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 gaming.

No, they weren’t personally in presence, but the world-famous celebs were conspicuously included in a slide presentation on social and sweepstakes gambling establishments – the controversial sites providing both free casino-style games and profitable prizes, such as cash, 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 just 2 cogs in the multibillion-dollar industry that now discovers itself besieged by claims. In the eyes of lots of gaming corporations, not to point out claim plaintiffs and state regulators, sweepstakes casinos serve as traditional casinos, only without the oversight, consumer securities and tax laws. So not only can they prevent the high 24-percent federal gambling levy, but sweepstakes operators aren’t subject to regulative hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the company faces allegations of prohibited gaming in a New York lawsuit that claims VGW utilizes celebrity endorsers to ‘develop a veneer of legitimacy’ around its product. (See VGW’s statement below)

‘I’m unsure” if you do not trust us, you can rely on Paris Hilton” is a winning message for business operating multibillion-dollar illegal operations out of places like Malta, Isle of Man, or US mail drops,’ Friday’s speaker, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a variety of celebs from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George – none of whom use any distinctions in between standard gaming and sweepstakes play.

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

Ryan Seacrest advises fans to dip into Chumba Casino, where lots of – however not all – video games are free

Drake has a handle social sweeps casino, Stake, that he frequently touts on social media

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Instead, advertisements generally focus around the social aspect of the casinos, while leaving out the potential for real gambling losses.

Others lure clients with pledges of prizes. One such operator, Stake, ran a social networks ad showing off Drake’s cars and trucks, planes and mansions before pivoting to video footage of the rap artist playing online casino-style video games.

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

Another caption explained: I never ever quit.’

The disparity in between gambling sites and social or sweepstakes gambling establishments is a bit intricate, however operators of the latter insist they’re not included with the previous.

A representative for a market 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 data, most of the gamers on social-sweepstakes casinos are playing for totally free.

‘Most social sweeps customers never ever purchase,’ the SPGA representative told DailyMail.com. ‘The minority of clients who make purchases do so in quantities far smaller than the normal deposit or bet size at real-money online gambling sites.’

Social gambling establishments use customers a possibility to play casino-style video games with pals. Players have the alternative to buy valueless currency often referred to as ‘gold coins,’ which can not be exchanged genuine money, but can be utilized to unlock various functions within the video games.

But within the world of social casinos exists sweepstakes gaming, permitting clients to obtain other currency understood as ‘sweeps coins’ that can be exchanged for money 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 gamer told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the previous year after continuing to buy more coins in pursuit of money and other things of value.

The Philadelphia 76ers’ Paul George is seen promoting an International Poker event

Social sweeps gambling establishment Stake ran an ad flaunting Drake’s cars and trucks, airplanes and estates

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

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

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

Many websites, like the crypto-compatible Stake, allow consumers to send mail-in ask for complimentary sweeps coins, offered the gamers follow painfully particular directions. What’s more, gamers are typically rewarded with sweeps coins merely for signing up, therefore offering them a factor to try their hands at any number of casino games for an opportunity to win – or lose – genuine money.

So why are sweepstakes sites allowed to run in 48 states, while online gambling establishments are banned in all however 7?

According to the stakeholders, their item is the free casino-style gaming, and the real-stakes competitors is simply a means of promoting their support.

‘Social sweepstakes games are merely a kind of online entertainment,’ an SPGA spokesperson told DailyMail.com by e-mail. ‘No purchase is required to dip into social gambling establishments with sweepstakes rewards. Consumers never ever have to spend for a chance to win rewards. That lack of a purchase requirement – or” consideration” – is an essential distinction between social sweeps and standard online sports betting sites like casinos.’

Think of the manner in which McDonald’s utilizes its annual Monopoly video game to promote its food: Customers aren’t paying to gamble, but rather they’re purchasing hamburgers and french fries that provide them the opportunity to win financially rewarding prizes, such as a $1 million prize.

And without a purchase requirement, or ‘consideration’, the video game itself does not meet the definition of gambling in the US.

‘Sweepstakes are an enduring approach for promoting all type of everyday organizations in the United States, everything from hamburgers to magazine memberships to coffee and home improvement stores,’ the SPGA representative told DailyMail.com. ‘Sweepstakes promotions are routinely utilized by a who’s who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.’

But to numerous sports betting industry insiders, that argument doesn’t cut it.

For beginners, gaming attorney Daniel Wallach points out, McDonald’s Monopoly game doesn’t run indefinitely. Rather, it has a distinct start and end, therefore suggesting the sweepstakes is not the fast-food giant’s main item. Instead, the sweepstakes is being utilized to promote genuine products like french fries, shakes, and the Filet-O-Fish.

‘They don’t last forever and they’re normally not connected to casino-style games of chance,’ Wallach informed DailyMail.com. ‘They’re just cash giveaways.

‘The sweepstakes [gambling establishments] possess none of the qualities frequently associated with McDonald’s-design sweepstakes promotions,’ Wallach continued. ‘Besides running in all time, the sweepstakes casinos use” casino-like” payments, typically 80 percent or more of earnings, whereas the common payout percentage for a temporary promotional sweepstakes is a trivial share of the revenue earned by the business [typically less than one percent]’

Wallach fasts to compare the online social sweeps casinos to the internet coffee shops that emerged in Florida, using customers the possibility to play casino-style games for genuine rewards. A lot of those brick-and-mortar establishments have given that been shuttered over claims of illegal sports betting.

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

Now, Wallach argues, social sweeps gambling establishments ought to face comparable scrutiny.

‘These differences are not arbitrary,’ Wallach said of social sweeps gambling establishments. ‘They have repeatedly been mentioned by courts and state chief law officer as crucial aspects in figuring out that a sweepstakes promotion was in reality a guise for prohibited gaming.’

Among the gambling establishment market’s leading trade companies, the American Gaming Association, is now pressing legislators to investigate sweepstakes operators and, in many cases, enact brand-new legislation on the problem.

‘Consumers are being deprived of defenses and states are forgoing significant tax and revenue opportunities as this gambling changes that conducted through regulated channels,’ checked out a well-circulated AGA memo.

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

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

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

In the newest lawsuit, which is mainly comparable to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is explained in the filing as an ‘illegal sports betting enterprise. ‘

Apple and Google have also been called as offenders in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com’s ask for remark.

‘We typically do not discuss matters before the courts,’ a VGW spokesperson told DailyMail.com via e-mail. ‘However, we keep in mind that this claim has actually only simply been filed with the court and VGW has not been formally served.

‘We have complete self-confidence in our compliance with all laws and guidelines where we run, and stay confident about the future,’ the representative continued. ‘We continue to provide our free-to-play games throughout the majority of The United States and Canada, as we have for more than a years, developing not just excellent video games, user experiences and entertainment, but also guaranteeing this is done securely, properly and at the highest level of standards.

‘More broadly, we ‘d restate that class actions and other lawsuits and arbitrations are fairly common throughout the online social games industry (and the US more broadly), and our standard practice is that we plan to intensely defend any claim which may be brought versus us.’

The concerns between traditional online gaming and sweepstakes casinos might prove troublesome for some celebrity 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 gaming titans like FanDuel and DraftKings.

‘It’s ironic that expert 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 informed DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter received a life time ban from the NBA over accusations he conspired with gamblers. However, to be clear, Porter’s scandal is unassociated to anything including social or sweepstakes gambling establishments.

In addition to VGW, Apple and Google are being taken legal action against for hosting apparently illegal sports betting websites

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

‘I ‘d expect that a league crackdown on professional athletes endorsing sweepstakes sites is a matter of when, not if,’ Glaser added.

Neither an NBA representative nor the gamers’ representatives responded to DailyMail.com’s ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also disregarded to respond to DailyMail.com emails.

Asked if their celeb 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 needs to be done.

‘We have complete confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,’ the representative stated. ‘A few of our values are” our players precede” 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 in a different way.

‘Celebrities who lend their names to dubious illegal gaming websites are, at a minimum, putting their credibilities at risk along with courting civil and class actions by customers who declare damage,’ Glaser said. ‘There is likewise some danger that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for facilitating unlawful gaming.’

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