1 Sweepstakes Casino Controversy - And Celebrities' All-important Role

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The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on unlawful gambling.
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No, they weren't personally in attendance, but the world-famous stars were conspicuously included in a slide discussion on social and sweepstakes casinos - the questionable websites providing both free casino-style video games and financially rewarding prizes, 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.
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The sites are simply two cogs in the multibillion-dollar industry that now finds itself besieged by claims. In the eyes of lots of gaming corporations, not to mention lawsuit complainants and state regulators, sweepstakes casinos function as standard gambling establishments, just without the oversight, customer securities and tax laws. So not only can they avoid the steep 24-percent federal gambling levy, but sweepstakes operators aren't based on regulative difficulties like anti-money laundering and responsible-gaming protections.


One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the business deals with allegations of illegal gambling in a New york city claim that declares VGW uses celebrity endorsers to 'create a veneer of legitimacy' around its item. (See VGW's declaration listed below)


'I'm not exactly sure" if you don't trust us, you can rely on Paris Hilton" is a winning message for companies 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, informed DailyMail.com.


Sweepstakes endorsers include a series of celebrities from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom provide any differences between conventional gaming and sweepstakes play.


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


Ryan Seacrest advises fans to play at Chumba Casino, where many - however not all - video games are free


Drake has a handle social sweeps gambling establishment, Stake, that he routinely touts on social networks


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Instead, advertisements typically focus around the social aspect of the gambling establishments, while omitting the capacity for real gambling losses.


Others tempt customers with guarantees of rewards. One such operator, Stake, ran a social media advertisement revealing off Drake's vehicles, airplanes and estates before rotating to video of the rap artist playing online casino-style video games.


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


Another caption explained: 'Because I never gave up.'


The inconsistency in between gambling websites and social or sweepstakes gambling establishments is a bit intricate, but operators of the latter insist they're not involved with the previous.


A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA information, most of the gamers on social-sweepstakes gambling establishments are playing for free.


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


Social casinos provide customers an opportunity to play casino-style games with buddies. Players have the choice to purchase valueless currency often described as 'gold coins,' which can not be exchanged genuine cash, but can be utilized to unlock numerous features within the games.


But within the world of social gambling establishments exists sweepstakes video gaming, enabling consumers to get other currency referred to as 'sweeps coins' that can be exchanged for cash or other prizes.


And therein lies the potential for financial losses, like the ones claimed by complainants 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 worth.


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


Social sweeps casino Stake ran an ad flaunting Drake's cars, airplanes and mansions


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 but 7 states, which has actually helped to sustain the appeal of sweepstakes gambling establishments.


Anyone over the age of 18 can access the sweepstakes websites, which don't need typically need recognition. However, websites like Chumba will request IDs from gamers attempting to withdraw any funds.


Many websites, like the crypto-compatible Stake, enable customers to send mail-in demands for totally free sweeps coins, offered the gamers follow painfully particular guidelines. What's more, gamers are typically rewarded with sweeps coins simply for registering, thereby offering them a reason to attempt their hands at any variety of casino video games for a chance to win - or lose - real money.


So why are sweepstakes sites enabled to operate in 48 states, while online gambling establishments are prohibited in all however 7?


According to the stakeholders, their product is the complimentary casino-style video gaming, and the real-stakes competitors is simply a way of promoting their support.


'Social sweepstakes games are merely a form of online entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is required to play at social casinos with sweepstakes prizes. Consumers never ever have to spend for an to win rewards. That absence of a purchase requirement - or" factor to consider" - is a vital difference between social sweeps and standard online gambling websites like gambling establishments.'


Consider the method that McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and french fries that provide them the possibility to win financially rewarding rewards, such as a $1 million prize.


And without a purchase requirement, or 'factor to consider', the video game itself doesn't meet the definition of gaming in the US.


'Sweepstakes are an enduring technique for promoting all sort of everyday companies in the United States, whatever from hamburgers to publication subscriptions to coffee and home enhancement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are routinely used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'


But to lots of gambling market insiders, that argument doesn't cut it.


For beginners, gaming attorney Daniel Wallach explains, McDonald's Monopoly video game doesn't run forever. Rather, it has a distinct start and end, consequently recommending the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being used to promote real products like fries, shakes, and the Filet-O-Fish.


'They do not last permanently and they're normally not connected to casino-style games of opportunity,' Wallach told DailyMail.com. 'They're just cash giveaways.


'The sweepstakes [gambling establishments] have none of the qualities typically related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos provide" casino-like" payouts, typically 80 percent or more of profits, whereas the normal payout percentage for a temporary advertising sweepstakes is an unimportant share of the earnings made by the business [typically less than one percent]'


Wallach is fast to compare the online social sweeps gambling establishments to the web cafes that emerged in Florida, using customers the possibility to play casino-style games for genuine prizes. A number of those brick-and-mortar facilities have because been shuttered over claims of unlawful sports betting.


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


Now, Wallach argues, social sweeps casinos must face similar examination.


'These distinctions are not approximate,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been cited by courts and state lawyer generals as key consider determining that a sweepstakes promo remained in fact a guise for prohibited gambling.'


One of the gambling establishment industry's leading trade organizations, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, in many cases, enact new legislation on the issue.


'Consumers are being deprived of securities and states are forgoing considerable tax and profits opportunities as this gaming replaces that performed through controlled channels,' checked out a well-circulated AGA memo.


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


Sweepstakes casino operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action suit, saying the settlement was made to prevent legal expenses and continued litigation.


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


In the most recent claim, which is largely comparable to its predecessors, New York state citizens Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is explained in the filing as an 'unlawful gambling business. '


Apple and Google have also been named as defendants in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for remark.


'We normally do not talk about matters before the courts,' a VGW spokesperson informed DailyMail.com through e-mail. 'However, we keep in mind that this claim has only simply been filed with the court and VGW has not been officially served.


'We have complete confidence in our compliance with all laws and regulations where we operate, and remain positive about the future,' the representative continued. 'We continue to offer our free-to-play video games throughout most of North America, as we have for more than a years, producing not only fantastic games, user experiences and home entertainment, however likewise guaranteeing this is done securely, properly and at the greatest level of standards.


'More broadly, we 'd repeat that class actions and other litigations and arbitrations are reasonably common across the online social video games industry (and the US more broadly), and our standard practice is that we plan to vigorously defend any claim which may be brought versus us.'


The issues in between conventional online gambling and sweepstakes gambling establishments might prove bothersome 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 video gaming titans like FanDuel and DraftKings.


'It's paradoxical that expert athletes are hawking illegal sports betting wagering 'sweeps' sites while at the very same time the leagues want to predict a strong stance against unlawful gaming - particularly when attempting to tamp down the occasional gaming scandal,' Glaser informed DailyMail.com.


It was simply 8 months ago that Toronto Raptors forward Jontay Porter got a life time restriction from the NBA over claims he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes casinos.


Together with VGW, Apple and Google are being sued for hosting apparently prohibited sports betting sites


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


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


Neither an NBA spokesperson nor the players' representatives reacted to DailyMail.com's demands for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise neglected to respond to DailyMail.com e-mails.


Asked if their star endorsers have a duty to describe to clients the differences and similarities in between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that needs to be done.


'We have complete self-confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the spokesperson stated. 'Some of our worths are" our players come initially" and" we do what's right", and we put our values at the core of whatever we do.'


Glaser, an outspoken challenger of sweepstakes websites, sees things differently.
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'Celebrities who provide their names to shady unlawful gambling sites are, at a minimum, putting their credibilities at danger as well as courting civil and class actions by customers who declare damage,' Glaser stated. 'There is also some threat that state regulators and state chief law officers rope star endorsers into enforcement efforts for facilitating illegal gambling.'


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