Sweepstakes Casino Controversy – And Celebrities’ All-important Role

The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday’s hearing on illegal gambling.

No, they weren’t personally in attendance, however the world-famous celebs were notably consisted of in a slide discussion on social and sweepstakes casinos – the questionable sites providing both totally free casino-style video games and rewarding prizes, such as cash, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can ‘bet totally free,’ while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are simply 2 cogs in the multibillion-dollar industry that now finds itself besieged by lawsuits. In the eyes of lots of video gaming corporations, not to point out suit plaintiffs and state regulators, sweepstakes casinos serve as conventional casinos, just without the oversight, consumer defenses and tax laws. So not just can they avoid the high 24-percent federal sports betting levy, however sweepstakes operators aren’t based on regulatory difficulties like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings last year alone. Now the company faces accusations of unlawful gambling in a New York suit that claims VGW utilizes celeb endorsers to ‘develop a veneer of legitimacy’ around its item. (See VGW’s declaration below)

‘I’m not exactly sure” if you do not trust us, you can rely on Paris Hilton” is a winning message for companies operating multibillion-dollar prohibited 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 range of stars from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George – none of whom provide any distinctions in between standard sports betting and sweepstakes play.

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

Ryan Seacrest urges fans to play at Chumba Casino, where numerous – however not all – 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 normally focus around the social element of the casinos, while leaving out the capacity for real gaming losses.

Others tempt consumers with promises of rewards. One such operator, Stake, ran a social networks ad showing off Drake’s cars and trucks, airplanes and mansions before pivoting to video footage of the rapper playing online casino-style games.

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

Another caption described: ‘Because I never ever quit.’

The inconsistency between gambling sites and social or sweepstakes gambling establishments is a bit complicated, but operators of the latter insist they’re not involved with the previous.

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

‘Most social sweeps customers never make a purchase,’ the SPGA representative told DailyMail.com. ‘The minority of clients who make purchases do so in amounts far smaller sized than the common deposit or wager size at real-money online gambling websites.’

Social gambling establishments offer clients an opportunity to play casino-style video games with friends. Players have the option to buy worthless currency typically described as ‘gold coins,’ which can not be exchanged genuine money, but can be utilized to open various features within the video games.

But within the world of social gambling establishments exists sweepstakes gaming, enabling consumers to obtain other currency called ‘sweeps coins’ that can be exchanged for cash or other rewards.

And therein lies the potential for monetary losses, like the ones claimed 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 previous year after continuing to purchase more coins in pursuit of money and other things of value.

The Philadelphia 76ers’ Paul George is seen promoting a Worldwide Poker occasion

Social sweeps gambling establishment Stake ran an advertisement displaying Drake’s cars and trucks, 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 banned in all but seven states, which has assisted to sustain the appeal of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, allow consumers to send mail-in requests for complimentary sweeps coins, supplied the gamers follow painfully specific instructions. What’s more, gamers are typically rewarded with sweeps coins merely for registering, thereby providing them a reason to try their hands at any variety of gambling establishment video games for an opportunity to win – or lose – real money.

So why are sweepstakes sites permitted to run in 48 states, while online gambling establishments are prohibited in all but 7?

According to the stakeholders, their product is the free casino-style video gaming, and the real-stakes competition is merely a means of promoting their support.

‘Social sweepstakes games are merely a kind of online home entertainment,’ an SPGA representative informed DailyMail.com by e-mail. ‘No purchase is required to play at social gambling establishments with sweepstakes rewards. Consumers never need to pay for a chance to win rewards. That absence of a purchase requirement – or” consideration” – is an important difference in between social sweeps and traditional online gambling sites like casinos.’

Think about the way that McDonald’s utilizes its annual Monopoly video game to promote its food: Customers aren’t paying to gamble, however rather they’re and fries that provide them the opportunity to win lucrative rewards, such as a $1 million jackpot.

And without a purchase requirement, or ‘consideration’, the game itself doesn’t meet the definition of gaming in the US.

‘Sweepstakes are an enduring approach for promoting all kinds of daily organizations in the United States, whatever from burgers to publication subscriptions to coffee and home enhancement stores,’ the SPGA spokesperson told DailyMail.com. ‘Sweepstakes promotions are routinely used by a who’s who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.’

But to numerous gambling industry experts, that argument doesn’t cut it.

For starters, gaming attorney Daniel Wallach points out, McDonald’s Monopoly video game does not run indefinitely. Rather, it has a distinct beginning and end, therefore suggesting the sweepstakes is not the fast-food giant’s primary item. Instead, the sweepstakes is being used to promote real items like french fries, shakes, and the Filet-O-Fish.

‘They don’t last forever and they’re typically not tied to casino-style games of opportunity,’ Wallach told DailyMail.com. ‘They’re just cash free gifts.

‘The sweepstakes [gambling establishments] possess none of the attributes frequently associated with McDonald’s-style sweepstakes promotions,’ Wallach continued. ‘Besides running in perpetuity, the sweepstakes gambling establishments provide” casino-like” payments, generally 80 percent or more of revenues, whereas the common payment percentage for a temporary advertising sweepstakes is an insignificant share of the profits earned by the business [generally less than one percent]’

Wallach is quick to compare the online social sweeps gambling establishments to the web cafes that sprang up in Florida, offering clients the opportunity to play casino-style games for real prizes. Much of those brick-and-mortar establishments have given that been shuttered over claims of prohibited sports betting.

DJ Khaled is amongst several celebrity spokespeople for VGW’s Global Poker brand name

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

‘These distinctions are not arbitrary,’ Wallach stated of social sweeps casinos. ‘They have actually repeatedly been cited by courts and state chief law officer as essential elements in identifying that a sweepstakes promo was in truth a guise for unlawful sports betting.’

One of the casino market’s leading trade companies, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, in some cases, enact new legislation on the problem.

‘Consumers are being deprived of protections and states are giving up considerable tax and earnings chances as this gaming replaces that performed through managed channels,’ read a well-circulated AGA memo.

And after that there are the plaintiffs who have actually sued social casinos in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in four separate cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action suit, saying the settlement was made to avoid legal costs and continued litigation.

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

In the most recent suit, which is largely similar to its predecessors, New York state locals Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is explained in the filing as an ‘illegal gaming business. ‘

Apple and Google have actually likewise been called as offenders in claims for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com’s request for remark.

‘We usually do not discuss matters before the courts,’ a VGW spokesperson told DailyMail.com by means of e-mail. ‘However, we keep in mind that this claim has actually only simply been submitted with the court and VGW has actually not been officially served.

‘We have complete self-confidence in our compliance with all laws and guidelines where we operate, and stay confident about the future,’ the spokesperson continued. ‘We continue to use our free-to-play video games throughout the majority of The United States and Canada, as we have for more than a years, producing not only terrific games, user experiences and home entertainment, but likewise ensuring this is done securely, responsibly and at the greatest level of standards.

‘More broadly, we ‘d repeat that class actions and other lawsuits and arbitrations are fairly common across the online social games industry (and the US more broadly), and our basic practice is that we mean to strongly protect any claim which might be brought against us.’

The concerns in between standard online sports betting and sweepstakes gambling establishments could prove troublesome 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 video gaming titans like FanDuel and DraftKings.

‘It’s ironic that professional athletes are hawking unlawful sports betting wagering ‘sweeps’ sites while at the exact same time the leagues wish to forecast a strong stance versus unlawful sports betting – particularly when trying to tamp down the periodic gaming scandal,’ Glaser told DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter received a life time restriction from the NBA over allegations he conspired with bettors. However, to be clear, Porter’s scandal is unassociated to anything including social or sweepstakes casinos.

In addition to VGW, Apple and Google are being sued for hosting presumably unlawful sports betting sites

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

‘I ‘d anticipate that a league crackdown on professional athletes backing sweepstakes sites refers when, not if,’ Glaser added.

Neither an NBA representative nor the players’ representatives reacted to DailyMail.com’s demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also ignored to react to DailyMail.com emails.

Asked if their celebrity endorsers have a responsibility to explain 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 full confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,’ the representative said. ‘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 challenger of sweepstakes websites, sees things in a different way.

‘Celebrities who provide their names to dubious prohibited gambling websites are, at a minimum, putting their track records at risk along with courting civil and class actions by consumers who allege damage,’ Glaser said. ‘There is likewise some danger that state regulators and state chief law officers rope celebrity endorsers into enforcement efforts for assisting in illegal gambling.’

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