1 Sweepstakes Casino Controversy - And Celebrities' All-important Role
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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 stars were notably included in a slide presentation on social and sweepstakes casinos - the questionable sites offering both complimentary casino-style games and profitable rewards, such as money, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The sites are just 2 cogs in the multibillion-dollar industry that now discovers itself besieged by lawsuits. In the eyes of numerous gaming corporations, not to discuss suit plaintiffs and state regulators, sweepstakes casinos function as conventional gambling establishments, only without the oversight, consumer securities and tax laws. So not just can they avoid the steep 24-percent federal gambling levy, but sweepstakes operators aren't based on regulatory hurdles 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 company faces allegations of prohibited gaming in a New York claim that declares VGW uses celeb endorsers to 'develop a veneer of legitimacy' around its product. (See VGW's statement listed below)

'I'm uncertain" if you don't trust us, you can rely on Paris Hilton" is a winning message for business running multibillion-dollar prohibited 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 variety of celebs 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 traditional gambling and sweepstakes play.

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

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

Drake has a deal with social sweeps casino, Stake, that he regularly touts on social networks

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Instead, advertisements generally focus around the social aspect of the casinos, while omitting the capacity for real gaming losses.

Others lure customers with promises of rewards. One such operator, Stake, ran a social media ad displaying Drake's automobiles, aircrafts and mansions before pivoting to video of the rap artist playing online casino-style video games.

'Daddy, why do we have a lot cash?' read the very first caption on the screen.
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Another caption discussed: 'Because I never quit.'

The discrepancy between gaming websites and social or sweepstakes casinos is a bit complex, however 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), described its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA information, the majority of the gamers on social-sweepstakes casinos are sports betting totally free.

'Most social sweeps clients never ever buy,' the SPGA spokesperson told DailyMail.com. 'The minority of clients who make purchases do so in amounts far smaller sized than the normal deposit or bet size at real-money online gaming sites.'
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Social gambling establishments use clients a possibility to play casino-style video games with friends. Players have the option to buy worthless currency frequently referred to as 'gold coins,' which can not be exchanged for real cash, but can be utilized to open different functions within the games.

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

And therein lies the potential for financial 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 purchase 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 casino Stake ran an ad flaunting Drake's cars, planes 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 7 states, which has actually assisted to fuel the appeal of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, enable clients to send mail-in requests for free sweeps coins, supplied the gamers follow painfully specific guidelines. What's more, gamers are typically rewarded with sweeps coins simply for signing up, consequently providing them a reason to attempt their hands at any number of gambling establishment games for a possibility to win - or lose - real cash.

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

According to the stakeholders, their item is the totally free casino-style video gaming, and the real-stakes competitors is just a method of promoting their support.

'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 play at social gambling establishments with sweepstakes rewards. Consumers never ever have to pay for an opportunity to win rewards. That lack of a purchase requirement - or" factor to consider" - is a crucial difference between social sweeps and conventional online gambling websites like casinos.'

Consider the manner in which McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and fries that offer them the opportunity to win profitable rewards, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the video game itself does not fulfill the definition of gaming in the US.
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'Sweepstakes are a long-standing method for promoting all sort of everyday services in the United States, everything from hamburgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA spokesperson informed 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 numerous gambling industry experts, that argument doesn't cut it.

For beginners, gaming attorney Daniel Wallach points out, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a distinct start and end, therefore recommending the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being used to promote genuine items like fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're typically not connected to casino-style video games of opportunity,' Wallach informed DailyMail.com. 'They're just money giveaways.

'The sweepstakes [gambling establishments] possess none of the attributes commonly associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos use" casino-like" payments, usually 80 percent or more of earnings, whereas the common payment percentage for a momentary marketing sweepstakes is an insignificant share of the profits earned by the business [normally less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the internet coffee shops that emerged in Florida, using clients the chance to play casino-style video games for genuine prizes. Many of those brick-and-mortar facilities have given that been shuttered over claims of unlawful sports betting.

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

Now, Wallach argues, social sweeps gambling establishments need to face similar scrutiny.

'These differences are not approximate,' Wallach said of social sweeps gambling establishments. 'They have repeatedly been pointed out by courts and state attorney general of the United States as key consider determining that a sweepstakes promotion was in reality a guise for illegal sports betting.'

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

'Consumers are being denied of defenses and states are passing up substantial tax and profits chances as this gambling replaces that carried out through regulated 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 separate cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action lawsuit, saying the settlement was made to avoid legal costs and continued lawsuits.
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Michael Phelps has signed a handle the VGW Group, which owns Global Poker

In the latest claim, which is mainly similar to its predecessors, New York state homeowners Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is described in the filing as an 'illegal gaming enterprise. '

Apple and Google have actually likewise been named as accuseds in claims for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's demand for comment.

'We normally do not talk about matters before the courts,' a VGW spokesperson told DailyMail.com through e-mail. 'However, we note that this claim has only just 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 stay positive about the future,' the spokesperson continued. 'We continue to provide our free-to-play video games across many of North America, as we have for more than a decade, developing not just great video games, user experiences and entertainment, however also ensuring this is done securely, properly and at the highest level of requirements.

'More broadly, we 'd restate 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 standard practice is that we intend to vigorously defend any claim which might be brought versus us.'

The concerns in between traditional online gambling and sweepstakes gambling establishments could prove problematic for some celebrity 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 ironic that expert athletes are hawking unlawful sports betting 'sweeps' websites while at the exact same time the leagues wish to project a strong position versus illegal gambling - specifically when trying to tamp down the occasional gaming scandal,' Glaser informed DailyMail.com.

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

In addition to VGW, Apple and Google are being demanded hosting supposedly prohibited gambling sites

Regardless, Glaser sees sweepstakes casinos as a significant 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 added.
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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 neglected to respond to DailyMail.com emails.

Asked if their celeb endorsers have a responsibility to explain to consumers the differences and resemblances between iGaming and sweepstakes gambling establishments, 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 organization practices more broadly,' the representative said. 'A few of our values are" our players come first" and" we do what's right", and we put our values at the core of whatever we do.'

Glaser, an outspoken opponent of sweepstakes websites, sees things in a different way.

'Celebrities who lend their names to shady unlawful gambling sites are, at a minimum, putting their track records at danger along with courting civil and class actions by customers who allege harm,' Glaser said. 'There is also some risk that state regulators and state chief law rope star endorsers into enforcement efforts for helping with illegal gaming.'

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