The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on unlawful gambling.
No, they weren't personally in presence, but the world-famous celebs were notably included in a slide discussion on social and sweepstakes casinos - the controversial sites providing both totally free casino-style games and rewarding prizes, such as cash, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
The sites are just 2 cogs in the multibillion-dollar industry that now finds itself besieged by lawsuits. In the eyes of numerous gaming corporations, not to discuss claim plaintiffs and state regulators, sweepstakes casinos act as standard gambling establishments, only without the oversight, consumer and tax laws. So not just can they avoid the high 24-percent federal gambling levy, but sweepstakes operators aren't subject to regulatory difficulties like anti-money laundering and responsible-gaming defenses.
One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the business deals with allegations of unlawful sports betting in a New york city lawsuit that claims VGW uses celeb endorsers to 'create a veneer of legitimacy' around its item. (See VGW's statement below)
'I'm uncertain" 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, told DailyMail.com.
Sweepstakes endorsers consist of a variety of stars from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions between traditional sports betting and sweepstakes play.
Paris Hilton is seen plugging Wow Vegas, one of lots of sweepstakes gambling establishments discovered online
Ryan Seacrest urges fans to dip into Chumba Casino, where lots of - however not all - games are free
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Drake has a handle social sweeps gambling establishment, Stake, that he frequently touts on social networks
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Instead, ads usually center around the social aspect of the casinos, while omitting the capacity for actual sports betting losses.
Others tempt consumers with promises of prizes. One such operator, Stake, ran a social media advertisement showing off Drake's cars and trucks, airplanes and mansions before pivoting to footage of the rap artist playing online casino-style video games.
'Daddy, why do we have so much money?' check out the first caption on the screen.
Another caption explained: 'Because I never quit.'
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 former.
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 data, many of the gamers on social-sweepstakes casinos are sports betting free.
'Most social sweeps customers never make a purchase,' the SPGA spokesperson told DailyMail.com. 'The minority of clients who make purchases do so in quantities far smaller sized than the normal deposit or bet size at real-money online sports betting sites.'
Social casinos use consumers a possibility to play casino-style video games with good friends. Players have the choice to buy worthless currency often described as 'gold coins,' which can not be exchanged for genuine money, but can be utilized to unlock different features within the games.
But within the world of social casinos exists sweepstakes gaming, enabling customers to get other currency understood as 'sweeps coins' that can be exchanged for cash or other rewards.
And therein lies the potential for monetary 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 money and other things of value.
The Philadelphia 76ers' Paul George is seen promoting a Worldwide Poker event
Social sweeps casino Stake ran an ad flaunting Drake's automobiles, 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 helped to fuel the appeal of sweepstakes casinos.
Anyone over the age of 18 can access the sweepstakes sites, which don't need typically need identification. However, sites like Chumba will request for IDs from players trying to withdraw any funds.
Many sites, like the crypto-compatible Stake, allow clients to send mail-in demands for complimentary sweeps coins, provided the gamers follow painfully specific instructions. What's more, players are frequently rewarded with sweeps coins simply for signing up, thereby offering them a factor to attempt their hands at any variety of gambling establishment games for an opportunity to win - or lose - real money.
So why are sweepstakes websites permitted to run in 48 states, while online casinos are prohibited in all however 7?
According to the stakeholders, their item is the totally free casino-style gaming, and the real-stakes competition is simply a means of promoting their support.
'Social sweepstakes video games are just a form of online entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is needed to dip into social casinos with sweepstakes rewards. Consumers never have to spend for a chance to win rewards. That absence of a purchase requirement - or" consideration" - is an important distinction between social sweeps and traditional online sports betting websites like casinos.'
Consider the manner in which McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and french fries that provide them the possibility to win profitable prizes, such as a $1 million jackpot.
And without a purchase requirement, or 'consideration', the game itself does not fulfill the definition of gambling in the US.
'Sweepstakes are a long-standing technique for promoting all type of everyday 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 gambling market insiders, that argument doesn't cut it.
For beginners, gaming lawyer Daniel Wallach explains, McDonald's Monopoly game does not run forever. Rather, it has a distinct beginning and end, therefore suggesting the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being used to promote genuine products like fries, shakes, and the Filet-O-Fish.
'They don't last forever and they're typically not tied to casino-style video games of possibility,' Wallach informed DailyMail.com. 'They're simply money giveaways.
'The sweepstakes [gambling establishments] have none of the attributes frequently associated with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos provide" casino-like" payments, typically 80 percent or more of earnings, whereas the normal payment portion for a short-lived promotional sweepstakes is an insignificant share of the earnings earned by the business [generally less than one percent]'
Wallach fasts to liken the online social sweeps casinos to the internet cafes that emerged in Florida, offering clients the possibility to play casino-style video games for real prizes. Much of those brick-and-mortar establishments have actually since been shuttered over accusations of unlawful gambling.
DJ Khaled is amongst several star spokespeople for VGW's Global Poker brand name
Now, Wallach argues, social sweeps gambling establishments must deal with comparable scrutiny.
'These distinctions are not arbitrary,' Wallach stated of social sweeps casinos. 'They have actually repeatedly been cited by courts and state attorney general of the United States as essential consider figuring out that a sweepstakes promotion was in reality a guise for illegal sports betting.'
Among the gambling establishment industry's leading trade organizations, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, in some cases, enact brand-new legislation on the problem.
'Consumers are being denied of securities and states are passing up substantial tax and profits opportunities as this sports betting changes that conducted through managed channels,' read a well-circulated AGA memo.
And after that there are the plaintiffs who have taken legal action against social casinos in more than a dozen states.
Sweepstakes casino operators paid a combined $14.2 million in four different cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action suit, saying the settlement was made to prevent legal costs and continued lawsuits.
Michael Phelps has signed a deal with the VGW Group, which owns Global Poker
In the most recent claim, which is largely similar to its predecessors, New york city state locals 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 gambling enterprise. '
Apple and Google have actually also been called as offenders in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for remark.
'We normally don't discuss matters before the courts,' a VGW spokesperson informed DailyMail.com through email. 'However, we keep in mind that this claim has actually 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 policies where we operate, and remain positive about the future,' the spokesperson continued. 'We continue to provide our free-to-play video games across most of The United States and Canada, as we have for more than a years, creating not only excellent video games, user experiences and entertainment, but likewise ensuring this is done securely, responsibly and at the highest level of requirements.
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'More broadly, we 'd restate that class actions and other litigations and arbitrations are relatively typical throughout the online social video games industry (and the US more broadly), and our basic practice is that we intend to vigorously safeguard any claim which may be brought against us.'
The concerns in between traditional online gambling and sweepstakes casinos might show troublesome for some star endorsers.
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Towns, a star center with the Knicks, and the 76ers' George both endorse VGW's Global Poker brand while the NBA is partnered with conventional gaming titans like FanDuel and DraftKings.
'It's paradoxical that professional athletes are hawking prohibited sports betting wagering 'sweeps' websites while at the very same time the leagues want to predict a strong position against prohibited gambling - especially when trying to tamp down the periodic gaming scandal,' Glaser informed DailyMail.com.
It was just eight months ago that Toronto Raptors forward Jontay Porter received a lifetime restriction from the NBA over allegations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes casinos.
Along with VGW, Apple and Google are being demanded hosting supposedly prohibited sports betting sites
Regardless, Glaser sees sweepstakes gambling establishments as a significant issue for leagues such as the NBA.
'I 'd expect that a league crackdown on professional athletes backing sweepstakes websites refers when, not if,' Glaser added.
Neither an NBA representative nor the gamers' representatives reacted to DailyMail.com's requests for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise ignored to react to DailyMail.com emails.
Asked if their celebrity endorsers have a responsibility to explain to clients the distinctions and similarities between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that requires to be done.
'We have complete self-confidence in our influencer and ambassadorial collaborations, and our organization practices more broadly,' the representative stated. 'Some of our worths are" our players come first" 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 differently.
'Celebrities who lend their names to shady unlawful gaming websites are, at a minimum, putting their track records at danger along with courting civil and class actions by customers who declare damage,' Glaser stated. 'There is also some threat that state regulators and state chief law officers rope celeb endorsers into enforcement efforts for facilitating prohibited sports betting.'
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Sweepstakes Casino Controversy And Celebrities' All important Role
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