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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 unlawful gambling.
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No, they weren't personally in attendance, however the world-famous celebrities were conspicuously included in a slide discussion on social and sweepstakes casinos - the questionable sites offering both totally free casino-style video games and profitable prizes, such as cash, present cards or cryptocurrency. In one ad, 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.
The websites are just two cogs in the multibillion-dollar industry that now discovers itself besieged by lawsuits. In the eyes of numerous video gaming corporations, not to mention claim complainants and state regulators, sweepstakes gambling establishments serve as standard gambling establishments, just without the oversight, consumer securities and tax laws. So not only can they avoid the steep 24-percent federal gaming 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 revenue in 2015 alone. Now the business deals with allegations of illegal gaming in a New york city claim that claims VGW uses celebrity endorsers to 'develop a veneer of legitimacy' around its item. (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 running 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, informed DailyMail.com.
Sweepstakes endorsers include a range of celebs from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom offer any differences between conventional gaming and sweepstakes play.
Paris Hilton is seen plugging Wow Vegas, one of lots of sweepstakes casinos found online
Ryan Seacrest prompts fans to play at Chumba Casino, where lots of - however not all - video games are totally free
Drake has an offer with social sweeps casino, Stake, that he routinely promotes on social media
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Instead, ads normally center around the social aspect of the casinos, while omitting the capacity for real sports betting losses.
Others lure clients with pledges of prizes. One such operator, Stake, ran a social media advertisement flaunting Drake's vehicles, airplanes and estates before pivoting to video of the rapper playing online casino-style video games.
'Daddy, why do we have a lot money?' read the first caption on the screen.
Another caption described: 'Because I never quit.'
The inconsistency between gambling websites and social or sweepstakes gambling establishments is a bit complicated, but operators of the latter insist they're not involved with the previous.
A representative for an industry 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 information, many of the gamers on social-sweepstakes gambling establishments are playing for totally free.
'Most social sweeps clients never ever make a purchase,' the SPGA spokesperson informed DailyMail.com. 'The minority of clients who make purchases do so in quantities far smaller than the typical deposit or wager size at real-money online gambling sites.'
Social casinos provide consumers a possibility to play casino-style video games with buddies. Players have the option to purchase valueless currency typically described as 'gold coins,' which can not be exchanged genuine money, however can be utilized to unlock numerous features within the games.
But within the world of social gambling establishments exists sweepstakes video gaming, permitting clients to get other currency called 'sweeps coins' that can be exchanged for money or other prizes.
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 purchase more coins in pursuit of cash and other things of worth.
The Philadelphia 76ers' Paul George is seen promoting a Global Poker event
Social sweeps gambling establishment Stake ran an ad displaying Drake's cars, aircrafts and estates
Karl-Anthony Towns of the New York Knicks is another NBA star plugging VGW's Global Poker
Traditional online gambling establishments are prohibited in all but 7 states, which has helped to sustain the appeal of sweepstakes casinos.
Anyone over the age of 18 can access the sweepstakes websites, which don't require generally require identification. However, sites like Chumba will request IDs from players attempting to withdraw any funds.
Many sites, like the crypto-compatible Stake, allow consumers to send mail-in ask for totally free sweeps coins, offered the players follow painfully particular directions. What's more, players are often rewarded with sweeps coins just for signing up, thus providing a factor to try their hands at any number of casino games for an opportunity to win - or lose - genuine cash.
So why are sweepstakes sites enabled to operate in 48 states, while online casinos are prohibited in all but 7?
According to the stakeholders, their product is the totally free casino-style gaming, and the real-stakes competitors is just a method of promoting their support.
'Social sweepstakes games are simply a type of online entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is needed to play at social gambling establishments with sweepstakes rewards. Consumers never need to pay for a chance to . That lack of a purchase requirement - or" factor to consider" - is an important difference between social sweeps and conventional online gambling sites like gambling establishments.'
Think about the way that McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and french fries that offer them the possibility to win financially rewarding prizes, such as a $1 million jackpot.
And without a purchase requirement, or 'consideration', the video game itself doesn't fulfill the definition of sports betting in the US.
'Sweepstakes are an enduring technique for promoting all sort of daily services in the United States, everything from burgers to magazine subscriptions to coffee and home improvement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are routinely utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'
But to numerous gambling industry insiders, that argument does not cut it.
For beginners, video gaming attorney Daniel Wallach mentions, McDonald's Monopoly game doesn't run forever. Rather, it has a distinct beginning and end, thus suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote genuine products like french fries, shakes, and the Filet-O-Fish.
'They do not last permanently and they're typically not tied to casino-style video games of possibility,' Wallach informed DailyMail.com. 'They're just money 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 use" casino-like" payouts, typically 80 percent or more of incomes, whereas the typical payment percentage for a short-term advertising sweepstakes is an insignificant share of the income earned by the company [generally less than one percent]'
Wallach fasts to compare the online social sweeps casinos to the web cafes that emerged in Florida, providing clients the possibility to play casino-style games for real rewards. A number of those brick-and-mortar establishments have since been shuttered over allegations of unlawful gambling.
DJ Khaled is amongst a number of star spokespeople for VGW's Global Poker brand name
Now, Wallach argues, social sweeps casinos need to face comparable analysis.
'These differences are not approximate,' Wallach stated of social sweeps casinos. 'They have consistently been pointed out by courts and state lawyer generals as crucial consider identifying that a sweepstakes promo remained in truth a guise for illegal gaming.'
One of the casino industry's leading trade companies, the American Gaming Association, is now pushing lawmakers to examine sweepstakes operators and, in many cases, enact new legislation on the issue.
'Consumers are being deprived of securities and states are passing up considerable tax and revenue chances as this gaming replaces that carried out through regulated channels,' read a well-circulated AGA memo.
And then there are the plaintiffs who have taken legal action against social gambling establishments in more than a dozen states.
Sweepstakes gambling establishment operators paid a combined $14.2 million in four separate cases in Kentucky without admitting any wrongdoing, 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 a handle the VGW Group, which owns Global Poker
In the most recent lawsuit, which is largely similar 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 'unlawful gaming enterprise. '
Apple and Google have also been named as offenders in suits for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for remark.
'We usually don't discuss matters before the courts,' a VGW spokesperson informed DailyMail.com through email. 'However, we keep in mind that this claim has only simply been filed with the court and VGW has actually not been formally served.
'We have full confidence in our compliance with all laws and regulations where we run, and remain positive about the future,' the spokesperson continued. 'We continue to offer our free-to-play video games across the majority of North America, as we have for more than a years, creating not just great games, user experiences and entertainment, however likewise guaranteeing this is done securely, responsibly and at the greatest level of requirements.
'More broadly, we 'd repeat that class actions and other litigations and arbitrations are fairly common throughout the online social games industry (and the US more broadly), and our basic practice is that we intend to vigorously safeguard any claim which may be brought versus us.'
The concerns between conventional online sports betting and sweepstakes casinos might prove bothersome for some celeb 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 traditional video gaming titans like FanDuel and DraftKings.
'It's ironic that professional athletes are hawking illegal sports betting wagering 'sweeps' sites while at the very same time the leagues wish to project a strong stance versus illegal gaming - specifically when trying to tamp down the periodic gambling scandal,' Glaser informed DailyMail.com.
It was just 8 months ago that Toronto Raptors forward Jontay Porter received a lifetime restriction from the NBA over allegations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes casinos.
Along with VGW, Apple and Google are being demanded hosting allegedly unlawful gambling sites
Regardless, Glaser sees sweepstakes casinos as a significant concern for leagues such as the NBA.
'I 'd expect that a league crackdown on athletes endorsing sweepstakes websites is a matter of when, not if,' Glaser added.
Neither an NBA spokesman nor the players' agents reacted to DailyMail.com's demands for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also overlooked to react to DailyMail.com emails.
Asked if their celeb endorsers have a duty to describe to customers the differences and similarities in between iGaming and sweepstakes casinos, VGW insisted there is nothing more that requires to be done.
'We have full self-confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the representative said. 'A few of our values are" our players come first" 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 dubious illegal sports betting websites are, at a minimum, putting their credibilities at risk as well as courting civil and class actions by consumers who allege harm,' Glaser said. 'There is also some risk that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for facilitating illegal gambling.'
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This will delete the page "Sweepstakes Casino Controversy - And Celebrities' All-important Role"
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