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 unlawful gambling.

No, they weren’t personally in participation, but the world-famous celebrities were notably included in a slide presentation on social and sweepstakes casinos – the questionable sites providing both free casino-style video games and financially rewarding prizes, such as cash, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can ‘bet complimentary,’ while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are simply 2 cogs in the multibillion-dollar market that now finds itself besieged by lawsuits. In the eyes of numerous video gaming corporations, not to mention suit complainants and state regulators, sweepstakes casinos act as standard casinos, only without the oversight, consumer defenses and tax laws. So not only can they avoid the steep 24-percent federal sports betting levy, however sweepstakes operators aren’t based on regulatory difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the business faces allegations of illegal gaming in a New york city lawsuit that claims VGW utilizes celeb endorsers to ‘produce a veneer of legitimacy’ around its product. (See VGW’s declaration listed below)

‘I’m unsure” 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 locations 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 variety of celebs 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 distinctions between conventional gambling and sweepstakes play.

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

Ryan Seacrest prompts fans to play at Chumba Casino, where many – but not all – games are totally free

Drake has a deal with social sweeps casino, Stake, that he routinely promotes on social networks

Learn more

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

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

Others lure clients with pledges of prizes. One such operator, Stake, ran a social networks advertisement showing off Drake’s automobiles, airplanes and estates before pivoting to video footage of the rapper playing online casino-style video games.

‘Daddy, why do we have so much money?’ check out the very first caption on the screen.

Another caption explained: ‘Because I never ever quit.’

The disparity between sports betting sites and social or sweepstakes gambling establishments is a bit complex, but operators of the latter insist they’re not included with the former.

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA data, most of the players on social-sweepstakes casinos are playing for totally free.

‘Most social sweeps clients never ever make a purchase,’ the SPGA representative told DailyMail.com. ‘The minority of consumers who make purchases do so in quantities far smaller sized than the typical deposit or bet size at real-money online sports betting websites.’

Social casinos offer customers a chance to play casino-style games with buddies. Players have the option to purchase valueless currency often referred to as ‘gold coins,’ which can not be exchanged for real cash, but can be used to unlock different functions within the games.

But within the world of social casinos exists sweepstakes gaming, permitting consumers to acquire other currency called ‘sweeps coins’ that can be exchanged for money or other prizes.

And therein lies the capacity for monetary 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 previous year after continuing to purchase more coins in pursuit of cash and other things of worth.

The Philadelphia 76ers’ Paul George is seen promoting a Worldwide Poker occasion

Social sweeps gambling establishment Stake ran an advertisement displaying Drake’s automobiles, airplanes and mansions

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

Traditional online gambling establishments are prohibited in all but seven states, which has helped to sustain the appeal of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, enable consumers to submit mail-in demands for totally free sweeps coins, offered the gamers follow painfully specific guidelines. What’s more, gamers are typically rewarded with sweeps coins just for registering, thus giving them a factor to attempt their hands at any variety of gambling establishment games for a possibility to win – or lose – genuine cash.

So why are sweepstakes sites permitted to run in 48 states, while online casinos are banned in all but 7?

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

‘Social sweepstakes video games are just a form of online home entertainment,’ an SPGA representative told DailyMail.com by email. ‘No purchase is needed to dip into social casinos 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 a crucial difference in between social sweeps and standard online gaming sites like gambling establishments.’

Think of the way that McDonald’s uses its yearly Monopoly game to promote its food: Customers aren’t paying to bet, however rather they’re buying hamburgers and fries that provide them the chance to win financially rewarding rewards, such as a $1 million jackpot.

And without a purchase requirement, or ‘consideration’, the video game itself doesn’t fulfill the definition of gaming in the US.

‘Sweepstakes are a long-standing technique for promoting all sort of everyday services in the United States, everything from hamburgers to publication subscriptions to coffee and home enhancement shops,’ the SPGA spokesperson told DailyMail.com. ‘Sweepstakes promos are regularly used by a who’s who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.’

But to numerous gambling industry insiders, that argument doesn’t cut it.

For starters, video gaming attorney Daniel Wallach mentions, McDonald’s Monopoly video game doesn’t run forever. Rather, it has a distinct beginning and end, thereby recommending the sweepstakes is not the fast-food giant’s main product. Instead, the sweepstakes is being used to promote real products like french fries, shakes, and the Filet-O-Fish.

‘They do not last permanently and they’re generally not tied to casino-style video games of possibility,’ Wallach informed DailyMail.com. ‘They’re simply cash giveaways.

‘The sweepstakes [gambling establishments] have none of the qualities typically related to McDonald’s-design sweepstakes promotions,’ Wallach continued. ‘Besides running in eternity, the sweepstakes casinos provide” casino-like” payouts, usually 80 percent or more of incomes, whereas the normal payout portion for a temporary advertising sweepstakes is a minor share of the income made by the business [typically less than one percent]’

Wallach fasts to compare the online social sweeps gambling establishments to the internet coffee shops that emerged in Florida, providing customers the opportunity to play casino-style video games for real rewards. A lot of those brick-and-mortar facilities have actually because been shuttered over claims of illegal gaming.

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

Now, Wallach argues, social sweeps gambling establishments should deal with comparable scrutiny.

‘These differences are not approximate,’ Wallach said of social sweeps casinos. ‘They have repeatedly been mentioned by courts and state lawyer generals as essential consider determining that a sweepstakes promo remained in fact a guise for illegal sports betting.’

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

‘Consumers are being deprived of protections and states are passing up substantial tax and profits opportunities as this gambling changes that performed through managed channels,’ read a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action claim, saying the settlement was made to prevent legal expenses 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 similar to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is explained in the filing as an ‘unlawful sports betting business. ‘

Apple and Google have likewise been called as offenders 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 discuss matters before the courts,’ a VGW spokesperson told DailyMail.com through e-mail. ‘However, we note that this claim has actually only just been filed with the court and VGW has actually not been formally served.

‘We have full self-confidence in our compliance with all laws and guidelines where we operate, and stay confident about the future,’ the spokesperson continued. ‘We continue to provide our free-to-play games throughout the majority of The United States and Canada, as we have for more than a decade, producing not only excellent games, user experiences and home entertainment, but also ensuring this is done securely, properly and at the highest level of standards.

‘More broadly, we ‘d restate that class actions and other lawsuits and arbitrations are reasonably typical across the online social video games industry (and the US more broadly), and our basic practice is that we intend to vigorously defend any claim which may be brought against us.’

The issues in between standard online gambling and sweepstakes gambling establishments 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 traditional gaming titans like FanDuel and DraftKings.

‘It’s paradoxical that professional athletes are hawking prohibited sports betting ‘sweeps’ sites while at the exact same time the leagues wish to predict a strong stance against illegal gambling – specifically 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 got a lifetime restriction from the NBA over claims he conspired with gamblers. However, to be clear, Porter’s scandal is unrelated to anything including social or sweepstakes gambling establishments.

In addition to VGW, Apple and Google are being demanded hosting apparently prohibited gambling websites

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

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

Neither an NBA representative nor the gamers’ agents reacted to DailyMail.com’s demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also overlooked to react to DailyMail.com emails.

Asked if their celeb endorsers have an obligation to discuss to customers the differences and similarities between iGaming and sweepstakes casinos, VGW firmly insisted there is absolutely nothing more that requires to be done.

‘We have complete confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,’ the spokesperson said. ‘A few of our worths are” our players come first” and” we do what’s right”, and we put our values at the core of everything we do.’

Glaser, an outspoken challenger of sweepstakes websites, sees things differently.

‘Celebrities who provide their names to dubious unlawful sports betting sites are, at a minimum, putting their track records at threat as well as courting civil and class actions by customers who declare damage,’ Glaser said. ‘There is also some danger that state regulators and state chief law officers rope celebrity endorsers into enforcement efforts for facilitating illegal gaming.’

New YorkNBADrakeParis Hilton