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 illegal gaming.


No, they weren't personally in participation, but the world-famous celebs were conspicuously consisted of in a slide presentation on social and sweepstakes gambling establishments - the questionable websites providing both totally free casino-style video games and lucrative prizes, such as cash, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The websites are just 2 cogs in the multibillion-dollar market that now finds itself besieged by lawsuits. In the eyes of lots of video gaming corporations, not to point out lawsuit plaintiffs and state regulators, sweepstakes casinos function as standard gambling establishments, just without the oversight, consumer securities and tax laws. So not just can they prevent the high 24-percent federal gambling levy, however sweepstakes operators aren't subject to regulatory hurdles like anti-money laundering and responsible-gaming defenses.


One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits last year alone. Now the business deals with accusations of unlawful sports betting in a New york city lawsuit that declares VGW utilizes star endorsers to 'produce a veneer of legitimacy' around its item. (See VGW's declaration below)


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


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


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


Ryan Seacrest prompts fans to dip into Chumba Casino, where lots of - but not all - video games are complimentary


Drake has a deal with social sweeps gambling establishment, Stake, that he frequently touts on social networks


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Instead, advertisements usually center around the social element of the gambling establishments, while omitting the potential for real sports betting losses.


Others tempt customers with pledges of rewards. One such operator, Stake, ran a social networks ad displaying Drake's automobiles, planes and mansions before rotating to footage of the rapper playing online casino-style video games.


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


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


The disparity in between gaming websites and social or sweepstakes casinos is a bit complicated, however 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), explained its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, most of the gamers on social-sweepstakes casinos are sports betting complimentary.


'Most social sweeps customers never buy,' the SPGA representative informed DailyMail.com. 'The minority of clients who make purchases do so in quantities far smaller sized than the common deposit or bet size at real-money online gaming sites.'
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Social casinos use customers a chance to play casino-style video games with friends. Players have the alternative to buy worthless currency frequently described as 'gold coins,' which can not be exchanged genuine money, but can be utilized to open various functions within the games.


But within the world of social casinos exists sweepstakes gaming, allowing consumers to acquire other currency referred to as 'sweeps coins' that can be exchanged for cash or other rewards.


And therein lies the capacity for monetary losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York. One player 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 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 showing off 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 are banned in all but 7 states, which has helped to fuel the appeal of sweepstakes casinos.


Anyone over the age of 18 can access the sweepstakes websites, which do not need usually need recognition. However, websites like Chumba will request IDs from players trying to withdraw any funds.
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Many sites, like the crypto-compatible Stake, permit clients to send mail-in ask for totally free sweeps coins, provided the players follow painfully specific instructions. What's more, players are frequently rewarded with sweeps coins just for signing up, thus offering them a reason to try their hands at any number of casino video games for a chance to win - or lose - real cash.


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


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


'Social sweepstakes video games are just a form of online home entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is required to play at social casinos with sweepstakes rewards. Consumers never need to pay for a chance to win prizes. That lack of a purchase requirement - or" consideration" - is an important distinction between social sweeps and conventional 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, however rather they're purchasing hamburgers and french fries that offer them the possibility to win lucrative prizes, such as a $1 million jackpot.


And without a purchase requirement, or 'consideration', the video game itself does not fulfill the meaning of sports betting in the US.


'Sweepstakes are an enduring technique for promoting all type of everyday companies in the United States, everything from hamburgers to magazine subscriptions to coffee and home enhancement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promos 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 sports betting industry experts, that argument doesn't cut it.


For starters, gaming attorney Daniel Wallach explains, McDonald's Monopoly video game does not run forever. Rather, it has a well-defined beginning and end, thereby suggesting the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being utilized to promote real products like french fries, shakes, and the Filet-O-Fish.


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


'The sweepstakes [casinos] have none of the characteristics commonly connected with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos use" casino-like" payouts, normally 80 percent or more of profits, whereas the typical payment percentage for a short-lived marketing sweepstakes is a minor share of the income earned by the company [typically less than one percent]'


Wallach is quick to liken the online social sweeps casinos to the internet coffee shops that sprang up in Florida, offering consumers the opportunity to play casino-style games for real rewards. A number of those brick-and-mortar facilities have since been shuttered over accusations of illegal gaming.


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


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


'These differences are not arbitrary,' Wallach stated of social sweeps casinos. 'They have actually repeatedly been mentioned by courts and state chief law officer as essential consider figuring out that a sweepstakes promo was in truth a guise for illegal gambling.'


One of the casino market's leading trade organizations, the American Gaming Association, is now pressing legislators to examine sweepstakes operators and, sometimes, enact brand-new legislation on the issue.


'Consumers are being deprived of defenses and states are passing up significant tax and earnings chances as this gaming replaces that carried out through regulated channels,' checked out a well-circulated AGA memo.
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And then there are the complainants who have taken legal action against 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 wrongdoing, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action claim, saying the settlement was made to avoid legal expenses and continued litigation.


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


In the most recent claim, which is mostly comparable to its predecessors, New York state locals 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 'illegal gaming enterprise. '


Apple and Google have actually also been called as accuseds in suits for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's demand for comment.


'We normally do not comment on matters before the courts,' a VGW spokesperson informed DailyMail.com via email. 'However, we keep in mind that this claim has actually only simply been filed with the court and VGW has actually not been formally served.


'We have complete self-confidence in our compliance with all laws and guidelines where we operate, and remain confident about the future,' the spokesperson continued. 'We continue to offer our free-to-play video games across many of The United States and Canada, as we have for more than a decade, developing not just terrific games, user experiences and entertainment, however also ensuring this is done safely, properly and at the greatest level of requirements.


'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are relatively common throughout the online social video games market (and the US more broadly), and our basic practice is that we plan to strongly defend any claim which may be brought versus us.'


The problems in between traditional online gaming and sweepstakes casinos might prove troublesome for some celeb 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 ironic that professional athletes are hawking prohibited sports betting wagering 'sweeps' sites while at the very same time the leagues wish to predict a strong stance against prohibited sports betting - especially 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 restriction from the NBA over allegations he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes casinos.


Together with VGW, Apple and Google are being taken legal action against for hosting supposedly prohibited sports betting websites
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Regardless, Glaser sees sweepstakes gambling establishments as a significant issue 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 included.


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


Asked if their celeb endorsers have an obligation to explain to consumers the distinctions and resemblances between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that requires to be done.


'We have full confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the representative stated. 'A few of our worths 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 challenger of sweepstakes sites, sees things differently.


'Celebrities who lend their names to shady prohibited gaming websites are, at a minimum, putting their credibilities at danger along with courting civil and class actions by consumers who declare harm,' Glaser stated. 'There is likewise some threat that state regulators and state attorneys general rope celebrity endorsers into enforcement efforts for facilitating unlawful gambling.'


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