Sweepstakes Casino Controversy - And Celebrities All-important Role

From Shiapedia

The smiling faces of Paris Hilton and Ryan Seacrest made surprise looks before the Louisiana Senate for Friday's hearing on unlawful gambling.


No, they weren't personally in attendance, however the world-famous celebrities were conspicuously consisted of in a slide discussion on social and sweepstakes gambling establishments - the controversial websites offering both free casino-style video games and lucrative rewards, such as money, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.


The websites are simply two cogs in the multibillion-dollar market that now discovers itself besieged by claims. In the eyes of lots of video gaming corporations, not to mention claim plaintiffs and state regulators, sweepstakes casinos act as conventional casinos, just without the oversight, consumer defenses and tax laws. So not just can they prevent the high 24-percent federal sports betting 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 earnings last year alone. Now the company faces allegations of unlawful sports betting in a New York lawsuit that claims VGW utilizes celeb endorsers to 'develop a veneer of authenticity' around its product. (See VGW's statement listed below)


'I'm unsure" if you don't trust us, you can rely on Paris Hilton" is a winning message for companies running multibillion-dollar unlawful operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of video gaming corporation Light & Wonder, informed DailyMail.com.


Sweepstakes endorsers include a series 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 use any differences between conventional sports betting and sweepstakes play.


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


Ryan Seacrest prompts fans to play at Chumba Casino, where lots of - however not all - games are complimentary


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


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Instead, advertisements generally focus around the social element of the casinos, while omitting the potential for actual gambling losses.


Others lure customers with pledges of prizes. One such operator, Stake, ran a social networks ad flaunting Drake's cars and trucks, airplanes and estates before pivoting to video footage of the rap artist playing online casino-style games.


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


Another caption explained: 'Because I never ever quit.'


The discrepancy between sports betting sites and social or sweepstakes casinos is a bit complicated, but operators of the latter insist they're not included with the former.


A spokesperson 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, the majority of the players on social-sweepstakes gambling establishments are sports betting complimentary.


'Most social sweeps clients never ever make a purchase,' the SPGA spokesperson informed DailyMail.com. 'The minority of customers who make purchases do so in amounts far smaller sized than the normal deposit or bet size at real-money online gambling websites.'


Social casinos provide clients a possibility to play casino-style games with buddies. Players have the option to purchase worthless currency frequently referred to as 'gold coins,' which can not be exchanged for real money, however can be used to open different functions within the video games.


But within the world of social casinos exists sweepstakes video gaming, enabling customers to acquire 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 complainants in Florida, Georgia, New Jersey and New York City. One gamer told the Washington Post he lost more than $100,000 on sweepstakes casinos in the past year after continuing to buy more coins in pursuit of cash and other things of worth.


The Philadelphia 76ers' Paul George is seen promoting an International Poker occasion


Social sweeps gambling establishment Stake ran an advertisement revealing off Drake's cars, aircrafts 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 however seven states, which has actually helped to fuel the popularity of sweepstakes casinos.


Anyone over the age of 18 can access the sweepstakes sites, which do not need typically require identification. However, sites like Chumba will request IDs from gamers attempting to withdraw any funds.
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Many sites, like the crypto-compatible Stake, permit consumers to send mail-in demands for complimentary sweeps coins, provided the players follow painfully particular guidelines. What's more, gamers are often rewarded with sweeps coins merely for signing up, thus providing a reason to attempt their hands at any variety of gambling establishment games for an opportunity to win - or lose - genuine cash.


So why are sweepstakes websites enabled to operate in 48 states, while online casinos are banned in all but 7?


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


'Social sweepstakes video games are simply a kind of online home entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is needed to dip into social gambling establishments with sweepstakes prizes. Consumers never have to spend for an opportunity to win rewards. That lack of a purchase requirement - or" factor to consider" - is an essential distinction between social sweeps and conventional online gaming 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 bet, however rather they're buying hamburgers and french fries that use them the chance to win profitable prizes, such as a $1 million jackpot.


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


'Sweepstakes are a long-standing technique for promoting all kinds of everyday organizations in the United States, everything from burgers to magazine memberships to coffee and home enhancement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are routinely used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'


But to numerous sports betting market experts, that argument does not cut it.


For beginners, gaming lawyer Daniel Wallach mentions, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a distinct beginning and end, thus recommending the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being used to promote genuine items like french fries, shakes, and the Filet-O-Fish.


'They don't last permanently and they're generally not connected to casino-style games of possibility,' Wallach told DailyMail.com. 'They're simply money giveaways.


'The sweepstakes [gambling establishments] possess none of the qualities commonly connected with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes casinos provide" casino-like" payouts, usually 80 percent or more of revenues, whereas the typical payout portion for a temporary advertising sweepstakes is a minor share of the revenue made by the company [typically less than one percent]'


Wallach fasts to liken the online social sweeps casinos to the internet coffee shops that emerged in Florida, offering consumers the chance to play casino-style games for genuine rewards. A lot of those brick-and-mortar establishments have since been shuttered over claims of prohibited sports betting.


DJ Khaled is amongst a number of star spokespeople for VGW's Global Poker brand name


Now, Wallach argues, social sweeps gambling establishments need to deal with similar analysis.


'These differences are not arbitrary,' Wallach stated of social sweeps casinos. 'They have consistently been pointed out by courts and state attorney general of the United States as crucial consider identifying that a sweepstakes promo remained in fact a guise for illegal sports betting.'


Among the casino market's leading trade organizations, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, sometimes, legislation on the concern.


'Consumers are being denied of defenses and states are giving up substantial tax and profits opportunities as this gambling changes that carried out through managed channels,' checked out a well-circulated AGA memo.
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And after that there are the complainants who have sued social gambling establishments in more than a dozen states.
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Sweepstakes casino operators paid a combined $14.2 million in four separate cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, stating the settlement was made to prevent legal costs and continued litigation.


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


In the most current lawsuit, which is mostly similar 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 described in the filing as an 'illegal gambling enterprise. '


Apple and Google have likewise been named as accuseds in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech business responded to DailyMail.com's ask for remark.


'We usually do not comment on matters before the courts,' a VGW spokesperson informed DailyMail.com by means of email. 'However, we note that this claim has only just been submitted with the court and VGW has not been formally served.


'We have complete self-confidence in our compliance with all laws and policies where we run, and stay positive about the future,' the spokesperson continued. 'We continue to offer our free-to-play video games throughout most of The United States and Canada, as we have for more than a decade, developing not only excellent games, user experiences and entertainment, however likewise ensuring this is done securely, properly and at the highest level of standards.


'More broadly, we 'd restate that class actions and other litigations and arbitrations are relatively typical across the online social games industry (and the US more broadly), and our basic practice is that we intend to vigorously safeguard any claim which might be brought against us.'


The problems in between traditional online gambling and sweepstakes gambling establishments might show problematic for some celebrity 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 standard gaming titans like FanDuel and DraftKings.


'It's ironic that expert athletes are hawking prohibited sports betting 'sweeps' websites while at the very same time the leagues wish to project a strong stance against prohibited gambling - particularly when attempting to tamp down the periodic gaming scandal,' Glaser informed DailyMail.com.
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It was just eight months ago that Toronto Raptors forward Jontay Porter got a life time restriction from the NBA over allegations he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes gambling establishments.


Along with VGW, Apple and Google are being demanded hosting apparently illegal sports betting websites


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


'I 'd expect that a league crackdown on athletes backing sweepstakes sites refers when, not if,' Glaser added.


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


Asked if their celebrity endorsers have a responsibility to explain to customers the differences and similarities between iGaming and sweepstakes casinos, VGW insisted there is nothing more that needs to be done.


'We have full confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the representative said. 'A few 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.'
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Glaser, an outspoken opponent of sweepstakes sites, sees things in a different way.


'Celebrities who provide their names to dubious unlawful gambling sites are, at a minimum, putting their credibilities at danger as well as courting civil and class actions by consumers who declare harm,' Glaser stated. 'There is also some risk that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for helping with illegal sports betting.'


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