1 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 participation, however the world-famous celebrities were conspicuously consisted of in a slide presentation on social and sweepstakes gambling establishments - the controversial websites offering both complimentary casino-style games and rewarding rewards, such as money, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are simply two cogs in the multibillion-dollar industry that now discovers itself besieged by lawsuits. In the eyes of lots of video gaming corporations, not to mention suit plaintiffs and state regulators, sweepstakes gambling establishments serve as standard casinos, just without the oversight, consumer defenses and tax laws. So not just can they avoid the steep 24-percent federal sports betting levy, but sweepstakes operators aren't subject to regulative difficulties like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the business deals with accusations of unlawful sports betting in a New york city claim that claims VGW uses celebrity endorsers to 'develop a veneer of legitimacy' around its product. (See VGW's declaration below)

'I'm uncertain" if you do not trust us, you can trust Paris Hilton" is a winning message for business running multibillion-dollar illegal operations out of places like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.
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Sweepstakes endorsers include a variety of celebrities from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom use any differences in between traditional sports betting and sweepstakes play.

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

Ryan Seacrest urges fans to play at Chumba Casino, where lots of - but not all - video games are totally free

Drake has an offer with social sweeps gambling establishment, Stake, that he frequently touts on social media

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

Others lure consumers with guarantees of prizes. One such operator, Stake, ran a social networks advertisement displaying Drake's cars, planes and mansions before rotating to video of the rapper playing online casino-style video games.

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

Another caption discussed: 'Because I never ever offered up.'

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 an industry 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, many of the gamers on social-sweepstakes gambling establishments are playing for complimentary.

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

Social gambling establishments offer consumers a chance to play casino-style games with good friends. Players have the choice to purchase worthless currency typically referred to as 'gold coins,' which can not be exchanged genuine cash, however can be utilized to unlock different features within the video games.

But within the world of social sweepstakes video gaming, permitting customers to get other currency called 'sweeps coins' that can be exchanged for cash or other prizes.

And therein lies the potential for financial losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York City. One player told 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 cash and other things of value.

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

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake's automobiles, airplanes 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 prohibited in all but 7 states, which has actually assisted to fuel the appeal of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, enable customers to submit mail-in demands for free sweeps coins, offered the gamers follow painfully particular instructions. What's more, players are typically rewarded with sweeps coins just for registering, thereby providing them a factor to attempt their hands at any number of gambling establishment games for an opportunity to win - or lose - genuine money.

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

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

'Social sweepstakes games are simply a form of online entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is required to play at social casinos 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 a vital distinction in between social sweeps and conventional online gaming sites like casinos.'

Think about the way that McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and french 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 does not satisfy the definition of sports betting in the US.

'Sweepstakes are a long-standing method for promoting all kinds of everyday businesses in the United States, whatever from hamburgers to publication subscriptions to coffee and home improvement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are routinely utilized by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

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

'They do not last permanently and they're generally not connected to casino-style video games of opportunity,' Wallach informed DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [gambling establishments] have none of the characteristics frequently connected with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos offer" casino-like" payouts, normally 80 percent or more of earnings, whereas the normal payment portion for a temporary promotional sweepstakes is a trivial share of the profits earned by the business [typically less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the internet cafes that emerged in Florida, using clients the opportunity to play casino-style video games for real prizes. A number of those brick-and-mortar establishments have actually considering that been shuttered over accusations of unlawful sports betting.

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

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

'These distinctions are not approximate,' Wallach stated of social sweeps casinos. 'They have repeatedly been mentioned by courts and state chief law officer as key consider determining that a sweepstakes promo remained in reality a guise for prohibited gaming.'

One of the casino industry's leading trade organizations, the American Gaming Association, is now pushing legislators to examine sweepstakes operators and, in many cases, enact brand-new legislation on the concern.

'Consumers are being denied of protections and states are passing up substantial tax and profits chances as this gaming replaces that carried out through managed channels,' read 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 gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action lawsuit, saying the settlement was made to avoid legal costs and continued litigation.

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

In the current lawsuit, which is mostly similar to its predecessors, New york city state citizens 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 gaming business. '

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

'We generally do not comment on matters before the courts,' a VGW spokesperson told DailyMail.com through email. 'However, we note that this claim has actually only just been filed with the court and VGW has not been formally served.

'We have full self-confidence in our compliance with all laws and guidelines where we run, and remain confident about the future,' the representative continued. 'We continue to provide our free-to-play games across the majority of North America, as we have for more than a decade, creating not just great video games, user experiences and home entertainment, but 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 fairly common throughout the online social video games market (and the US more broadly), and our standard practice is that we intend to strongly safeguard any claim which might be brought versus us.'

The problems between conventional online gaming and sweepstakes casinos could prove troublesome for some celeb 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 ironic that professional athletes are hawking illegal sports betting wagering 'sweeps' sites while at the very same time the leagues wish to project a strong position versus illegal sports betting - particularly when attempting to tamp down the periodic sports betting scandal,' Glaser informed DailyMail.com.

It was simply eight months ago that Toronto Raptors forward Jontay Porter received a lifetime 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.

Together with VGW, Apple and Google are being taken legal action against for hosting supposedly prohibited gambling sites

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

'I 'd expect that a league crackdown on athletes endorsing sweepstakes websites is a matter of when, not if,' Glaser included.

Neither an NBA spokesperson nor the gamers' agents reacted to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise overlooked to react to DailyMail.com emails.

Asked if their star endorsers have a duty to describe 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 self-confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the representative stated. 'A few of our worths are" our players precede" 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 credibilities at risk in addition to courting civil and class actions by consumers who declare harm,' Glaser said. 'There is also some danger that state regulators and state chief law officers rope celebrity endorsers into enforcement efforts for helping with prohibited gaming.'

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