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 presence, however the world-famous stars were conspicuously included in a slide discussion on social and sweepstakes casinos – the questionable sites using both free casino-style games and rewarding rewards, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can ‘bet free,’ while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are just two cogs in the multibillion-dollar market that now discovers itself besieged by lawsuits. In the eyes of lots of gaming corporations, not to discuss lawsuit plaintiffs and state regulators, sweepstakes casinos serve as traditional casinos, only without the oversight, customer securities and tax laws. So not only can they avoid the high 24-percent federal sports betting levy, however sweepstakes operators aren’t based on regulatory obstacles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income last year alone. Now the business deals with accusations of illegal gambling in a New York suit that claims VGW uses celebrity endorsers to ‘develop a veneer of authenticity’ around its product. (See VGW’s declaration listed below)

‘I’m not sure” if you do not trust us, you can rely on Paris Hilton” is a winning message for business running multibillion-dollar unlawful operations out of places 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 consist of a variety of celebs from gambling 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 conventional gambling and sweepstakes play.

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

Ryan Seacrest urges fans to play at Chumba Casino, where numerous – however not all – games are complimentary

Drake has a handle social sweeps gambling establishment, Stake, that he frequently promotes on social networks

Learn more

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

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

Others tempt customers with pledges of prizes. One such operator, Stake, ran a social media ad showing off Drake’s vehicles, airplanes and mansions before pivoting to video 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 ever quit.’

The disparity between gambling websites and social or sweepstakes gambling establishments is a bit complicated, however operators of the latter insist they’re not included with the former.

A spokesperson for a market 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 information, most of the players on social-sweepstakes gambling establishments are playing for totally free.

‘Most social sweeps consumers never ever make a purchase,’ the SPGA spokesperson told DailyMail.com. ‘The minority of consumers who make purchases do so in quantities far smaller than the common deposit or wager size at real-money online gambling websites.’

Social gambling establishments offer consumers a chance to play casino-style video games with good friends. Players have the option to buy valueless currency typically described as ‘gold coins,’ which can not be exchanged genuine cash, but can be utilized to open various functions within the games.

But within the world of social gambling establishments exists sweepstakes video gaming, allowing consumers to acquire other currency called ‘sweeps coins’ that can be exchanged for cash or other rewards.

And therein lies the capacity for financial 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 past year after continuing to purchase more coins in pursuit of money and other things of worth.

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

Social sweeps gambling establishment Stake ran an ad revealing off Drake’s cars, planes 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 but 7 states, which has helped to sustain the popularity of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes websites, which don’t need generally require identification. However, websites like Chumba will request for IDs from players trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, enable customers to submit mail-in demands for free sweeps coins, provided the players follow painfully specific guidelines. What’s more, players are typically rewarded with sweeps coins merely for signing up, thereby providing a reason to try their hands at any number of casino video games for a chance to win – or lose – genuine cash.

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

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

‘Social sweepstakes games are simply a type of online entertainment,’ an SPGA representative informed DailyMail.com by e-mail. ‘No purchase is needed to play at social gambling establishments with sweepstakes prizes. Consumers never need to spend for a chance to win prizes. That absence of a purchase requirement – or” consideration” – is a crucial difference in between social sweeps and traditional online sports betting sites like casinos.’

Think about the way that McDonald’s utilizes its yearly Monopoly game to promote its food: Customers aren’t paying to gamble, but rather they’re buying hamburgers and fries that use them the possibility to win rewarding prizes, such as a $1 million prize.

And without a purchase requirement, or ‘factor to consider’, the video game itself doesn’t satisfy the meaning of sports betting in the US.

‘Sweepstakes are an enduring method for promoting all kinds of everyday businesses in the United States, everything from hamburgers to publication subscriptions to coffee and home improvement shops,’ the SPGA spokesperson informed DailyMail.com. ‘Sweepstakes promos are frequently utilized by a who’s who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.’

But to numerous gambling market insiders, that argument does not cut it.

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

‘They don’t last forever and they’re usually not tied to casino-style video games of possibility,’ Wallach told DailyMail.com. ‘They’re simply money giveaways.

‘The sweepstakes [casinos] possess none of the attributes frequently associated with McDonald’s-design sweepstakes promos,’ Wallach continued. ‘Besides running in eternity, the sweepstakes gambling establishments use” casino-like” payouts, normally 80 percent or more of incomes, whereas the typical payout percentage for a temporary promotional sweepstakes is an insignificant share of the profits earned by the company [normally less than one percent]’

Wallach is quick to liken the online social sweeps casinos to the internet coffee shops that emerged in Florida, providing clients the opportunity to play casino-style video games for genuine prizes. A number of those brick-and-mortar establishments have actually given that been shuttered over accusations of prohibited gambling.

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

Now, Wallach argues, social sweeps gambling establishments should face similar analysis.

‘These differences are not arbitrary,’ Wallach said of social sweeps gambling establishments. ‘They have consistently been mentioned by courts and state attorney general of the United States as essential consider identifying that a sweepstakes promo was in truth a guise for illegal gambling.’

Among the gambling establishment market’s leading trade organizations, 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 defenses and states are giving up significant tax and earnings opportunities as this sports betting changes that carried out through controlled channels,’ read a well-circulated AGA memo.

And then there are the complainants who have sued social casinos in more than a dozen states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in four different cases in Kentucky without admitting any misbehavior, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action lawsuit, stating the settlement was made to prevent legal expenses and continued lawsuits.

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

In the current suit, 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 described in the filing as an ‘illegal sports betting business. ‘

Apple and Google have also been called as defendants in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com’s demand for remark.

‘We normally do not talk about matters before the courts,’ a VGW representative 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 formally served.

‘We have full confidence in our compliance with all laws and guidelines where we run, and remain confident about the future,’ the representative continued. ‘We continue to use our free-to-play games throughout many of The United States and Canada, as we have for more than a decade, developing not only excellent video games, user experiences and entertainment, but likewise guaranteeing this is done safely, responsibly and at the highest level of standards.

‘More broadly, we ‘d repeat that class actions and other lawsuits and arbitrations are fairly typical across the online social games market (and the US more broadly), and our standard practice is that we mean to strongly protect any claim which may be brought against 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 endorse VGW’s Global Poker brand name while the NBA is partnered with standard video gaming titans like FanDuel and DraftKings.

‘It’s paradoxical that expert athletes are hawking prohibited sports betting ‘sweeps’ sites while at the very same time the leagues wish to forecast a strong position against unlawful gambling – specifically when attempting to tamp down the periodic gambling scandal,’ Glaser informed DailyMail.com.

It was simply eight 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 unassociated to anything including social or sweepstakes casinos.

Together with VGW, Apple and Google are being taken legal action against for hosting allegedly illegal gambling sites

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

‘I ‘d expect that a league crackdown on athletes backing sweepstakes websites refers when, not if,’ Glaser included.

Neither an NBA spokesman nor the gamers’ representatives responded to DailyMail.com’s demands for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise neglected to react to DailyMail.com e-mails.

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

‘We have complete self-confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,’ the representative said. ‘A few 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 opponent of sweepstakes websites, sees things in a different way.

‘Celebrities who provide their names to shady prohibited gambling sites are, at a minimum, putting their track records at risk in addition to courting civil and class actions by customers who allege harm,’ Glaser stated. ‘There is likewise some threat that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for assisting in prohibited sports betting.’

New YorkNBADrakeParis Hilton