The smiling faces of Paris Hilton and Ryan Seacrest made surprise looks before the Louisiana Senate for Friday's hearing on prohibited sports betting.
No, they weren't personally in attendance, but the world-famous celebrities were conspicuously consisted of in a slide presentation on social and sweepstakes casinos - the questionable websites using both complimentary casino-style games and financially rewarding prizes, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The websites are just two cogs in the multibillion-dollar industry that now discovers itself besieged by claims. In the eyes of numerous gaming corporations, not to point out claim complainants and state regulators, sweepstakes casinos serve as conventional casinos, only without the oversight, consumer protections 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 defenses.
One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the company deals with accusations of unlawful gaming in a New york city claim that declares VGW utilizes celeb endorsers to 'produce a veneer of authenticity' around its product. (See VGW's statement below)
'I'm unsure" if you don't trust us, you can rely on 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 gaming corporation Light & Wonder, told DailyMail.com.
Sweepstakes endorsers include a series 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 offer any differences in between conventional sports betting and sweepstakes play.
Paris Hilton is seen plugging Wow Vegas, one of many sweepstakes gambling establishments discovered online
Ryan Seacrest prompts fans to dip into Chumba Casino, where numerous - but not all - video games are complimentary
Drake has a handle social sweeps gambling establishment, Stake, that he regularly promotes on social networks
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Instead, advertisements normally center around the social element of the gambling establishments, while leaving out the capacity for real gambling losses.
Others tempt customers with promises of rewards. One such operator, Stake, ran a social networks advertisement displaying 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 so much money?' check out the first caption on the screen.
Another caption discussed: 'Because I never quit.'
The discrepancy between gaming sites and social or sweepstakes casinos is a bit complex, however operators of the latter insist they're not included with the previous.
A spokesperson for a market trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, most of the players on social-sweepstakes gambling establishments are sports betting complimentary.
'Most social sweeps clients never make a purchase,' the SPGA spokesperson told DailyMail.com. 'The minority of customers who make purchases do so in quantities far smaller sized than the normal deposit or bet size at real-money online gambling websites.'
Social casinos offer clients an opportunity to play casino-style video games with good friends. Players have the option to buy valueless currency frequently described as 'gold coins,' which can not be exchanged for genuine money, but can be used to open various functions within the games.
But within the world of social gambling establishments exists sweepstakes gaming, allowing consumers to get other currency called 'sweeps coins' that can be exchanged for cash or other prizes.
And therein lies the potential for financial losses, like the ones declared 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 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 flaunting 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 gambling establishments are banned in all but 7 states, which has helped to sustain the appeal of sweepstakes casinos.
Anyone over the age of 18 can access the sweepstakes websites, which don't need generally require identification. However, sites like Chumba will request IDs from gamers attempting to withdraw any funds.
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Many sites, like the crypto-compatible Stake, allow consumers to send mail-in ask for free sweeps coins, supplied the players follow painfully specific instructions. What's more, players are often rewarded with sweeps coins simply for registering, thereby a factor to try their hands at any variety of gambling establishment video games for a possibility to win - or lose - real cash.
So why are sweepstakes sites enabled to operate in 48 states, while online casinos are prohibited in all however 7?
According to the stakeholders, their product is the complimentary casino-style gaming, and the real-stakes competition is simply a method of promoting their bread and butter.
'Social sweepstakes video games are just a type of online home entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is needed to play at social casinos with sweepstakes rewards. Consumers never ever have to spend for a chance to win prizes. That lack of a purchase requirement - or" consideration" - is a crucial difference between social sweeps and traditional online gaming sites like gambling establishments.'
Consider the manner in which McDonald's utilizes its annual Monopoly game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and french fries that provide them the opportunity to win lucrative prizes, such as a $1 million prize.
And without a purchase requirement, or 'consideration', the video game itself doesn't fulfill the meaning of sports betting in the US.
'Sweepstakes are an enduring approach for promoting all type of everyday organizations in the United States, whatever from hamburgers to magazine memberships to coffee and home improvement stores,' the SPGA spokesperson told 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 industry experts, that argument doesn't cut it.
For starters, video gaming attorney Daniel Wallach points out, McDonald's Monopoly video game doesn't run forever. Rather, it has a well-defined start and end, thereby suggesting the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being utilized to promote genuine items like french fries, shakes, and the Filet-O-Fish.
'They do not last forever and they're usually not connected to casino-style games of opportunity,' Wallach told DailyMail.com. 'They're just cash giveaways.
'The sweepstakes [gambling establishments] have none of the qualities frequently associated with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments use" casino-like" payouts, usually 80 percent or more of profits, whereas the normal payout portion for a short-term marketing sweepstakes is an unimportant share of the earnings earned by the company [generally less than one percent]'
Wallach is fast to liken the online social sweeps casinos to the web cafes that emerged in Florida, using customers the chance to play casino-style video games for real rewards. Many of those brick-and-mortar establishments have considering that been shuttered over allegations of prohibited gambling.
DJ Khaled is amongst several celebrity spokespeople for VGW's Global Poker brand name
Now, Wallach argues, social sweeps casinos should face comparable examination.
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'These differences are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have repeatedly been pointed out by courts and state chief law officer as essential elements in identifying that a sweepstakes promo was in fact a guise for prohibited sports betting.'
One of the gambling establishment market's leading trade organizations, the American Gaming Association, is now pressing legislators to examine sweepstakes operators and, sometimes, enact new legislation on the concern.
'Consumers are being denied of securities and states are passing up considerable tax and income chances as this gambling changes that carried out through managed channels,' read a well-circulated AGA memo.
And then there are the plaintiffs who have sued social gambling establishments in more than a dozen states.
Sweepstakes gambling establishment operators paid a combined $14.2 million in four separate cases in Kentucky without admitting any misbehavior, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action suit, stating the settlement was made to avoid legal expenses and continued lawsuits.
Michael Phelps has signed a deal with the VGW Group, which owns Global Poker
In the current claim, which is mostly comparable to its predecessors, New York state homeowners Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is described in the filing as an 'prohibited sports betting enterprise. '
Apple and Google have likewise been named as defendants in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com's demand for comment.
'We generally don't talk about matters before the courts,' a VGW spokesperson informed DailyMail.com by means of email. 'However, we keep in mind that this claim has only simply been submitted with the court and VGW has not been formally served.
'We have complete confidence in our compliance with all laws and policies where we operate, and remain confident about the future,' the spokesperson continued. 'We continue to offer our free-to-play video games across the majority of North America, as we have for more than a years, developing not just great games, user experiences and home entertainment, however also guaranteeing this is done safely, properly and at the greatest level of standards.
'More broadly, we 'd restate that class actions and other litigations and arbitrations are reasonably typical across the online social games industry (and the US more broadly), and our standard practice is that we mean to vigorously protect any claim which may be brought versus us.'
The problems between standard online gambling and sweepstakes gambling establishments could prove bothersome for some celebrity endorsers.
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 video gaming titans like FanDuel and DraftKings.
'It's ironic that professional athletes are hawking prohibited sports betting 'sweeps' sites while at the same time the leagues desire to forecast a strong stance versus illegal gaming - particularly when trying to tamp down the periodic gaming scandal,' Glaser told DailyMail.com.
It was just 8 months ago that Toronto Raptors forward Jontay Porter received a life time restriction from the NBA over accusations he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes casinos.
Along with VGW, Apple and Google are being demanded hosting allegedly unlawful sports betting websites
Regardless, Glaser sees sweepstakes gambling establishments as a significant concern for leagues such as the NBA.
'I 'd anticipate that a league crackdown on professional athletes backing sweepstakes websites refers when, not if,' Glaser included.
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Neither an NBA representative nor the players' representatives reacted to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to react to DailyMail.com e-mails.
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Asked if their star endorsers have a responsibility to explain to consumers the distinctions and resemblances in between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that requires to be done.
'We have full self-confidence in our influencer and ambassadorial collaborations, and our business practices more broadly,' the spokesperson said. 'Some of our values are" our gamers precede" 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 differently.
'Celebrities who provide their names to dubious unlawful sports betting websites are, at a minimum, putting their reputations at risk in addition to courting civil and class actions by consumers who allege damage,' Glaser stated. 'There is likewise some danger that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for assisting in prohibited gambling.'
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Sweepstakes Casino Controversy And Celebrities' All important Role
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