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Sweepstakes Casino Controversy - And Celebrities' All-important Role
gradyisaacson edited this page 2025-01-02 05:02:53 +00:00

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The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on prohibited gaming.

No, they weren't personally in presence, but the world-famous celebrities were notably consisted of in a slide discussion on social and sweepstakes casinos - the controversial sites providing both complimentary casino-style games and profitable prizes, such as cash, present 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.
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The sites are just two cogs in the multibillion-dollar market that now finds itself besieged by lawsuits. In the eyes of many gaming corporations, not to discuss suit plaintiffs and state regulators, sweepstakes casinos serve as traditional casinos, only without the oversight, customer protections and tax laws. So not only can they avoid the steep 24-percent federal gambling levy, however sweepstakes operators aren't based on regulatory difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the business faces accusations of illegal gaming in a New York suit that claims VGW utilizes celeb endorsers to 'create a veneer of authenticity' around its product. (See VGW's declaration listed below)

'I'm not exactly sure" if you don't trust us, you can trust 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 video gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers include a series of stars from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom provide any distinctions in between conventional gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of many sweepstakes gambling establishments found online

Ryan Seacrest prompts fans to dip into Chumba Casino, where lots of - but not all - games are totally free

Drake has a deal with social sweeps casino, Stake, that he frequently touts on social media

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Instead, advertisements normally focus around the social aspect of the casinos, while omitting the capacity for real gambling losses.
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Others lure consumers with promises of prizes. One such operator, Stake, ran a social networks ad displaying Drake's cars and trucks, planes and estates before rotating to video of the rap artist playing online casino-style video games.

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

Another caption described: 'Because I never gave up.'

The inconsistency in between gambling sites and social or sweepstakes casinos is a bit intricate, 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), discussed its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA information, many of the players on social-sweepstakes gambling establishments are sports betting free.

'Most social sweeps customers never make a purchase,' the SPGA spokesperson told DailyMail.com. 'The minority of consumers who make purchases do so in quantities far smaller sized than the typical deposit or bet size at real-money online sports betting sites.'

Social casinos offer clients a chance to play casino-style video games with friends. Players have the choice to buy worthless currency frequently described as 'gold coins,' which can not be exchanged for real cash, but can be utilized to open various functions within the games.

But within the world of social casinos exists sweepstakes gaming, enabling customers to acquire 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 declared by plaintiffs 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 previous 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 Global Poker event

Social sweeps gambling establishment Stake ran an ad showing off Drake's cars, planes and mansions

Karl-Anthony Towns of the New York Knicks is another NBA star plugging VGW's Global Poker

Traditional online gambling establishments are banned in all however seven states, which has actually helped to sustain the appeal of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes websites, which do not require usually require identification. However, sites like Chumba will request for IDs from gamers trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, permit clients to submit mail-in demands for totally free sweeps coins, offered the gamers follow painfully particular instructions. What's more, players are often rewarded with sweeps coins merely for signing up, thus providing a reason to try their hands at any number of gambling establishment video games for an opportunity to win - or lose - real cash.

So why are sweepstakes sites allowed to operate in 48 states, while online casinos are banned in all but 7?

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

'Social sweepstakes games are simply a type of online home entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is needed to dip into social casinos with sweepstakes rewards. Consumers never have to spend for an opportunity to win rewards. That absence of a purchase requirement - or" factor to consider" - is a crucial distinction in between social sweeps and traditional online gambling websites like gambling establishments.'

Think about the manner in which McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to bet, but rather they're buying hamburgers and french fries that provide them the possibility to win lucrative prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the game itself doesn't meet the definition of gaming in the US.

'Sweepstakes are an enduring approach for promoting all sort of daily services in the United States, everything from hamburgers to publication subscriptions to coffee and home improvement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are regularly used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling industry experts, that argument does not cut it.

For starters, video gaming lawyer Daniel Wallach mentions, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a distinct beginning and end, therefore recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote real items like french fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're normally not connected to casino-style video games of opportunity,' Wallach told DailyMail.com. 'They're just money giveaways.

'The sweepstakes [gambling establishments] possess none of the characteristics frequently associated with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments use" casino-like" payments, typically 80 percent or more of incomes, whereas the normal payout percentage for a short-lived advertising sweepstakes is an unimportant share of the earnings made by the company [normally less than one percent]'

Wallach is fast to compare the online social sweeps casinos to the web coffee shops that sprang up in Florida, using clients the opportunity to play casino-style games for genuine rewards. A lot of those brick-and-mortar have since been shuttered over claims of prohibited gaming.

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

Now, Wallach argues, social sweeps gambling establishments should deal with comparable analysis.

'These differences are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have consistently been mentioned by courts and state attorney generals as essential consider determining that a sweepstakes promo was in reality a guise for prohibited gaming.'

One of the gambling establishment market's leading trade organizations, the American Gaming Association, is now pressing legislators to investigate sweepstakes operators and, in some cases, enact brand-new legislation on the concern.

'Consumers are being denied of protections and states are giving up considerable tax and income chances as this gambling replaces that conducted through managed channels,' checked out a well-circulated AGA memo.

And after that there are the complainants who have actually taken legal action against social gambling establishments in more than a lots states.

Sweepstakes casino operators paid a combined $14.2 million in four separate cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action claim, saying the settlement was made to prevent legal costs and continued litigation.

Michael Phelps has actually signed an offer with the VGW Group, which owns Global Poker

In the current lawsuit, which is mostly similar to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited gaming business. '

Apple and Google have actually likewise been called as defendants in claims for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com's demand for comment.

'We usually don't talk about matters before the courts,' a VGW representative told DailyMail.com by means of e-mail. 'However, we note that this claim has actually only simply been submitted with the court and VGW has actually not been officially served.

'We have full self-confidence in our compliance with all laws and regulations where we operate, and stay positive about the future,' the representative continued. 'We continue to provide our free-to-play games throughout the majority of The United States and Canada, as we have for more than a years, developing not just excellent video games, user experiences and entertainment, but also guaranteeing this is done safely, properly and at the highest level of requirements.

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

The issues in between standard online gambling and sweepstakes gambling establishments could prove 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 conventional gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking unlawful sports betting wagering 'sweeps' sites while at the exact same time the leagues wish to project a strong position versus prohibited gaming - specifically when trying to tamp down the periodic gaming scandal,' Glaser told DailyMail.com.

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

Along with VGW, Apple and Google are being taken legal action against for hosting supposedly illegal gambling sites

Regardless, Glaser sees sweepstakes gambling establishments as a significant issue for leagues such as the NBA.

'I 'd anticipate that a league crackdown on athletes endorsing sweepstakes websites refers when, not if,' Glaser included.

Neither an NBA spokesperson nor the gamers' representatives reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also ignored 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 similarities in between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is absolutely nothing more that requires to be done.

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the spokesperson stated. 'Some of our values are" our gamers come initially" and" we do what's right", and we put our values at the core of whatever we do.'

Glaser, an outspoken opponent of sweepstakes sites, sees things in a different way.
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'Celebrities who provide their names to shady illegal sports betting sites are, at a minimum, putting their reputations at risk as well as courting civil and class actions by consumers who allege damage,' Glaser said. 'There is also some risk that state regulators and state lawyers general rope celebrity endorsers into enforcement efforts for assisting in illegal sports betting.'

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