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 gaming.

No, they weren’t personally in attendance, but the world-famous stars were conspicuously included in a slide presentation on social and sweepstakes casinos – the questionable sites offering both totally free casino-style video games and rewarding rewards, such as cash, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can ‘play for totally free,’ while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are just two cogs in the multibillion-dollar industry that now discovers itself besieged by suits. In the eyes of numerous video gaming corporations, not to discuss claim plaintiffs and state regulators, sweepstakes casinos act as conventional casinos, only without the oversight, customer protections and tax laws. So not just can they prevent the steep 24-percent federal gambling levy, however 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 income in 2015 alone. Now the business deals with allegations of prohibited sports betting in a New York suit that claims VGW utilizes star endorsers to ‘develop a veneer of authenticity’ around its item. (See VGW’s statement listed below)

‘I’m uncertain » if you don’t trust us, you can rely on Paris Hilton » is a winning message for companies operating multibillion-dollar prohibited operations out of locations like Malta, Isle of Man, or US mail drops,‘ Friday’s speaker, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers include 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 offer any differences in between traditional gambling and sweepstakes play.

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

Ryan Seacrest urges fans to play at Chumba Casino, where lots of – but not all – games are complimentary

Drake has a handle social sweeps casino, Stake, that he regularly promotes on social networks

Find out more

Donald Trump ‘set to name NBA group owner as US ambassador to Italy’

Instead, ads usually center around the social aspect of the casinos, while leaving out the capacity for real gaming losses.

Others lure customers with pledges of prizes. One such operator, Stake, ran a social media ad flaunting Drake’s vehicles, aircrafts and estates before pivoting to video of the rap artist playing online casino-style games.

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

Another caption explained: ‘Because I never ever provided up.’

The inconsistency in between gaming websites and social or sweepstakes gambling establishments is a bit complicated, 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), described 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 free.

‘Most social sweeps consumers never buy,’ the SPGA representative informed DailyMail.com. ‘The minority of customers who make purchases do so in quantities far smaller sized than the common deposit or bet size at real-money online gaming sites.’

Social gambling establishments offer clients a chance to play casino-style video games with pals. Players have the option to buy valueless currency frequently described as ‘gold coins,’ which can not be exchanged for genuine cash, however can be used to unlock numerous features within the games.

But within the world of social gambling establishments exists sweepstakes video gaming, enabling customers to obtain other currency known as ‘sweeps coins’ that can be exchanged for money or other prizes.

And therein lies the potential for monetary losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York City. One gamer informed the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the past 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 Global Poker occasion

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake’s automobiles, planes and estates

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

Traditional online casinos are banned in all however 7 states, which has helped to fuel the appeal of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes sites, which do not require usually need . However, sites like Chumba will request for IDs from players trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, allow clients to submit mail-in demands for totally free sweeps coins, provided the gamers follow painfully particular instructions. What’s more, players are often rewarded with sweeps coins just for signing up, consequently providing a factor to attempt their hands at any variety of casino video games for an opportunity to win – or lose – genuine money.

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

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

‘Social sweepstakes games are merely a form 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 pay for an opportunity to win rewards. That absence of a purchase requirement – or » factor to consider » – is an essential difference in between social sweeps and conventional online gambling websites like gambling establishments.’

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

And without a purchase requirement, or ‘consideration’, the video game itself doesn’t meet the meaning of sports betting in the US.

‘Sweepstakes are a long-standing technique for promoting all kinds of everyday companies in the United States, everything from hamburgers to magazine memberships to coffee and home improvement shops,’ the SPGA representative informed DailyMail.com. ‘Sweepstakes promotions are frequently utilized by a who’s who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.’

But to many gambling market insiders, that argument does not cut it.

For starters, gaming attorney Daniel Wallach points out, McDonald’s Monopoly game doesn’t run forever. Rather, it has a well-defined beginning and end, thereby suggesting the sweepstakes is not the fast-food giant’s main item. Instead, the sweepstakes is being utilized to promote genuine items like fries, shakes, and the Filet-O-Fish.

‘They don’t last permanently and they’re normally not connected to casino-style games of chance,’ Wallach informed DailyMail.com. ‘They’re just money free gifts.

‘The sweepstakes [casinos] possess none of the qualities commonly connected with McDonald’s-style sweepstakes promos,’ Wallach continued. ‘Besides running in perpetuity, the sweepstakes casinos use » casino-like » payouts, usually 80 percent or more of revenues, whereas the normal payout portion for a short-term advertising sweepstakes is an unimportant share of the profits earned by the company [typically less than one percent]’

Wallach is quick to compare the online social sweeps casinos to the web coffee shops that emerged in Florida, providing clients the opportunity to play casino-style video games for real rewards. Much of those brick-and-mortar establishments have considering that been shuttered over allegations of illegal gaming.

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

Now, Wallach argues, social sweeps casinos should deal with similar scrutiny.

‘These differences are not approximate,’ Wallach said of social sweeps gambling establishments. ‘They have consistently been pointed out by courts and state attorney generals as crucial elements in identifying that a sweepstakes promo remained in truth a guise for illegal sports betting.’

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

‘Consumers are being denied of securities and states are giving up substantial tax and revenue opportunities as this gaming replaces that conducted through regulated channels,’ read a well-circulated AGA memo.

And then there are the complainants who have actually taken legal action against social casinos in more than a lots states.

Sweepstakes casino operators paid a combined $14.2 million in four different cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action lawsuit, stating the settlement was made to prevent legal costs and continued lawsuits.

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

In the current suit, which is largely similar 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 business. ‘

Apple and Google have likewise been named as accuseds in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com’s request for comment.

‘We typically don’t comment on matters before the courts,’ a VGW representative told DailyMail.com by means of email. ‘However, we keep in mind that this claim has only simply been submitted with the court and VGW has actually not been officially served.

‘We have full confidence in our compliance with all laws and regulations where we operate, and remain positive about the future,’ the representative continued. ‘We continue to use our free-to-play video games across most of The United States and Canada, as we have for more than a decade, producing not only fantastic games, user experiences and entertainment, however likewise ensuring this is done securely, properly and at the highest level of standards.

‘More broadly, we ‘d reiterate that class actions and other litigations and arbitrations are relatively typical throughout the online social games industry (and the US more broadly), and our basic practice is that we plan to intensely protect any claim which may be brought against us.’

The problems in between conventional online sports betting and sweepstakes gambling establishments might show bothersome for some celebrity 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 video gaming titans like FanDuel and DraftKings.

‘It’s paradoxical that professional athletes are hawking illegal sports betting ‘sweeps’ sites while at the same time the leagues desire to forecast a strong position versus prohibited sports betting – especially when attempting to tamp down the periodic gambling scandal,’ Glaser informed DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter received a lifetime restriction from the NBA over allegations he conspired with gamblers. However, to be clear, Porter’s scandal is unrelated to anything involving social or sweepstakes gambling establishments.

Along with VGW, Apple and Google are being demanded hosting allegedly unlawful sports betting websites

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

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

Neither an NBA spokesperson nor the gamers’ agents reacted to DailyMail.com’s ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise overlooked to respond to DailyMail.com e-mails.

Asked if their star endorsers have a responsibility to explain to consumers the distinctions and resemblances between iGaming and sweepstakes casinos, VGW insisted there is nothing more that needs to be done.

‘We have complete self-confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,’ the spokesperson said. ‘A few of our worths are » our gamers precede » and » we do what’s right », and we put our worths at the core of whatever we do.’

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

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

New YorkNBADrakeParis Hilton