And therein lies the potential for financial losses, like the ones claimed 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 casinos in the past year after continuing to buy more coins in pursuit of cash and other things of worth.

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

Social sweeps gambling establishment Stake ran an advertisement displaying Drake's automobiles, airplanes 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 but 7 states, which has assisted 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 IDs from players trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, permit customers to submit mail-in ask for complimentary sweeps coins, offered the players follow painfully particular instructions. What's more, players are frequently rewarded with sweeps coins simply for registering, thereby providing a reason to attempt their hands at any number of casino video games for a possibility to win - or lose - genuine money.

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

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

'Social sweepstakes video games are simply a form of online home entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is needed to play at social casinos with sweepstakes prizes. Consumers never need to spend for an opportunity to win rewards. That absence of a purchase requirement - or" factor to consider" - is a vital difference in between social sweeps and traditional online sports betting sites like casinos.'

Think of the manner in which McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and fries that provide them the opportunity to win profitable rewards, such as a $1 million jackpot.

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

'Sweepstakes are an enduring approach for promoting all sort of daily companies in the United States, everything from hamburgers to magazine memberships to coffee and home enhancement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are frequently used 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 doesn't cut it.
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For beginners, video gaming lawyer Daniel Wallach mentions, McDonald's Monopoly video game does not run indefinitely. Rather, it has a distinct start and end, thus 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 don't last forever and they're typically not connected to casino-style video games of opportunity,' Wallach informed DailyMail.com. 'They're simply cash giveaways.

'The sweepstakes [casinos] possess none of the characteristics frequently related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments use" casino-like" payouts, normally 80 percent or more of incomes, whereas the common payment percentage for a temporary promotional sweepstakes is an unimportant share of the revenue earned by the company [typically less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the internet coffee shops that emerged in Florida, offering clients the possibility to play casino-style games for genuine rewards. A number of those brick-and-mortar establishments have considering that been shuttered over accusations of illegal sports betting.

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

Now, Wallach argues, social sweeps casinos must face similar analysis.

'These differences are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have consistently been mentioned by courts and state attorney general of the United States as key aspects in determining that a sweepstakes promotion remained in reality a guise for illegal gaming.'

One of the gambling establishment market's leading trade companies, the American Gaming Association, is now pressing legislators to examine sweepstakes operators and, in some cases, enact brand-new legislation on the concern.

'Consumers are being denied of securities and states are passing up considerable tax and profits chances as this gaming changes that performed through controlled channels,' checked out a well-circulated AGA memo.

And after that there are the complainants who have actually sued social gambling establishments in more than a dozen states.

Sweepstakes casino operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action claim, saying the settlement was made to avoid legal expenses and continued litigation.

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

In the current lawsuit, which is largely comparable to its predecessors, New york city state homeowners 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. '

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

'We typically do not comment on matters before the courts,' a VGW spokesperson informed DailyMail.com by means of email. 'However, we note that this claim has actually only simply been filed with the court and VGW has not been officially served.

'We have full self-confidence in our compliance with all laws and regulations where we operate, and stay positive about the future,' the spokesperson continued. 'We continue to offer our free-to-play video games throughout the majority of The United States and Canada, as we have for more than a decade, producing not just great video games, user experiences and home entertainment, but likewise guaranteeing this is done securely, responsibly and at the highest level of requirements.

'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are relatively common throughout the online social games industry (and the US more broadly), and our standard practice is that we intend to strongly protect any claim which may be brought versus us.'

The issues between standard online gaming and sweepstakes casinos could prove bothersome for some celeb 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 video gaming titans like FanDuel and DraftKings.

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

It was simply eight months ago that Toronto Raptors forward Jontay Porter a life time restriction 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 sued for hosting apparently prohibited gambling sites

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

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

Neither an NBA spokesman nor the gamers' agents responded to DailyMail.com's demands for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to react to DailyMail.com emails.

Asked if their star endorsers have a responsibility to discuss to customers the differences and resemblances in 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 collaborations, and our service practices more broadly,' the representative stated. 'A few of our values are" our players come first" and" we do what's right", and we put our values at the core of everything we do.'

Glaser, an outspoken opponent of sweepstakes sites, sees things differently.
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'Celebrities who provide their names to shady unlawful gaming sites are, at a minimum, putting their credibilities at risk as well as courting civil and class actions by consumers who allege damage,' Glaser stated. 'There is likewise some risk that state regulators and state chief law officers rope celebrity endorsers into enforcement efforts for facilitating unlawful gambling.'

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