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 sports betting.

No, they weren’t personally in participation, but the world-famous celebs were conspicuously consisted of in a slide discussion on social and sweepstakes casinos – the controversial sites offering both complimentary casino-style games and profitable rewards, such as cash, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can ‘bet 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 market that now discovers itself besieged by claims. In the eyes of many video gaming corporations, not to mention claim plaintiffs and state regulators, sweepstakes casinos act as conventional casinos, only without the oversight, customer defenses and tax laws. So not only can they prevent the high 24-percent federal gambling levy, however sweepstakes operators aren’t based on regulatory 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 accusations of prohibited gambling in a New York claim that claims VGW utilizes star endorsers to ‘produce a veneer of authenticity’ around its product. (See VGW’s declaration below)

‘I’m unsure” if you do not trust us, you can trust Paris Hilton” is a winning message for companies operating multibillion-dollar prohibited 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 variety of celebrities from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George – none of whom use any distinctions between standard sports betting and sweepstakes play.

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

Ryan Seacrest urges fans to dip into Chumba Casino, where lots of – but not all – games are totally free

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

Read More

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

Instead, ads typically center around the social aspect of the gambling establishments, while leaving out the potential for actual gambling losses.

Others lure clients with guarantees of rewards. One such operator, Stake, ran a social networks ad displaying Drake’s cars and trucks, airplanes and mansions before rotating to video footage of the rapper playing online casino-style games.

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

Another caption described: ‘Because I never quit.’

The disparity in between gaming websites and social or sweepstakes gambling establishments is a bit complex, but operators of the latter insist they’re not involved with the previous.

A representative 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 data, the majority of the gamers on social-sweepstakes casinos are sports betting complimentary.

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

Social gambling establishments offer consumers a chance to play casino-style games with pals. Players have the option to buy worthless currency frequently referred to as ‘gold coins,’ which can not be exchanged genuine money, but can be used to open numerous features within the video games.

But within the world of social gambling establishments exists sweepstakes gaming, permitting clients to get other currency understood as ‘sweeps coins’ that can be exchanged for money 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. One player 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 cash 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 and trucks, planes and mansions

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

Traditional online casinos are prohibited in all however 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 typically need recognition. However, websites like Chumba will request for IDs from gamers trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, permit clients to send mail-in ask for free sweeps coins, provided the gamers follow painfully particular guidelines. What’s more, gamers are often rewarded with sweeps coins just for signing up, thereby offering them a reason to try their hands at any number of gambling establishment video games for a possibility to win – or lose – genuine money.

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

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

‘Social sweepstakes games are just a form of online home entertainment,’ an SPGA spokesperson informed DailyMail.com by email. ‘No purchase is needed to dip into social gambling establishments with sweepstakes rewards. Consumers never have to pay for a chance to win rewards. That absence of a purchase requirement – or” factor to consider” – is an important difference in between social sweeps and conventional online gambling websites like gambling establishments.’

Think about the manner in which McDonald’s utilizes its yearly Monopoly video game to promote its food: Customers aren’t paying to bet, however rather they’re buying hamburgers and fries that offer them the possibility to win lucrative prizes, such as a $1 million prize.

And without a purchase requirement, or ‘consideration’, the video game itself does not fulfill the meaning of sports betting in the US.

‘Sweepstakes are a long-standing method for promoting all type of everyday services in the United States, everything from hamburgers to publication subscriptions to coffee and home improvement stores,’ the SPGA representative informed DailyMail.com. ‘Sweepstakes promotions 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 gambling industry experts, that argument does not cut it.

For starters, video gaming lawyer Daniel Wallach explains, McDonald’s Monopoly video game doesn’t run forever. Rather, it has a well-defined start and end, thereby recommending the sweepstakes is not the fast-food giant’s primary product. Instead, the sweepstakes is being utilized to promote real items like fries, shakes, and the Filet-O-Fish.

‘They don’t last forever and they’re normally not tied to casino-style games of opportunity,’ Wallach informed DailyMail.com. ‘They’re just cash free gifts.

‘The sweepstakes [casinos] have none of the qualities typically connected with McDonald’s-style sweepstakes promos,‘ Wallach continued. ‘Besides running in all time, the sweepstakes gambling establishments use” casino-like” payments, generally 80 percent or more of profits, whereas the common payment portion for a temporary advertising sweepstakes is an unimportant share of the profits earned by the company [usually less than one percent]’

Wallach fasts to liken the online social sweeps gambling establishments to the internet coffee shops that emerged in Florida, using consumers the chance to play casino-style video games for genuine rewards. A number of those brick-and-mortar establishments have actually considering that been shuttered over allegations of unlawful sports betting.

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

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

‘These differences are not approximate,’ Wallach said of social sweeps gambling establishments. ‘They have repeatedly been pointed out by courts and state chief law officer as key consider identifying that a sweepstakes promotion was in reality a guise for unlawful sports betting.’

One of the gambling establishment market’s leading trade companies, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, in many cases, enact brand-new legislation on the problem.

‘Consumers are being denied of protections and states are forgoing significant tax and revenue chances as this sports betting that conducted through managed channels,’ read a well-circulated AGA memo.

And then there are the plaintiffs who have actually sued social casinos in more than a lots states.

Sweepstakes casino operators paid a combined $14.2 million in four separate cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action suit, stating the settlement was made to prevent legal expenses and continued lawsuits.

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

In the current lawsuit, which is mainly comparable to its predecessors, New York state citizens 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 business. ‘

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

‘We typically do not discuss matters before the courts,’ a VGW representative informed DailyMail.com through e-mail. ‘However, we note that this claim has actually only simply been filed 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 run, and remain positive about the future,’ the spokesperson continued. ‘We continue to use our free-to-play video games across the majority of The United States and Canada, as we have for more than a decade, developing not only fantastic games, user experiences and entertainment, however also guaranteeing this is done securely, responsibly and at the greatest level of requirements.

‘More broadly, we ‘d restate that class actions and other lawsuits and arbitrations are relatively common across the online social video games industry (and the US more broadly), and our standard practice is that we plan to intensely protect any claim which might be brought versus us.’

The issues between traditional online gaming and sweepstakes casinos might show bothersome for some star 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 standard gaming titans like FanDuel and DraftKings.

‘It’s ironic that professional athletes are hawking prohibited sports betting wagering ‘sweeps’ websites while at the exact same time the leagues desire to predict a strong stance against unlawful gambling – specifically when trying to tamp down the occasional gambling scandal,’ Glaser informed DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter got a life time ban from the NBA over allegations 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 taken legal action against for hosting apparently illegal gambling websites

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 websites is a matter of when, not if,’ Glaser added.

Neither an NBA representative nor the players’ agents reacted to DailyMail.com’s ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also ignored to react to DailyMail.com e-mails.

Asked if their star endorsers have an obligation to discuss to clients the differences and resemblances between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that requires to be done.

‘We have full confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,’ the spokesperson said. ‘Some of our worths are” our players come initially” and” we do what’s right”, and we put our values at the core of whatever we do.’

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

‘Celebrities who provide their names to shady unlawful gambling websites are, at a minimum, putting their track records at danger as well as courting civil and class actions by consumers who allege damage,’ Glaser said. ‘There is likewise some risk that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for helping with prohibited sports betting.’

New YorkNBADrakeParis Hilton