The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday’s hearing on unlawful gambling.
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No, they weren’t personally in attendance, but the world-famous stars were conspicuously consisted of in a slide discussion on social and sweepstakes casinos - the controversial sites providing both free casino-style video games and financially rewarding rewards, such as money, present cards or cryptocurrency. In one ad, 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 websites are just two cogs in the multibillion-dollar industry that now finds itself besieged by lawsuits. In the eyes of many video gaming corporations, not to mention lawsuit complainants and state regulators, sweepstakes gambling establishments serve as conventional gambling establishments, just without the oversight, customer securities and tax laws. So not just can they avoid the high 24-percent federal gambling levy, but 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 revenue in 2015 alone. Now the business deals with accusations of unlawful gaming in a New york city suit that claims VGW utilizes celeb endorsers to ‘develop a veneer of authenticity’ around its item. (See VGW’s declaration listed below)

‘I’m unsure” if you do not trust us, you can trust Paris Hilton” is a winning message for business operating multibillion-dollar prohibited operations out of places like Malta, Isle of Man, or US mail drops,’ Friday’s speaker, Howard Glaser of video gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers include a range of celebs 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 provide any differences between traditional gaming and sweepstakes play.

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

Ryan Seacrest prompts fans to play at Chumba Casino, where many - but not all - games are complimentary

Drake has an offer with social sweeps casino, Stake, that he routinely touts on social media

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Instead, advertisements typically center around the social element of the casinos, while leaving out the potential for real gaming losses.

Others tempt clients with pledges of rewards. One such operator, Stake, ran a social media ad showing off Drake’s automobiles, planes and estates before rotating to footage of the rap artist playing online casino-style games.

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

Another caption discussed: ‘Because I never quit.’

The discrepancy in between gambling sites and social or sweepstakes casinos is a bit complicated, but operators of the latter insist they’re not involved with the former.

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), explained 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 gambling establishments are sports betting free.

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

Social gambling establishments offer clients a possibility to play casino-style games with friends. Players have the alternative to purchase valueless currency often described as ‘gold coins,’ which can not be exchanged for genuine cash, however can be used to open numerous functions within the games.

But within the world of social gambling establishments exists sweepstakes gaming, enabling customers to acquire other currency referred to as ‘sweeps coins’ that can be exchanged for cash or other prizes.

And therein lies the capacity for monetary 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 value.

The Philadelphia 76ers’ Paul George is seen promoting a Worldwide Poker event

Social sweeps casino Stake ran an advertisement flaunting 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 but 7 states, which has actually helped to fuel the popularity of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes sites, which don’t need usually need recognition. However, sites like Chumba will request for IDs from gamers attempting to withdraw any funds.

Many websites, like the crypto-compatible Stake, permit consumers to submit mail-in demands for free sweeps coins, offered the gamers follow painfully particular guidelines. What’s more, gamers are typically rewarded with sweeps coins merely for signing up, therefore offering them a reason to attempt their hands at any number of gambling establishment video games for an opportunity to win - or lose - real money.

So why are sweepstakes websites permitted to operate in 48 states, while online casinos are banned in all however 7?

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

‘Social sweepstakes games are merely a form of online home entertainment,’ an SPGA spokesperson informed DailyMail.com by email. ‘No purchase is required to play at social gambling establishments with sweepstakes prizes. Consumers never ever need to spend for an opportunity to win rewards. That lack of a purchase requirement - or” consideration” - is an important difference in between social sweeps and standard online gambling websites like casinos.’

Think of the way that McDonald’s uses its annual Monopoly video game to promote its food: Customers aren’t paying to bet, however rather they’re purchasing hamburgers and fries that use them the opportunity to win financially rewarding prizes, such as a $1 million jackpot.

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

‘Sweepstakes are an enduring approach for promoting all sort of everyday organizations in the United States, whatever from burgers to magazine memberships to coffee and home enhancement stores,’ the SPGA representative informed DailyMail.com. ‘Sweepstakes promos are frequently utilized by a who’s who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.’

But to lots of sports betting industry insiders, that argument doesn’t cut it.

For starters, video gaming attorney Daniel Wallach explains, McDonald’s Monopoly video game does not run indefinitely. Rather, it has a well-defined beginning and end, thus suggesting the sweepstakes is not the fast-food giant’s main product. Instead, the sweepstakes is being used to promote genuine items like french fries, shakes, and the Filet-O-Fish.

‘They do not last permanently and they’re typically not tied to casino-style games of opportunity,’ Wallach informed DailyMail.com. ‘They’re just cash giveaways.

‘The sweepstakes [gambling establishments] possess none of the qualities typically associated with McDonald’s-style sweepstakes promotions,’ Wallach continued. ‘Besides running in eternity, the sweepstakes casinos provide” casino-like” payouts, usually 80 percent or more of profits, whereas the common payment portion for a temporary advertising sweepstakes is a minor share of the profits earned by the company [typically less than one percent]’

Wallach is fast to liken the online social sweeps casinos to the internet coffee shops that emerged in Florida, using customers the opportunity to play casino-style games for real prizes. A lot of those brick-and-mortar establishments have actually because been shuttered over claims of unlawful gambling.

DJ Khaled is amongst numerous star spokespeople for VGW’s Global Poker brand name

Now, Wallach argues, social sweeps gambling establishments must face comparable examination.

‘These distinctions are not approximate,’ Wallach stated of social sweeps gambling establishments. ‘They have actually consistently been cited by courts and state attorney general of the United States as key aspects in identifying that a sweepstakes promotion was in truth a guise for prohibited sports betting.’

One of the gambling establishment industry’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 problem.

‘Consumers are being denied of defenses and states are passing up considerable tax and revenue chances as this gambling changes that conducted through managed channels,’ checked out a well-circulated AGA memo.

And then there are the plaintiffs who have actually sued social casinos 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 wrongdoing, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, stating the settlement was made to prevent legal costs and continued litigation.

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

In the most recent suit, which is mainly comparable to its predecessors, New york city state homeowners Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is explained in the filing as an ‘prohibited sports betting business. ‘

Apple and Google have actually likewise been called as defendants in suits for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com’s request for remark.

‘We typically do not comment on matters before the courts,’ a VGW spokesperson told DailyMail.com via e-mail. ‘However, we note that this claim has only just been submitted with the court and VGW has not been formally served.

‘We have complete self-confidence in our compliance with all laws and policies where we run, and stay confident about the future,’ the spokesperson continued. ‘We continue to use our free-to-play games throughout the majority of North America, as we have for more than a decade, creating not only excellent games, user experiences and home entertainment, but likewise ensuring this is done safely, properly and at the highest level of standards.
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‘More broadly, we ’d repeat that class actions and other litigations and arbitrations are fairly typical throughout the online social video games market (and the US more broadly), and our standard practice is that we intend to intensely defend any claim which may be brought versus us.’

The issues in between standard online gambling and sweepstakes casinos might prove 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 traditional gaming titans like FanDuel and DraftKings.

‘It’s paradoxical that professional athletes are hawking illegal sports betting ‘sweeps’ sites while at the exact same time the leagues wish to predict a strong position against illegal gambling - especially when trying to tamp down the occasional gambling scandal,’ Glaser told DailyMail.com.

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

Along with VGW, Apple and Google are being demanded hosting apparently 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 endorsing sweepstakes sites refers when, not if,’ Glaser added.

Neither an NBA representative nor the players’ representatives reacted to DailyMail.com’s requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also overlooked to react to DailyMail.com emails.
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Asked if their celeb endorsers have a responsibility to discuss to consumers the differences and similarities between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that requires to be done.

‘We have full confidence in our influencer and ambassadorial collaborations, and our service practices more broadly,’ the spokesperson stated. ‘A few of our worths are” our gamers 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 sites, sees things in a different way.

‘Celebrities who lend their names to dubious illegal gaming sites are, at a minimum, putting their credibilities at threat along with courting civil and class actions by customers who allege damage,’ Glaser stated. ‘There is also some danger that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for assisting in prohibited sports betting.’

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