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Sweepstakes Casino Controversy – And Celebrities’ All-important Role

The smiling faces of Paris Hilton and Ryan Seacrest made surprise looks before the Louisiana Senate for Friday’s hearing on prohibited sports betting.

No, they weren’t personally in attendance, but the world-famous celebrities were notably consisted of in a slide presentation on social and sweepstakes casinos – the controversial sites providing both totally free casino-style games and lucrative prizes, such as money, present cards or cryptocurrency. In one ad, 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 discovers itself besieged by lawsuits. In the eyes of numerous gaming corporations, not to discuss lawsuit plaintiffs and state regulators, sweepstakes gambling establishments act as conventional casinos, just without the oversight, consumer securities and tax laws. So not only can they avoid the steep 24-percent federal sports betting levy, however sweepstakes operators aren’t based on regulative obstacles 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 allegations of unlawful gaming in a New York claim that claims VGW utilizes star endorsers to ‘create a veneer of authenticity’ 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 running multibillion-dollar prohibited operations out of places like Malta, Isle of Man, or US mail drops,’ Friday’s presenter, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers include a variety of celebrities from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George – none of whom offer any differences in between traditional gaming and sweepstakes play.

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

Ryan Seacrest prompts fans to play at Chumba Casino, where lots of – but not all – video games are free

Drake has an offer with social sweeps gambling establishment, Stake, that he regularly touts on social networks

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

Others lure clients with guarantees of rewards. One such operator, Stake, ran a social networks advertisement flaunting Drake’s vehicles, aircrafts and estates before rotating to video of the rap artist playing online casino-style video games.

‘Daddy, why do we have a lot cash?’ read the first caption on the screen.

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

The inconsistency in between gambling sites and social or sweepstakes casinos is a bit complex, 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), explained its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA data, the majority of the players on social-sweepstakes casinos are playing for free.

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

Social casinos use consumers a possibility to play casino-style games with buddies. Players have the option to buy worthless currency frequently referred to as ‘gold coins,’ which can not be exchanged for genuine money, but can be used to unlock numerous features within the video games.

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

And therein lies the potential for financial losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York. One gamer told the Washington Post he lost more than $100,000 on sweepstakes casinos in the past 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 Global Poker event

Social sweeps gambling establishment Stake ran an ad displaying Drake’s cars, aircrafts and estates

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 seven states, which has actually helped to fuel the appeal of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, allow clients to submit mail-in demands for complimentary sweeps coins, supplied the gamers follow painfully specific instructions. What’s more, gamers are often rewarded with sweeps coins just for registering, thereby giving them a factor to try their hands at any number of casino video games for a chance to win – or lose – genuine money.

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

According to the stakeholders, their product is the free casino-style gaming, and the real-stakes competition is just a method 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 e-mail. ‘No purchase is needed to dip into social gambling establishments with sweepstakes prizes. Consumers never have to spend for a chance to win rewards. That lack of a purchase requirement – or” factor to consider” – is an important difference in between social sweeps and traditional online gambling websites like gambling establishments.’

Consider the way that McDonald’s utilizes its annual 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 chance to win rewarding rewards, such as a $1 million prize.

And without a purchase requirement, or ‘factor to consider’, the game itself doesn’t meet the meaning of gaming in the US.

‘Sweepstakes are a long-standing approach for promoting all sort of daily companies in the United States, whatever from burgers to magazine subscriptions to coffee and home enhancement shops,’ the SPGA spokesperson told DailyMail.com. ‘Sweepstakes promotions are frequently used by a who’s who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.’

But to numerous sports betting market experts, that argument doesn’t cut it.

For beginners, gaming attorney Daniel Wallach explains, McDonald’s Monopoly game doesn’t run indefinitely. Rather, it has a distinct start and end, therefore recommending the sweepstakes is not the fast-food giant’s primary product. 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 typically not tied to casino-style video games of chance,’ Wallach told DailyMail.com. ‘They’re simply cash free gifts.

‘The sweepstakes [gambling establishments] possess none of the attributes commonly related to McDonald’s-style sweepstakes promos,’ Wallach continued. ‘Besides running in all time, the sweepstakes gambling establishments provide” casino-like” payouts, usually 80 percent or more of profits, whereas the normal payout percentage for a short-lived promotional sweepstakes is a minor share of the earnings made by the company [usually less than one percent]’

Wallach is quick to compare the online social sweeps casinos to the internet coffee shops that emerged in Florida, offering clients the opportunity to play casino-style video games for real rewards. A number of those brick-and-mortar facilities have because been shuttered over accusations of prohibited sports betting.

DJ Khaled is amongst a number of celebrity spokespeople for VGW’s Global Poker brand

Now, Wallach argues, social sweeps gambling establishments must face comparable analysis.

‘These differences are not approximate,’ Wallach said of social sweeps casinos. ‘They have repeatedly been mentioned by courts and state attorney generals as key elements in figuring out that a sweepstakes promo was in fact a guise for prohibited gaming.’

Among the casino industry’s leading trade organizations, the American Gaming Association, is now pressing legislators to investigate sweepstakes operators and, in some cases, enact brand-new legislation on the problem.

‘Consumers are being deprived of securities and states are giving up substantial tax and profits opportunities as this gaming changes that conducted through controlled channels,’ read a well-circulated AGA memo.

And then there are the plaintiffs who have taken legal action against 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 current claim, which is mostly comparable to its predecessors, New York state residents 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 ‘unlawful gaming enterprise. ‘

Apple and Google have also been named as accuseds in claims for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com’s demand for comment.

‘We usually do not talk about matters before the courts,’ a VGW spokesperson told DailyMail.com through e-mail. ‘However, we note 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 use our free-to-play games across the majority of North America, as we have for more than a decade, creating not just excellent video games, user experiences and entertainment, however also guaranteeing this is done securely, responsibly and at the highest level of standards.

‘More broadly, we ‘d reiterate that class actions and other litigations and arbitrations are relatively common throughout the online social games industry (and the US more broadly), and our standard practice is that we mean to vigorously protect any claim which might be brought versus us.’

The issues between traditional online sports betting and sweepstakes gambling establishments might show bothersome for some celeb 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 conventional video gaming titans like FanDuel and DraftKings.

‘It’s ironic that expert athletes are hawking prohibited sports betting wagering ‘sweeps’ websites while at the same time the leagues desire to forecast a strong position versus unlawful gaming – particularly when trying to tamp down the occasional gambling scandal,’ Glaser told DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter received 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.

Along with VGW, Apple and Google are being sued for hosting allegedly prohibited sports betting websites

Regardless, Glaser sees sweepstakes gambling establishments as a major issue for 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 spokesman nor the players’ agents reacted to DailyMail.com’s requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise ignored to react to DailyMail.com emails.

Asked if their star endorsers have a duty to explain to customers the distinctions and similarities in between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that requires to be done.

‘We have full self-confidence in our influencer and ambassadorial collaborations, and our business practices more broadly,’ the spokesperson stated. ‘A few of our worths are” our gamers come initially” and” we do what’s right”, and we put our values at the core of everything we do.’

Glaser, an outspoken challenger of sweepstakes websites, sees things differently.

‘Celebrities who provide their names to shady unlawful sports betting websites are, at a minimum, putting their track records at risk along with courting civil and class actions by consumers who allege harm,’ Glaser stated. ‘There is also some danger that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for facilitating unlawful gaming.’

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