The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on illegal sports betting.
No, they weren't personally in participation, but the world-famous celebs were notably included in a slide presentation on social and sweepstakes gambling establishments - the questionable sites using both free casino-style games and lucrative rewards, such as money, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for complimentary,' 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 gaming corporations, not to point out lawsuit complainants and state regulators, sweepstakes casinos act as standard gambling establishments, only without the oversight, consumer securities and tax laws. So not just can they avoid the steep 24-percent federal sports betting levy, but sweepstakes operators aren't subject to regulative obstacles like anti-money laundering and responsible-gaming protections.
One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits last year alone. Now the company faces allegations of prohibited gambling in a New York suit that declares VGW utilizes celebrity endorsers to 'develop a veneer of legitimacy' around its product. (See VGW's statement below)
'I'm unsure" if you do not trust us, you can rely on Paris Hilton" is a winning message for companies running multibillion-dollar unlawful operations out of places like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.
Sweepstakes endorsers consist of a variety of stars from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions between standard gaming and sweepstakes play.
Paris Hilton is seen plugging Wow Vegas, among lots of sweepstakes casinos discovered online
Ryan Seacrest prompts fans to play at Chumba Casino, where many - however not all - games are complimentary
Drake has a handle social sweeps casino, Stake, that he frequently touts on social media
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Instead, advertisements typically focus around the social aspect of the gambling establishments, while leaving out the capacity for real gaming losses.
Others lure customers with pledges of rewards. One such operator, Stake, ran a social media advertisement showing off Drake's cars and trucks, aircrafts and mansions before rotating to footage of the rapper playing online casino-style video games.
'Daddy, why do we have a lot cash?' check out the very first caption on the screen.
Another caption explained: 'Because I never ever quit.'
The disparity between gaming sites and social or sweepstakes casinos is a bit complicated, however operators of the latter insist they're not involved with the former.
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A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA information, many of the gamers on social-sweepstakes casinos are playing for free.
'Most social sweeps clients never purchase,' the SPGA representative informed DailyMail.com. 'The minority of clients who make purchases do so in amounts far smaller than the normal deposit or wager size at real-money online sports betting sites.'
Social casinos provide customers a chance to play casino-style video games with pals. Players have the option to buy valueless currency frequently described as 'gold coins,' which can not be exchanged for real money, but can be used to unlock various functions within the video games.
But within the world of social gambling establishments exists sweepstakes gaming, enabling customers to obtain other currency called 'sweeps coins' that can be exchanged for money or other prizes.
And therein lies the capacity for financial losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York City. One player 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 cash and other things of value.
The Philadelphia 76ers' Paul George is seen promoting a Worldwide Poker occasion
Social sweeps casino Stake ran an ad flaunting Drake's cars, airplanes and estates
Karl-Anthony Towns of the New York Knicks is another NBA star plugging VGW's Global Poker
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Traditional online casinos are banned in all however 7 states, which has actually helped to fuel the appeal of sweepstakes casinos.
Anyone over the age of 18 can access the sweepstakes websites, which do not need normally need identification. However, sites like Chumba will ask for IDs from gamers trying to withdraw any funds.
Many sites, like the crypto-compatible Stake, allow customers to send mail-in demands for complimentary sweeps coins, offered the players follow painfully specific guidelines. What's more, gamers are often rewarded with sweeps coins merely for signing up, thus providing 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 but 7?
According to the stakeholders, their product is the free casino-style video gaming, and the real-stakes competition is simply a method of promoting their bread and butter.
'Social sweepstakes games are just a type of online entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is required to dip into social gambling establishments with sweepstakes rewards. Consumers never ever need to spend for an opportunity to win prizes. That lack of a purchase requirement - or" factor to consider" - is a crucial difference between social sweeps and standard online gaming sites like gambling establishments.'
Think of the way that McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and fries that use them the chance to win lucrative prizes, such as a $1 million prize.
And without a purchase requirement, or 'factor to consider', the game itself doesn't fulfill the definition of gambling in the US.
'Sweepstakes are an enduring technique for promoting all kinds of everyday services in the United States, whatever from burgers to publication memberships to coffee and home enhancement stores,' the SPGA spokesperson told DailyMail.com. are routinely utilized 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 insiders, that argument does not cut it.
For starters, gaming lawyer Daniel Wallach points out, McDonald's Monopoly video game doesn't run forever. Rather, it has a distinct beginning and end, consequently recommending the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being utilized to promote real items like french fries, shakes, and the Filet-O-Fish.
'They don't last forever and they're generally not tied to casino-style games of chance,' Wallach informed DailyMail.com. 'They're simply cash free gifts.
'The sweepstakes [casinos] possess none of the attributes frequently related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos provide" casino-like" payouts, generally 80 percent or more of earnings, whereas the normal payout percentage for a short-term promotional sweepstakes is a trivial share of the income made by the business [normally less than one percent]'
Wallach is quick to compare the online social sweeps casinos to the internet coffee shops that sprang up in Florida, using clients the opportunity to play casino-style video games for genuine prizes. Much of those brick-and-mortar facilities have considering that been shuttered over claims of unlawful gambling.
DJ Khaled is among a number of star spokespeople for VGW's Global Poker brand
Now, Wallach argues, social sweeps gambling establishments ought to face similar scrutiny.
'These distinctions are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been cited by courts and state lawyer generals as crucial aspects in identifying that a sweepstakes promotion remained in reality a guise for prohibited gaming.'
One of the gambling establishment market's leading trade companies, the American Gaming Association, is now pressing lawmakers to investigate sweepstakes operators and, in many cases, enact new legislation on the issue.
'Consumers are being deprived of securities and states are giving up significant tax and profits opportunities as this sports betting replaces that performed through managed channels,' read a well-circulated AGA memo.
And after that there are the complainants who have actually taken legal action against social casinos in more than a dozen states.
Sweepstakes casino operators paid a combined $14.2 million in 4 separate 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 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 largely comparable to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is described in the filing as an 'illegal sports betting business. '
Apple and Google have actually likewise been called as accuseds in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's ask for remark.
'We normally do not talk about matters before the courts,' a VGW representative informed DailyMail.com by means of email. 'However, we keep in mind that this claim has actually only simply 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 positive about the future,' the spokesperson continued. 'We continue to offer our free-to-play games throughout many of North America, as we have for more than a years, creating not only excellent games, user experiences and home entertainment, but also guaranteeing this is done securely, properly and at the greatest level of standards.
'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are reasonably typical throughout the online social games market (and the US more broadly), and our basic practice is that we intend to vigorously protect any claim which might be brought versus us.'
The issues between standard online sports betting and sweepstakes casinos might prove problematic for some celeb endorsers.
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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 'sweeps' websites while at the very same time the leagues want to predict a strong position against unlawful gambling - especially when trying to tamp down the periodic gambling scandal,' Glaser told DailyMail.com.
It was simply eight 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 unrelated to anything including social or sweepstakes casinos.
Together with VGW, Apple and Google are being demanded hosting apparently unlawful gambling websites
Regardless, Glaser sees sweepstakes casinos as a major problem for leagues such as the NBA.
'I 'd anticipate that a league crackdown on professional athletes endorsing sweepstakes websites refers when, not if,' Glaser included.
Neither an NBA spokesman nor the players' agents reacted to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise overlooked to respond to DailyMail.com emails.
Asked if their celebrity endorsers have a responsibility to explain to consumers the differences and resemblances in between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that needs to be done.
'We have complete self-confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the representative 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 challenger of sweepstakes websites, sees things in a different way.
'Celebrities who provide their names to shady prohibited gambling sites are, at a minimum, putting their track records at risk in addition to courting civil and class actions by consumers who declare damage,' Glaser said. 'There is also some threat that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for assisting in illegal gambling.'
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Sweepstakes Casino Controversy - And Celebrities' All-important Role
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