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 unlawful gaming.

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

The sites are simply two cogs in the multibillion-dollar industry that now finds itself besieged by claims. In the eyes of lots of video gaming corporations, not to mention suit complainants and state regulators, sweepstakes gambling establishments function as standard gambling establishments, just without the oversight, consumer protections and tax laws. So not just can they prevent the steep 24-percent federal sports betting levy, but sweepstakes operators aren't based on regulative obstacles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income last year alone. Now the business faces allegations of illegal gambling in a New york city lawsuit that claims VGW uses celeb endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's statement below)

'I'm not exactly sure" 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 locations like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers consist of a series of celebrities from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom offer any differences between traditional gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among many sweepstakes gambling establishments found online

Ryan Seacrest urges fans to dip into Chumba Casino, where numerous - but not all - video games are complimentary

Drake has an offer with social sweeps gambling establishment, Stake, that he frequently promotes on social media

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Instead, advertisements typically focus around the social element of the gambling establishments, while omitting the potential for actual gaming losses.

Others tempt customers with guarantees of prizes. One such operator, Stake, ran a social media ad revealing off Drake's cars and trucks, planes and mansions before pivoting to video footage of the rapper playing online casino-style games.

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

Another caption described: 'Because I never quit.'

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 included with the former.

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA information, the majority of the gamers on social-sweepstakes casinos are playing for totally free.

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

Social casinos use consumers an opportunity to play casino-style games with buddies. Players have the option to purchase worthless currency often described as 'gold coins,' which can not be exchanged genuine cash, however can be used to open different features within the games.

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

And therein lies the capacity 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 casinos in the past year after continuing to buy 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 revealing off Drake's automobiles, 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 banned in all however seven states, which has actually helped to sustain the popularity of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes websites, which do not require typically need identification. However, sites 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 demands for free sweeps coins, offered the players follow painfully specific guidelines. What's more, players are frequently rewarded with sweeps coins just for signing up, thereby providing them a factor to attempt their hands at any number of casino video games for a possibility to win - or lose - genuine cash.

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

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

'Social sweepstakes video games are merely a form of online home entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is needed to dip into social casinos with sweepstakes prizes. Consumers never need to spend for a chance to win prizes. That absence of a purchase requirement - or" consideration" - is a vital distinction between social sweeps and traditional online gambling websites like gambling establishments.'

Think about the way that McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and fries that offer them the opportunity to win lucrative prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the game itself doesn't meet the definition of gambling in the US.

'Sweepstakes are a long-standing technique for promoting all type of everyday businesses in the United States, whatever from hamburgers to magazine memberships to coffee and home improvement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are regularly used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous sports betting industry insiders, that argument does not cut it.

For starters, video gaming lawyer Daniel Wallach mentions, McDonald's Monopoly video game does not run indefinitely. Rather, it has a well-defined start and end, therefore recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote genuine products like french fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're typically not connected to casino-style games of chance,' Wallach informed DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [casinos] possess none of the qualities commonly associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments offer" casino-like" payments, usually 80 percent or more of profits, whereas the common payment portion for a temporary advertising sweepstakes is an insignificant share of the profits earned by the business [usually less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the internet cafes that emerged in Florida, providing customers the opportunity to play casino-style games for genuine rewards. Many of those brick-and-mortar establishments have because been shuttered over accusations of prohibited gaming.

DJ Khaled is among numerous star spokespeople for VGW's Global Poker brand

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

'These differences are not arbitrary,' Wallach said of social sweeps casinos. 'They have consistently been mentioned by courts and state chief law officer as key consider determining that a sweepstakes promotion remained in fact a guise for illegal sports betting.'

One of the gambling establishment market's leading trade organizations, the American Gaming Association, is now pressing lawmakers to investigate sweepstakes operators and, in some cases, enact brand-new legislation on the problem.

'Consumers are being deprived of securities and states are forgoing considerable tax and revenue opportunities as this gambling changes that conducted through controlled channels,' read a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action claim, stating the settlement was made to avoid legal costs and continued lawsuits.

Michael Phelps has signed an offer with the VGW Group, which owns Global Poker

In the most recent claim, which is mainly comparable to its predecessors, New york city state homeowners 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 gaming business. '

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

'We usually do not comment on matters before the courts,' a VGW spokesperson told DailyMail.com via e-mail. 'However, we note that this claim has only just been submitted with the court and VGW has actually not been officially served.

'We have full confidence in our compliance with all laws and guidelines where we operate, and remain confident about the future,' the representative continued. 'We continue to use our free-to-play video games across many of The United States and Canada, as we have for more than a decade, creating not just terrific video games, user experiences and entertainment, but also guaranteeing this is done securely, responsibly and at the highest level of standards.

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

The issues in between standard online gaming and sweepstakes casinos could show troublesome for some star endorsers.

Towns, a star center with the Knicks, and the 76ers' George both endorse VGW's Global Poker brand name while the NBA is partnered with standard gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking prohibited sports betting 'sweeps' sites while at the same time the leagues want to project a strong position versus unlawful gambling - especially when trying to tamp down the periodic gaming 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 accusations he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes gambling establishments.

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

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

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

Neither an NBA spokesman nor the gamers' agents reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise ignored to react to DailyMail.com emails.

Asked if their star endorsers have an obligation to describe to consumers the differences and similarities between iGaming and sweepstakes casinos, VGW insisted there is nothing more that requires to be done.

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our business practices more broadly,' the representative said. 'Some of our worths are" our gamers come initially" 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 lend their names to dubious illegal sports betting websites are, at a minimum, putting their credibilities at risk along with courting civil and class actions by customers who declare harm,' Glaser said. 'There is likewise some risk that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for facilitating illegal gambling.'

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