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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 unlawful sports betting.
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No, they weren't personally in presence, but the world-famous celebrities were notably consisted of in a slide presentation on social and sweepstakes gambling establishments - the controversial websites using both complimentary casino-style games and profitable rewards, such as cash, present cards or cryptocurrency. In one advertisement, 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.
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The websites are just 2 cogs in the multibillion-dollar industry that now discovers itself besieged by suits. In the eyes of many video gaming corporations, not to point out suit plaintiffs and state regulators, sweepstakes casinos serve as conventional gambling establishments, only without the oversight, customer securities and tax laws. So not just can they avoid the high 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 profits last year alone. Now the company faces accusations of illegal gambling in a New York lawsuit that claims VGW uses celebrity endorsers to 'develop a veneer of authenticity' around its product. (See VGW's declaration below)
'I'm not exactly sure" if you don't trust us, you can trust Paris Hilton" is a winning message for companies operating multibillion-dollar illegal operations out of places 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 include a variety of celebs from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom provide any distinctions between traditional gaming and sweepstakes play.
Paris Hilton is seen plugging Wow Vegas, among many sweepstakes casinos found online
Ryan Seacrest prompts fans to play at Chumba Casino, where numerous - however not all - games are free
Drake has a handle social sweeps gambling establishment, Stake, that he routinely promotes on social networks
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Instead, ads generally focus around the social element of the gambling establishments, while leaving out the potential for actual sports betting losses.
Others tempt consumers with guarantees of prizes. One such operator, Stake, ran a social media ad flaunting Drake's cars, aircrafts and mansions before pivoting to footage of the rapper playing online casino-style games.
'Daddy, why do we have so much cash?' check out the first caption on the screen.
Another caption discussed: 'Because I never quit.'
The disparity between gambling websites and social or sweepstakes casinos is a bit intricate, however operators of the latter insist they're not included with the previous.
A representative for an industry trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, the majority of the players on social-sweepstakes gambling establishments are playing for complimentary.
'Most social sweeps consumers never make a purchase,' the SPGA spokesperson told DailyMail.com. 'The minority of customers who make purchases do so in amounts far smaller than the common deposit or wager size at real-money online gambling websites.'
Social casinos use clients a chance to play casino-style games with buddies. Players have the option to purchase worthless currency frequently referred to as 'gold coins,' which can not be exchanged genuine money, however can be used to unlock various functions within the video games.
But within the world of social casinos exists sweepstakes video gaming, enabling clients to get other currency understood as 'sweeps coins' that can be exchanged for cash or other prizes.
And therein lies the potential for financial losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York. 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 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, aircrafts and mansions
Karl-Anthony Towns of the New York City Knicks is another NBA star plugging VGW's Global Poker
Traditional online casinos are banned in all however 7 states, which has assisted to sustain the appeal of sweepstakes gambling establishments.
Anyone over the age of 18 can access the sweepstakes websites, which don't need usually need identification. However, sites like Chumba will request for IDs from players trying to withdraw any funds.
Many websites, like the crypto-compatible Stake, enable clients to submit mail-in demands for complimentary sweeps coins, supplied the gamers follow painfully particular guidelines. What's more, players are often rewarded with sweeps coins just for registering, thus providing them a reason to attempt their hands at any number of casino games for an opportunity to win - or lose - real money.
So why are sweepstakes websites allowed to run in 48 states, while online gambling establishments are prohibited in all but 7?
According to the stakeholders, their item is the totally free casino-style video gaming, and the real-stakes competition is simply a way of promoting their bread and butter.
'Social sweepstakes video games are just a form of online entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is required to dip into social casinos with sweepstakes prizes. Consumers never ever need to spend for a chance to win prizes. That lack of a purchase requirement - or" factor to consider" - is a crucial difference in between social sweeps and conventional online gambling sites like casinos.'
Think about the manner in which McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to bet, however rather they're buying 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 definition of sports betting in the US.
'Sweepstakes are a long-standing method for promoting all kinds of everyday services in the United States, everything from hamburgers to publication memberships to coffee and home improvement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are frequently used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'
But to numerous sports betting industry experts, that argument doesn't cut it.
For beginners, gaming lawyer Daniel Wallach points out, McDonald's Monopoly video game doesn't run forever. Rather, it has a well-defined beginning and end, thus recommending the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being utilized to promote real items like fries, shakes, and the Filet-O-Fish.
'They do not last forever and they're normally not connected to casino-style video games of possibility,' Wallach informed DailyMail.com. 'They're simply cash free gifts.
'The sweepstakes [casinos] possess none of the characteristics frequently associated with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos provide" casino-like" payments, normally 80 percent or more of revenues, whereas the common payout percentage for a short-term promotional sweepstakes is an unimportant share of the profits made by the business [generally less than one percent]'
Wallach fasts to compare the online social sweeps casinos to the internet coffee shops that sprang up in Florida, providing consumers the opportunity to play casino-style video games for genuine prizes. Much of those brick-and-mortar establishments have considering that been shuttered over allegations of prohibited sports betting.
DJ Khaled is amongst several celeb spokespeople for VGW's Global Poker brand name
Now, Wallach argues, social sweeps gambling establishments must deal with comparable examination.
'These differences are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have repeatedly been mentioned by courts and state lawyer generals as essential consider identifying that a sweepstakes promo remained in truth a guise for prohibited gambling.'
Among the gambling establishment industry's leading trade companies, the American Gaming Association, is now pressing legislators to examine sweepstakes operators and, in many cases, enact new legislation on the concern.
'Consumers are being deprived of protections and states are giving up significant tax and profits opportunities as this gaming replaces that performed through regulated 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 lots states.
Sweepstakes casino operators paid a combined $14.2 million in 4 different cases in Kentucky without admitting 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 signed an offer with the VGW Group, which owns Global Poker
In the newest claim, which is largely comparable to its predecessors, New york city state homeowners Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'prohibited gaming enterprise. '
Apple and Google have also been named as offenders in suits for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's demand for remark.
'We usually do not comment on matters before the courts,' a VGW spokesperson informed DailyMail.com through email. 'However, we note that this claim has actually only simply been submitted with the court and VGW has not been formally served.
'We have full confidence in our compliance with all laws and policies where we run, and remain confident about the future,' the representative continued. 'We continue to provide our free-to-play video games across many of The United States and Canada, as we have for more than a years, creating not only excellent video games, user experiences and entertainment, but also ensuring this is done safely, properly and at the highest level of standards.
'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are relatively common across the online social video games industry (and the US more broadly), and our basic practice is that we mean to strongly defend any claim which may be brought against us.'
The problems in between traditional online gaming and sweepstakes casinos might prove troublesome 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 standard gaming titans like FanDuel and DraftKings.
'It's paradoxical that professional athletes are hawking unlawful sports betting wagering 'sweeps' sites while at the exact same time the leagues desire to project a strong stance against illegal sports betting - especially when attempting to tamp down the occasional gaming scandal,' Glaser informed DailyMail.com.
It was just 8 months ago that Toronto Raptors forward Jontay Porter got a lifetime ban from the NBA over claims he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes gambling establishments.
Together with VGW, Apple and Google are being sued for hosting supposedly unlawful gambling websites
Regardless, Glaser sees sweepstakes casinos as a significant problem for leagues such as the NBA.
'I 'd anticipate that a league crackdown on athletes endorsing sweepstakes sites is a matter of when, not if,' Glaser added.
Neither an NBA spokesperson nor the gamers' agents reacted to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also disregarded to react to DailyMail.com emails.
Asked if their star endorsers have a duty to to clients the distinctions and resemblances in between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that needs to be done.
'We have full confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the representative said. 'Some of our values are" our gamers come first" and" we do what's right", and we put our worths at the core of everything we do.'
Glaser, an outspoken challenger of sweepstakes websites, sees things in a different way.
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'Celebrities who provide their names to dubious prohibited gambling sites are, at a minimum, putting their credibilities at danger in addition to courting civil and class actions by consumers who declare damage,' Glaser stated. 'There is likewise some danger that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for facilitating unlawful sports betting.'
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Sweepstakes Casino Controversy And Celebrities' All important Role
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