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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 gambling.
No, they weren't personally in presence, however the world-famous celebs were conspicuously consisted of in a slide presentation on social and sweepstakes gambling establishments - the controversial sites using both free casino-style video games and rewarding rewards, such as money, gift cards or cryptocurrency. In one ad, 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.
The websites are just two cogs in the multibillion-dollar industry that now discovers itself besieged by suits. In the eyes of many gaming corporations, not to point out suit complainants and state regulators, sweepstakes gambling establishments serve as traditional gambling establishments, only without the oversight, consumer securities and tax laws. So not only can they prevent the high 24-percent federal sports betting levy, but sweepstakes operators aren't based on regulative difficulties like anti-money laundering and responsible-gaming securities.
One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the company deals with accusations of unlawful gambling in a New york city lawsuit that claims VGW uses star endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's statement listed below)
'I'm unsure" if you don't trust us, you can trust Paris Hilton" is a winning message for business operating 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, told DailyMail.com.
Sweepstakes endorsers include a variety of stars from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom provide any distinctions between standard gaming and sweepstakes play.
Paris Hilton is seen plugging Wow Vegas, among lots of sweepstakes casinos discovered online
Ryan Seacrest urges fans to dip into Chumba Casino, where many - but not all - video games are totally free
Drake has a handle social sweeps gambling establishment, Stake, that he regularly promotes on social media
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Instead, advertisements usually focus around the social aspect of the gambling establishments, while leaving out the potential for actual gaming losses.
Others tempt consumers with pledges of prizes. One such operator, Stake, ran a social media advertisement revealing off Drake's cars and trucks, planes and mansions before rotating to video footage of the rap artist playing online casino-style games.
'Daddy, why do we have a lot money?' read the first caption on the screen.
Another caption described: 'Because I never quit.'
The disparity between gambling sites and social or sweepstakes gambling establishments is a bit complex, but 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 information, the majority of the players on social-sweepstakes gambling establishments are playing for complimentary.
'Most social sweeps clients never ever purchase,' the SPGA representative told DailyMail.com. 'The minority of customers who make purchases do so in quantities far smaller than the common deposit or bet size at real-money online gaming sites.'
Social casinos offer customers an opportunity to play casino-style video games with pals. Players have the choice to purchase valueless currency typically described as 'gold coins,' which can not be exchanged genuine cash, however can be used to unlock numerous features within the video games.
But within the world of social casinos exists sweepstakes gaming, permitting consumers to acquire other currency referred to as '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 City. One gamer informed the Washington Post he lost more than $100,000 on sweepstakes casinos in the previous year after continuing to buy more coins in pursuit of money and other things of worth.
The Philadelphia 76ers' Paul George is seen promoting a Global Poker event
Social sweeps casino Stake ran an advertisement showing off Drake's automobiles, aircrafts and estates
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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 but seven states, which has actually assisted to fuel the popularity of sweepstakes gambling establishments.
Anyone over the age of 18 can access the sweepstakes websites, which do not need typically require identification. However, sites like Chumba will ask for IDs from players trying to withdraw any funds.
Many websites, like the crypto-compatible Stake, allow customers to send mail-in ask for totally free sweeps coins, provided the players follow painfully specific instructions. What's more, gamers are typically rewarded with sweeps coins simply for signing up, thereby providing a reason to attempt their hands at any number of gambling establishment games for an opportunity to win - or lose - real money.
So why are sweepstakes websites enabled to operate in 48 states, while online casinos are banned in all however 7?
According to the stakeholders, their item is the free casino-style gaming, and the real-stakes competitors is simply a way of promoting their support.
'Social sweepstakes video games are merely a type of online entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is required to play at social casinos with sweepstakes rewards. Consumers never need to pay for a chance to win prizes. That absence of a purchase requirement - or" consideration" - is an important distinction between social sweeps and standard online gambling sites like casinos.'
Think about the manner in which McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and french fries that provide them the opportunity to win rewarding prizes, such as a $1 million jackpot.
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And without a purchase requirement, or 'factor to consider', the game itself doesn't meet the meaning of gambling in the US.
'Sweepstakes are a long-standing method for promoting all type of everyday businesses in the United States, whatever from hamburgers to publication subscriptions to coffee and home enhancement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are frequently used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'
But to numerous sports betting industry insiders, that argument doesn't cut it.
For starters, video gaming attorney Daniel Wallach explains, McDonald's Monopoly game doesn't run forever. Rather, it has a well-defined start and end, thereby recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote real items like french fries, shakes, and the Filet-O-Fish.
'They do not last forever and they're typically not connected to casino-style video games of possibility,' Wallach informed DailyMail.com. 'They're just money giveaways.
'The sweepstakes [gambling establishments] possess none of the characteristics frequently related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes casinos offer" casino-like" payouts, normally 80 percent or more of incomes, whereas the typical payment portion for a short-lived promotional sweepstakes is an insignificant share of the income earned by the business [normally less than one percent]'
Wallach is fast to compare the online social sweeps casinos to the web cafes that emerged in Florida, offering consumers the opportunity to play casino-style games for real prizes. A lot of those brick-and-mortar establishments have given that been shuttered over allegations of unlawful sports betting.
DJ Khaled is among a number of celebrity spokespeople for Poker brand
Now, Wallach argues, social sweeps gambling establishments need to deal with similar scrutiny.
'These distinctions are not approximate,' Wallach said of social sweeps gambling establishments. 'They have repeatedly been cited by courts and state chief law officer as crucial aspects in determining that a sweepstakes promotion was in reality a guise for unlawful gambling.'
Among the casino market's leading trade organizations, the American Gaming Association, is now pushing legislators to examine sweepstakes operators and, sometimes, enact new legislation on the issue.
'Consumers are being denied of defenses and states are forgoing substantial tax and income opportunities as this sports betting replaces that carried out through regulated channels,' read a well-circulated AGA memo.
And then there are the complainants who have sued social gambling establishments in more than a dozen states.
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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 claim, saying the settlement was made to prevent legal costs and continued litigation.
Michael Phelps has signed a deal with the VGW Group, which owns Global Poker
In the most recent claim, which is largely similar to its predecessors, New York state residents 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 also been called as accuseds in claims for hosting the sweepstakes sites. But unlike VGW, neither tech business responded to DailyMail.com's ask for comment.
'We typically do not talk about matters before the courts,' a VGW representative informed DailyMail.com via e-mail. 'However, we keep in mind that this claim has actually only just been filed with the court and VGW has not been formally served.
'We have full confidence in our compliance with all laws and policies where we operate, and remain positive about the future,' the representative continued. 'We continue to provide our free-to-play video games across most of The United States and Canada, as we have for more than a decade, producing not only fantastic video games, user experiences and home entertainment, but also ensuring this is done securely, properly and at the highest level of standards.
'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are relatively typical across the online social video games market (and the US more broadly), and our standard practice is that we mean to strongly safeguard any claim which might be brought against us.'
The issues between conventional online sports betting and sweepstakes casinos might show problematic for some star 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 standard video gaming titans like FanDuel and DraftKings.
'It's paradoxical that professional athletes are hawking illegal sports betting 'sweeps' websites while at the same time the leagues wish to forecast a strong stance against unlawful sports betting - specifically when attempting to tamp down the occasional gambling scandal,' Glaser told DailyMail.com.
It was simply eight months ago that Toronto Raptors forward Jontay Porter received a life time ban from the NBA over allegations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes gambling establishments.
Together with VGW, Apple and Google are being taken legal action against for hosting apparently prohibited sports betting sites
Regardless, Glaser sees sweepstakes gambling establishments as a significant problem for leagues such as the NBA.
'I 'd expect that a league crackdown on athletes backing sweepstakes websites is a matter of when, not if,' Glaser added.
Neither an NBA spokesperson nor the gamers' agents reacted to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also disregarded to react to DailyMail.com emails.
Asked if their celeb 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 needs to be done.
'We have full confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the spokesperson stated. 'A few of our worths 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 sites, sees things in a different way.
'Celebrities who lend their names to shady prohibited gaming sites are, at a minimum, putting their reputations at risk as well as courting civil and class actions by consumers who declare damage,' Glaser said. 'There is likewise some risk that state regulators and state lawyers 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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