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The smiling faces of Paris Hilton and Ryan Seacrest made surprise looks before the Louisiana Senate for Friday's hearing on prohibited sports betting.
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No, they weren't personally in participation, but the world-famous stars were conspicuously included in a slide presentation on social and sweepstakes casinos - the controversial websites providing both free casino-style video games and financially rewarding rewards, such as cash, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The sites are just 2 cogs in the multibillion-dollar market that now discovers itself besieged by lawsuits. In the eyes of lots of video gaming corporations, not to point out lawsuit plaintiffs and state regulators, sweepstakes gambling establishments act as traditional casinos, only without the oversight, customer protections and tax laws. So not just can they avoid the steep 24-percent federal gaming levy, however sweepstakes operators aren't subject to regulative 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 faces accusations of prohibited gaming in a New York claim that claims VGW uses star endorsers to 'develop a veneer of authenticity' around its product. (See VGW's statement listed below)
'I'm unsure" if you do not trust us, you can rely on Paris Hilton" is a winning message for business running multibillion-dollar illegal operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of video gaming corporation Light & Wonder, informed DailyMail.com.
Sweepstakes endorsers consist of a range of celebrities from sports betting lovers 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 standard gaming and sweepstakes play.
Paris Hilton is seen plugging Wow Vegas, among numerous sweepstakes gambling establishments found online
Ryan Seacrest advises fans to play at Chumba Casino, where many - however not all - games are complimentary
Drake has a handle social sweeps casino, Stake, that he regularly touts on social networks
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Instead, advertisements usually focus around the social aspect of the gambling establishments, while omitting the potential for real gaming losses.
Others lure clients with guarantees of rewards. One such operator, Stake, ran a social networks ad showing off Drake's vehicles, aircrafts and mansions before pivoting to video footage of the rapper 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 provided up.'
The disparity in between gaming sites and social or sweepstakes casinos is a bit complicated, 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), explained its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA data, many of the gamers on social-sweepstakes gambling establishments are playing for totally free.
'Most social sweeps consumers never ever 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 common deposit or bet size at real-money online gaming websites.'
Social gambling establishments use consumers an opportunity to play casino-style games with good friends. Players have the choice to purchase valueless currency frequently described as 'gold coins,' which can not be exchanged for real money, but can be used to open different functions within the video games.
But within the world of social casinos exists sweepstakes gaming, permitting customers to obtain other currency called '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. One player 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 advertisement displaying Drake's cars, airplanes 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 prohibited in all however seven states, which has helped to fuel the popularity of sweepstakes casinos.
Anyone over the age of 18 can access the sweepstakes sites, which don't need usually require identification. However, websites like Chumba will request IDs from gamers attempting to withdraw any funds.
Many sites, like the crypto-compatible Stake, enable clients to submit mail-in requests for totally free sweeps coins, provided the players follow painfully particular directions. What's more, players are frequently rewarded with sweeps coins simply for signing up, thereby providing a factor to try their hands at any variety of gambling establishment video games for a possibility to win - or lose - real money.
So why are sweepstakes websites enabled to operate in 48 states, while online gambling establishments are banned in all but 7?
According to the stakeholders, their item is the totally free casino-style video gaming, and the real-stakes competitors is simply a method of promoting their bread and butter.
'Social sweepstakes video 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 casinos with sweepstakes prizes. Consumers never have to spend for a chance to win rewards. That lack of a purchase requirement - or" consideration" - is an important difference in between social sweeps and traditional online gambling sites like gambling establishments.'
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 purchasing hamburgers and fries that offer them the chance to win profitable prizes, such as a $1 million prize.
And without a purchase requirement, or 'factor to consider', the game itself doesn't satisfy the definition of gambling in the US.
'Sweepstakes are a long-standing approach for promoting all kinds of daily companies in the United States, whatever from hamburgers to magazine subscriptions to coffee and home improvement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are regularly 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 starters, video gaming attorney Daniel Wallach points out, McDonald's Monopoly video game doesn't run forever. Rather, it has a well-defined beginning and end, consequently recommending the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being used to promote genuine items like fries, shakes, and the Filet-O-Fish.
'They don't last forever and they're usually not tied to casino-style games of possibility,' Wallach told DailyMail.com. 'They're just money free gifts.
'The sweepstakes [casinos] possess none of the qualities typically connected with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments offer" casino-like" payments, normally 80 percent or more of revenues, whereas the common payment percentage for a short-lived promotional sweepstakes is a minor share of the profits earned by the company [generally less than one percent]'
Wallach is quick to liken the online social sweeps casinos to the internet cafes that sprang up in Florida, offering clients the opportunity to play casino-style video games for real prizes. Many of those brick-and-mortar establishments have since been shuttered over claims of illegal gaming.
DJ Khaled is among a number of celeb spokespeople for VGW's Global Poker brand
Now, Wallach argues, social sweeps casinos should face comparable examination.
'These distinctions are not arbitrary,' Wallach stated of social sweeps casinos. 'They have actually repeatedly been pointed out by courts and state chief law officer as key consider figuring out that a sweepstakes promotion was in fact a guise for unlawful gambling.'
One of the casino industry's leading trade companies, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, in many cases, enact brand-new legislation on the concern.
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'Consumers are being denied of protections and states are giving up significant tax and income chances as this sports betting changes that conducted through controlled channels,' read a well-circulated AGA memo.
And after that there are the complainants who have sued 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 admitting any misbehavior, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action suit, stating the settlement was made to prevent legal costs and continued lawsuits.
Michael Phelps has actually signed an offer with the VGW Group, which owns Global Poker
In the most current lawsuit, which is largely comparable to its predecessors, New York state citizens 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 gaming enterprise. '
Apple and Google have likewise been named as offenders in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com's demand for comment.
'We typically don't comment on matters before the courts,' a VGW spokesperson told DailyMail.com by means of e-mail. 'However, we note that this claim has only simply been filed with the court and VGW has not been officially served.
'We have full self-confidence in our compliance with all laws and policies where we run, and stay positive about the future,' the representative continued. 'We continue to use our free-to-play games throughout many of The United States and Canada, as we have for more than a years, producing not just terrific 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 reiterate that class actions and other litigations and arbitrations are relatively common across the online social video games industry (and the US more broadly), and our standard practice is that we plan to intensely safeguard any claim which may be brought against us.'
The issues in between conventional online and sweepstakes casinos might prove troublesome for some celebrity endorsers.
Towns, a star center with the Knicks, and the 76ers' George both back VGW's Global Poker brand while the NBA is partnered with standard video gaming titans like FanDuel and DraftKings.
'It's ironic that expert athletes are hawking unlawful sports betting 'sweeps' sites while at the same time the leagues desire to forecast a strong position against unlawful gaming - especially when trying to tamp down the periodic sports betting scandal,' Glaser informed 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 including social or sweepstakes casinos.
In addition to VGW, Apple and Google are being taken legal action against for hosting supposedly prohibited sports betting websites
Regardless, Glaser sees sweepstakes casinos as a major problem for leagues such as the NBA.
'I 'd expect that a league crackdown on athletes backing sweepstakes websites refers when, not if,' Glaser added.
Neither an NBA spokesperson nor the players' representatives reacted to DailyMail.com's ask 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 star endorsers have an obligation to explain to clients the distinctions and similarities between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that requires to be done.
'We have full confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the representative said. 'Some of our worths are" our gamers precede" and" we do what's right", and we put our worths at the core of whatever we do.'
Glaser, an outspoken challenger of sweepstakes websites, sees things differently.
'Celebrities who lend their names to shady prohibited sports betting sites are, at a minimum, putting their track records at threat in addition to courting civil and class actions by customers who declare harm,' Glaser stated. 'There is likewise some risk that state regulators and state attorneys general rope celebrity endorsers into enforcement efforts for facilitating prohibited gambling.'
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Sweepstakes Casino Controversy And Celebrities' All important Role
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