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 illegal sports betting.


No, they weren't personally in presence, but the world-famous celebs were notably consisted of in a slide presentation on social and sweepstakes gambling establishments - the controversial websites offering both free casino-style games and profitable prizes, such as money, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet complimentary,' 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 industry that now discovers itself besieged by suits. In the eyes of lots of gaming corporations, not to mention suit plaintiffs and state regulators, sweepstakes casinos act as traditional casinos, just without the oversight, customer protections and tax laws. So not only can they prevent the steep 24-percent federal gaming levy, however sweepstakes operators aren't subject to regulatory difficulties like anti-money laundering and responsible-gaming securities.
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One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits last year alone. Now the business faces accusations of illegal sports betting in a New york city suit that declares VGW uses celeb endorsers to 'create a veneer of authenticity' around its item. (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 running 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, told DailyMail.com.


Sweepstakes endorsers include a range of celebrities from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul none of whom provide any differences between conventional gambling and sweepstakes play.


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


Ryan Seacrest prompts fans to dip into Chumba Casino, where many - however not all - video games are free
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Drake has a handle social sweeps gambling establishment, Stake, that he routinely touts on social media


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Instead, ads generally focus around the social element of the casinos, while omitting the capacity for actual sports betting losses.
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Others lure customers with promises of prizes. One such operator, Stake, ran a social media advertisement showing off Drake's cars and trucks, airplanes and mansions before rotating to footage of the rapper playing online casino-style video games.


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


Another caption discussed: 'Because I never provided up.'


The disparity between gambling sites and social or sweepstakes gambling establishments is a bit complex, but 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), discussed its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA information, most 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 consumers who make purchases do so in amounts far smaller sized than the typical deposit or bet size at real-money online gambling websites.'


Social casinos provide consumers a possibility to play casino-style games with friends. Players have the option to purchase worthless currency often referred to as 'gold coins,' which can not be exchanged for real cash, however can be utilized to unlock various functions within the games.


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


And therein lies the potential for monetary losses, like the ones declared by plaintiffs 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 buy more coins in pursuit of cash and other things of value.


The Philadelphia 76ers' Paul George is seen promoting a Global Poker occasion


Social sweeps casino Stake ran an ad showing off Drake's vehicles, aircrafts and estates


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 but seven states, which has actually assisted to sustain the popularity of sweepstakes casinos.


Anyone over the age of 18 can access the sweepstakes sites, which do not need typically require identification. However, websites like Chumba will ask for IDs from players trying to withdraw any funds.
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Many sites, like the crypto-compatible Stake, permit consumers to send mail-in demands for free sweeps coins, supplied the players follow painfully specific instructions. What's more, players are typically rewarded with sweeps coins simply for signing up, thereby providing a factor to try their hands at any number of gambling establishment video games for a chance to win - or lose - real cash.


So why are sweepstakes websites permitted to operate in 48 states, while online gambling establishments are banned in all but 7?


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


'Social sweepstakes games are simply a kind of online home entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is required to dip into social casinos with sweepstakes prizes. Consumers never have to pay for a chance to win rewards. That lack of a purchase requirement - or" consideration" - is a vital distinction in between social sweeps and traditional online sports betting sites like casinos.'


Think of the manner in which McDonald's uses its yearly Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and fries that offer them the possibility to win rewarding prizes, such as a $1 million jackpot.


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


'Sweepstakes are a long-standing approach for promoting all sort of daily companies in the United States, whatever from burgers to publication memberships to coffee and home enhancement shops,' the SPGA representative informed 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 many sports betting industry insiders, that argument does not cut it.


For starters, video gaming attorney Daniel Wallach mentions, McDonald's Monopoly game does not run forever. Rather, it has a distinct beginning and end, consequently suggesting the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being used to promote real items like fries, shakes, and the Filet-O-Fish.


'They do not last forever and they're usually not tied to casino-style games of chance,' Wallach informed DailyMail.com. 'They're simply money giveaways.


'The sweepstakes [gambling establishments] possess none of the attributes frequently associated with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments use" casino-like" payments, generally 80 percent or more of revenues, whereas the common payment percentage for a short-lived advertising sweepstakes is an unimportant share of the profits made by the business [generally less than one percent]'


Wallach fasts to compare the online social sweeps gambling establishments to the internet cafes that emerged in Florida, providing consumers the opportunity to play casino-style video games for real rewards. A lot of those brick-and-mortar facilities have since been shuttered over claims of illegal sports betting.


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


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


'These differences are not arbitrary,' Wallach said of social sweeps casinos. 'They have repeatedly been pointed out by courts and state attorney general of the United States as key consider determining that a sweepstakes promo was in fact a guise for unlawful sports betting.'


Among the gambling establishment market's leading trade companies, the American Gaming Association, is now pressing legislators to examine sweepstakes operators and, in some cases, enact new legislation on the concern.


'Consumers are being deprived of defenses and states are forgoing considerable tax and revenue chances as this sports betting replaces that carried out through regulated channels,' read a well-circulated AGA memo.


And then there are the plaintiffs who have actually taken legal action against social gambling establishments 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 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 avoid legal expenses and continued litigation.


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


In the current lawsuit, which is mostly similar to its predecessors, New york city state citizens Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is described in the filing as an 'illegal sports betting enterprise. '


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


'We typically don't talk about matters before the courts,' a VGW spokesperson informed DailyMail.com by means of email. 'However, we keep in mind that this claim has actually only simply been filed with the court and VGW has not been formally served.


'We have full self-confidence in our compliance with all laws and guidelines where we operate, and remain positive about the future,' the representative continued. 'We continue to use our free-to-play games across the majority of The United States and Canada, as we have for more than a years, producing not only excellent games, user experiences and entertainment, but likewise ensuring this is done securely, responsibly and at the highest level of standards.


'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are fairly typical throughout the online social games industry (and the US more broadly), and our basic practice is that we plan to vigorously protect any claim which may be brought versus us.'


The concerns between traditional online gambling and sweepstakes gambling establishments could show bothersome for some celeb endorsers.


Towns, a star center with the Knicks, and the 76ers' George both back VGW's Global Poker brand name while the NBA is partnered with conventional video gaming titans like FanDuel and DraftKings.
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'It's paradoxical that expert athletes are hawking unlawful sports betting wagering 'sweeps' sites while at the exact same time the leagues desire to forecast a strong position against illegal gaming - especially when attempting to tamp down the periodic gambling scandal,' Glaser informed DailyMail.com.


It was simply 8 months ago that Toronto Raptors forward Jontay Porter received a lifetime ban from the NBA over claims he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes gambling establishments.


Together with VGW, Apple and Google are being demanded hosting presumably illegal sports betting sites


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 included.


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


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


'We have complete self-confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the representative said. 'Some of our values are" our gamers come first" and" we do what's right", and we put our worths at the core of whatever we do.'
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Glaser, an outspoken opponent of sweepstakes websites, sees things in a different way.
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'Celebrities who lend their names to dubious unlawful gaming sites are, at a minimum, putting their track records at risk as well as courting civil and class actions by customers who declare harm,' Glaser stated. 'There is also some risk that state regulators and state attorneys general rope star endorsers into enforcement efforts for facilitating prohibited sports betting.'


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