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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 prohibited gambling.

No, they weren't personally in presence, however the world-famous stars were notably included in a slide discussion on social and sweepstakes casinos - the controversial sites offering both complimentary casino-style games and lucrative prizes, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for totally 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 finds itself besieged by claims. In the eyes of numerous video gaming corporations, not to discuss suit plaintiffs and state regulators, sweepstakes casinos function as standard gambling establishments, just without the oversight, customer protections and tax laws. So not just can they prevent the steep 24-percent federal gambling levy, but sweepstakes operators aren't based on regulative obstacles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the company faces allegations of prohibited gaming in a New york city claim that claims VGW utilizes celeb endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's statement below)

'I'm not exactly sure" if you don't trust us, you can trust Paris Hilton" is a winning message for companies operating multibillion-dollar unlawful operations out of places like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of video gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers include a series of celebrities from sports betting enthusiasts 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 gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among many sweepstakes gambling establishments discovered online

Ryan Seacrest advises fans to play at Chumba Casino, where numerous - but not all - games are totally free

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

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Instead, ads normally center around the social element of the gambling establishments, while omitting the potential for real gambling losses.

Others lure consumers with guarantees of prizes. One such operator, Stake, ran a social media advertisement showing off Drake's cars and trucks, aircrafts and estates before rotating to video footage of the rap artist playing online casino-style games.

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

Another caption explained: 'Because I never quit.'

The inconsistency between sports betting sites and social or sweepstakes gambling establishments is a bit complicated, however operators of the latter insist they're not involved with the previous.

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, most of the gamers on establishments are playing for totally free.

'Most social sweeps consumers never buy,' the SPGA spokesperson informed DailyMail.com. 'The minority of clients who make purchases do so in amounts far smaller than the normal deposit or bet size at real-money online sports betting websites.'

Social gambling establishments provide consumers a chance to play casino-style video games with good friends. Players have the choice to buy worthless currency frequently referred to as 'gold coins,' which can not be exchanged for real cash, but can be utilized to unlock different features within the video games.

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

And therein lies the potential for monetary losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York City. One gamer informed the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the previous year after continuing to buy more coins in pursuit of money and other things of worth.

The Philadelphia 76ers' Paul George is seen promoting an International Poker event

Social sweeps gambling establishment Stake ran an ad displaying 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 gambling establishments are prohibited in all however 7 states, which has actually helped to fuel the popularity of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, permit customers to send mail-in ask for free sweeps coins, provided the players follow painfully particular instructions. What's more, gamers are often rewarded with sweeps coins merely for signing up, consequently providing them a reason to attempt their hands at any number of casino video games for a possibility to win - or lose - genuine cash.

So why are sweepstakes websites allowed to run in 48 states, while online casinos are prohibited in all but 7?

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

'Social sweepstakes video games are just a kind of online entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is required to dip into social gambling establishments with sweepstakes prizes. Consumers never need to spend for a chance to win prizes. That lack of a purchase requirement - or" factor to consider" - is a crucial distinction in between social sweeps and traditional online gambling sites like gambling establishments.'

Consider the method that McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and french fries that use them the possibility to win lucrative rewards, such as a $1 million prize.

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

'Sweepstakes are an enduring method for promoting all type of daily services in the United States, everything from burgers to magazine memberships to coffee and home enhancement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are routinely used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many sports betting market experts, that argument doesn't cut it.

For starters, video gaming lawyer Daniel Wallach explains, McDonald's Monopoly game does not run forever. Rather, it has a distinct start and end, therefore suggesting the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being used to promote real 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 chance,' Wallach informed DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [gambling establishments] possess none of the attributes typically related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes casinos offer" casino-like" payments, normally 80 percent or more of incomes, whereas the normal payout percentage for a short-lived advertising sweepstakes is an unimportant share of the profits earned by the business [typically less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the internet coffee shops that emerged in Florida, using clients the possibility to play casino-style games for genuine prizes. A lot of those brick-and-mortar facilities have considering that been shuttered over allegations of illegal gaming.

DJ Khaled is among numerous celeb spokespeople for VGW's Global Poker brand

Now, Wallach argues, social sweeps casinos need to deal with comparable scrutiny.

'These distinctions are not approximate,' Wallach said of social sweeps casinos. 'They have consistently been mentioned by courts and state chief law officer as essential aspects in determining that a sweepstakes promo was in truth a guise for unlawful sports betting.'

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

'Consumers are being deprived of defenses and states are passing up significant tax and profits opportunities as this gaming replaces that performed through regulated channels,' checked out a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in 4 different cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action lawsuit, stating the settlement was made to avoid legal expenses and continued litigation.

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

In the current suit, which is mainly comparable to its predecessors, New York state homeowners Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'illegal sports betting enterprise. '

Apple and Google have actually also been called as accuseds in suits for hosting the sweepstakes sites. But unlike VGW, neither tech company 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 keep in mind that this claim has actually only simply been filed with the court and VGW has actually not been officially served.

'We have full self-confidence in our compliance with all laws and policies where we run, and remain confident about the future,' the representative continued. 'We continue to use our free-to-play games across many 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 likewise ensuring this is done safely, responsibly and at the highest level of standards.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are relatively common across the online social video games market (and the US more broadly), and our basic practice is that we mean to vigorously defend any claim which may be brought versus us.'

The concerns between conventional online gaming and sweepstakes gambling establishments might show troublesome 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 standard video gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking illegal sports betting wagering 'sweeps' sites while at the very same time the leagues want to forecast a strong stance against unlawful gaming - specifically when attempting to tamp down the occasional sports betting scandal,' Glaser told DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter got a life time restriction from the NBA over accusations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes gambling establishments.

In addition to VGW, Apple and Google are being demanded hosting presumably unlawful gambling websites

Regardless, Glaser sees sweepstakes casinos as a major issue 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 representative nor the players' agents 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 emails.

Asked if their celebrity endorsers have a responsibility to describe to customers the differences and similarities in between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is absolutely nothing more that needs to be done.

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our business practices more broadly,' the representative stated. 'A few of our worths are" our players come initially" and" we do what's right", and we put our values at the core of everything we do.'

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

'Celebrities who provide their names to dubious unlawful gaming websites are, at a minimum, putting their track records at danger along with courting civil and class actions by consumers who allege harm,' Glaser said. 'There is also some threat that state regulators and state chief law officers rope star endorsers into enforcement efforts for assisting in prohibited sports betting.'

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