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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 attendance, but the world-famous celebs were notably consisted of in a slide discussion on social and sweepstakes casinos - the questionable sites providing both free casino-style games and lucrative prizes, such as cash, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet 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 discovers itself besieged by claims. In the eyes of lots of gaming corporations, not to mention lawsuit complainants and state regulators, sweepstakes gambling establishments function as standard casinos, only without the oversight, consumer protections and tax laws. So not just can they avoid the high 24-percent federal gambling levy, however sweepstakes operators aren't subject to regulative obstacles like anti-money laundering and responsible-gaming defenses.
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One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the business faces allegations of illegal gaming in a New York suit that claims VGW uses star endorsers to 'develop a veneer of legitimacy' around its item. (See VGW's declaration below)
'I'm not exactly sure" if you do not trust us, you can trust Paris Hilton" is a winning message for business running multibillion-dollar prohibited 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 series of celebs from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom use any differences between standard gaming and sweepstakes play.
Paris Hilton is seen plugging Wow Vegas, among numerous sweepstakes casinos found online
Ryan Seacrest prompts fans to dip into Chumba Casino, where lots of - however not all - games are free
Drake has a handle social sweeps gambling establishment, Stake, that he frequently touts on social media
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Instead, ads normally center around the social element of the gambling establishments, while leaving out the capacity for real sports betting losses.
Others tempt customers with guarantees of prizes. One such operator, Stake, ran a social networks ad flaunting Drake's cars, airplanes and estates before rotating to video 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 described: 'Because I never offered up.'
The inconsistency in between sports betting websites and social or sweepstakes casinos is a bit intricate, but operators of the latter insist they're not included with the former.
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 totally free.
'Most social sweeps clients never 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 gambling establishments offer consumers a possibility to play casino-style video games with friends. Players have the choice to buy valueless currency often described as 'gold coins,' which can not be exchanged genuine cash, however can be used to open numerous functions within the video games.
But within the world of social casinos exists sweepstakes video gaming, enabling consumers to acquire other currency known as 'sweeps coins' that can be exchanged for cash or other rewards.
And therein lies the capacity for financial losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York. One gamer told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the past year after continuing to buy more coins in pursuit of cash and other things of worth.
The Philadelphia 76ers' Paul George is seen promoting a Worldwide Poker occasion
Social sweeps casino Stake ran an advertisement revealing off Drake's automobiles, 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 prohibited in all but seven states, which has actually 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 players attempting to withdraw any funds.
Many sites, like the crypto-compatible Stake, permit clients to submit mail-in ask for free sweeps coins, offered the gamers follow painfully particular instructions. What's more, players are typically rewarded with sweeps coins simply for signing up, consequently providing a reason to try their hands at any variety of casino games for a chance to win - or lose - genuine cash.
So why are sweepstakes sites permitted to run in 48 states, while online gambling establishments are banned in all but 7?
According to the stakeholders, their item is the free casino-style gaming, and the real-stakes competitors is just a means of promoting their bread and butter.
'Social sweepstakes games are merely a kind of online home entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is required to dip into social gambling establishments with sweepstakes rewards. Consumers never have to pay for an opportunity to win rewards. That absence of a purchase requirement - or" consideration" - is an important distinction between social sweeps and conventional online sports betting websites like casinos.'
Think of the method that McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're buying hamburgers and french fries that offer them the chance to win rewarding rewards, such as a $1 million jackpot.
And without a purchase requirement, or 'factor to consider', the game itself does not satisfy the meaning of gaming in the US.
'Sweepstakes are a long-standing approach for promoting all sort of daily services in the United States, whatever from burgers to magazine memberships to coffee and home enhancement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos 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 gambling market experts, that argument does not cut it.
For starters, gaming lawyer Daniel Wallach points out, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a well-defined start and end, thereby recommending the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being used to promote real products like french fries, shakes, and the Filet-O-Fish.
'They do not last forever and they're normally not connected to casino-style video games of chance,' Wallach told DailyMail.com. 'They're simply money free gifts.
'The sweepstakes [gambling establishments] possess none of the attributes typically related to McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments use" casino-like" payouts, usually 80 percent or more of revenues, whereas the common payment portion for a momentary advertising sweepstakes is a minor share of the revenue earned by the company [usually less than one percent]'
Wallach fasts to compare the online social sweeps casinos to the web coffee shops that sprang up in Florida, providing clients the possibility to play casino-style games for real rewards. Much of those brick-and-mortar facilities have considering that been shuttered over claims of illegal gambling.
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 scrutiny.
'These differences are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have repeatedly been pointed out by courts and state attorney generals as key consider determining that a was in truth a guise for unlawful gambling.'
Among the gambling establishment market's leading trade organizations, the American Gaming Association, is now pushing lawmakers to examine sweepstakes operators and, in some cases, enact brand-new legislation on the issue.
'Consumers are being denied of protections and states are forgoing considerable tax and revenue opportunities as this gaming replaces that conducted through managed channels,' read a well-circulated AGA memo.
And then 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 4 separate cases in Kentucky without admitting any misbehavior, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, stating the settlement was made to avoid legal expenses and continued litigation.
Michael Phelps has signed an offer with the VGW Group, which owns Global Poker
In the current lawsuit, which is largely comparable to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'unlawful gaming enterprise. '
Apple and Google have actually likewise been called as offenders in suits for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com's request for comment.
'We generally don't talk about matters before the courts,' a VGW representative told DailyMail.com through e-mail. 'However, we note that this claim has 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 positive about the future,' the spokesperson continued. 'We continue to use our free-to-play games throughout most of The United States and Canada, as we have for more than a years, creating not just terrific video games, user experiences and entertainment, but also guaranteeing this is done safely, responsibly and at the highest level of standards.
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'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are fairly typical across the online social games market (and the US more broadly), and our standard practice is that we intend to intensely defend any claim which might be brought against us.'
The problems in between traditional online gambling and sweepstakes casinos could prove bothersome 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 conventional video gaming titans like FanDuel and DraftKings.
'It's paradoxical that professional athletes are hawking unlawful sports betting 'sweeps' websites while at the same time the leagues desire to project a strong stance versus illegal sports betting - specifically when attempting to tamp down the occasional gambling scandal,' Glaser told DailyMail.com.
It was just 8 months ago that Toronto Raptors forward Jontay Porter got a life time ban from the NBA over accusations he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes casinos.
Along with VGW, Apple and Google are being demanded hosting apparently prohibited sports betting websites
Regardless, Glaser sees sweepstakes casinos as a significant issue for leagues such as the NBA.
'I 'd anticipate that a league crackdown on professional athletes backing sweepstakes websites refers when, not if,' Glaser included.
Neither an NBA representative nor the gamers' representatives reacted to DailyMail.com's requests 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 celebrity endorsers have an obligation to describe to consumers the distinctions and similarities between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that needs to be done.
'We have full self-confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the representative said. 'A few of our values are" our players precede" and" we do what's right", and we put our worths at the core of whatever we do.'
Glaser, an outspoken opponent of sweepstakes sites, sees things differently.
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'Celebrities who provide their names to shady unlawful sports betting websites are, at a minimum, putting their track records at threat in addition to courting civil and class actions by consumers who allege damage,' Glaser said. 'There is likewise some threat that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for helping with unlawful gambling.'
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Sweepstakes Casino Controversy And Celebrities' All important Role
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