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 illegal gambling.

No, they weren't personally in participation, but the world-famous celebrities were conspicuously included in a slide presentation on social and sweepstakes gambling establishments - the controversial websites offering both totally free casino-style games and lucrative rewards, such as money, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are just 2 cogs in the multibillion-dollar market that now finds itself besieged by claims. In the eyes of numerous video gaming corporations, not to mention claim plaintiffs and state regulators, sweepstakes casinos serve as standard gambling establishments, only without the oversight, customer defenses and tax laws. So not just can they avoid the steep 24-percent federal gaming levy, however sweepstakes operators aren't based on regulatory hurdles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the business faces accusations of illegal gambling in a New york city claim that claims VGW utilizes celebrity endorsers to 'create a veneer of authenticity' around its item. (See VGW's statement below)

'I'm unsure" if you don't trust us, you can trust Paris Hilton" is a winning message for business operating multibillion-dollar unlawful operations out of places like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of video gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a variety of stars from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom provide any differences between standard gambling and sweepstakes play.

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

Ryan Seacrest prompts fans to play at Chumba Casino, where numerous - however not all - games are free

Drake has an offer with social sweeps gambling establishment, Stake, that he frequently promotes on social networks

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Instead, ads usually center around the social aspect of the gambling establishments, while leaving out the potential for actual gaming losses.

Others tempt consumers with pledges of prizes. One such operator, Stake, ran a social media ad flaunting Drake's automobiles, airplanes and estates before rotating to video of the rapper playing online casino-style games.

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

Another caption described: 'Because I never quit.'

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

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA information, most of the gamers on social-sweepstakes casinos are playing for totally free.

'Most social sweeps customers never buy,' the SPGA spokesperson told DailyMail.com. 'The minority of customers who make purchases do so in quantities far smaller sized than the typical deposit or wager size at real-money online gaming websites.'

Social gambling establishments use customers an opportunity to play casino-style games with friends. Players have the alternative to buy valueless currency frequently described as 'gold coins,' which can not be exchanged genuine money, however can be utilized to unlock numerous features within the video games.

But within the world of social gambling establishments exists sweepstakes gaming, permitting clients to acquire other currency known as 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the capacity for monetary losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York. One player told 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 money and other things of worth.

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

Social sweeps gambling establishment Stake ran an ad revealing off Drake's automobiles, airplanes and estates

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

Traditional online casinos are prohibited in all however seven states, which has helped to sustain the popularity of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes sites, which do not need generally require identification. However, websites like Chumba will request IDs from gamers attempting to withdraw any funds.

Many sites, like the crypto-compatible Stake, enable clients to submit mail-in ask for totally free sweeps coins, supplied the players follow painfully particular guidelines. What's more, gamers are typically rewarded with sweeps coins just for signing up, consequently providing a reason to attempt their hands at any number of casino video games for an opportunity to win - or lose - real money.

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

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

'Social sweepstakes games are simply a form of online home entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is required to play at social casinos with sweepstakes prizes. Consumers never need to pay for a chance to win rewards. That absence of a purchase requirement - or" factor to consider" - is a vital difference in between social sweeps and conventional online sports betting sites like gambling establishments.'

Consider the method that McDonald's utilizes its annual Monopoly game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and fries that provide them the opportunity to win profitable prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the video game itself does not fulfill the definition of gaming in the US.

'Sweepstakes are an enduring method for promoting all type of daily businesses in the United States, everything from burgers to publication memberships to coffee and home enhancement stores,' the SPGA representative 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 many sports betting industry insiders, that argument does not cut it.

For starters, gaming attorney Daniel Wallach mentions, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a well-defined beginning and end, therefore suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote genuine products like french fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [gambling establishments] have none of the attributes frequently related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments offer" casino-like" payments, generally 80 percent or more of earnings, whereas the common payout portion for a short-term promotional sweepstakes is a trivial share of the revenue earned by the business [typically less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the internet coffee shops that emerged in Florida, using consumers the opportunity to play casino-style games for genuine rewards. Many of those brick-and-mortar establishments have given that been shuttered over accusations of prohibited gambling.

DJ Khaled is amongst a number of star spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps gambling establishments need to deal with comparable examination.

'These differences are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have repeatedly been pointed out by courts and state attorney generals as crucial elements in figuring out that a sweepstakes promotion was in fact a guise for illegal sports betting.'

Among the casino market's leading trade organizations, the American Gaming Association, is now pushing legislators to examine sweepstakes operators and, in many cases, enact new legislation on the issue.

'Consumers are being denied of defenses and states are giving up substantial tax and profits chances as this gaming replaces that performed through controlled channels,' read a well-circulated AGA memo.
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And then there are the plaintiffs who have taken legal action against social gambling establishments in more than a lots states.
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Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action claim, 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 newest lawsuit, which is largely comparable to its predecessors, New york city state homeowners 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 'prohibited gambling business. '

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

'We generally don't discuss matters before the courts,' a VGW spokesperson told DailyMail.com by means of email. 'However, we keep in mind that this claim has only just been filed with the court and VGW has not been officially served.

'We have complete confidence in our compliance with all laws and guidelines where we operate, and stay positive about the future,' the spokesperson continued. 'We continue to provide our free-to-play video games across many of North America, as we have for more than a decade, developing not just terrific games, user experiences and home entertainment, however also ensuring this is done securely, responsibly and at the highest level of standards.

'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are fairly typical across the online social video games industry (and the US more broadly), and our basic practice is that we intend to vigorously safeguard any claim which may be brought against us.'

The issues in between conventional online gambling and sweepstakes gambling establishments could prove problematic 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 unlawful sports betting wagering 'sweeps' sites while at the very same time the leagues wish to forecast a strong stance against - especially 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 got a life time restriction from the NBA over claims he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes gambling establishments.

In addition to VGW, Apple and Google are being sued for hosting allegedly illegal gambling websites

Regardless, Glaser sees sweepstakes gambling establishments as a major concern for leagues such as the NBA.

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

Neither an NBA spokesperson nor the gamers' agents responded to DailyMail.com's requests for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also ignored to react to DailyMail.com e-mails.

Asked if their celebrity endorsers have a duty to explain to clients the distinctions 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 collaborations, and our organization practices more broadly,' the spokesperson stated. 'Some of our values are" our players precede" and" we do what's right", and we put our worths at the core of everything we do.'

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

'Celebrities who lend their names to shady unlawful gaming websites are, at a minimum, putting their track records at threat along with courting civil and class actions by consumers who allege damage,' Glaser stated. 'There is also some risk that state regulators and state chief law officers rope celeb endorsers into enforcement efforts for facilitating prohibited gaming.'

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