The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on prohibited sports betting.
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No, they weren't personally in participation, however the world-famous celebs were notably included in a slide presentation on social and sweepstakes casinos - the questionable websites providing both totally free casino-style video games and financially rewarding prizes, such as cash, present cards or cryptocurrency. In one advertisement, 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.
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The websites are simply 2 cogs in the multibillion-dollar market that now finds itself besieged by lawsuits. In the eyes of lots of gaming corporations, not to discuss suit plaintiffs and state regulators, sweepstakes gambling act as standard casinos, just without the oversight, customer securities and tax laws. So not only can they prevent the high 24-percent federal sports betting levy, however sweepstakes operators aren't based on regulative obstacles like anti-money laundering and responsible-gaming protections.
One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the business faces accusations of prohibited sports betting in a New York claim that claims VGW uses star endorsers to 'develop a veneer of legitimacy' around its item. (See VGW's statement below)
'I'm uncertain" if you don't trust us, you can rely on Paris Hilton" is a winning message for companies running multibillion-dollar prohibited operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.
Sweepstakes endorsers include a series 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 offer any differences between conventional gaming and sweepstakes play.
Paris Hilton is seen plugging Wow Vegas, one of many sweepstakes gambling establishments discovered online
Ryan Seacrest prompts fans to play at Chumba Casino, where numerous - however not all - games are complimentary
Drake has a handle social sweeps gambling establishment, Stake, that he frequently touts on social media
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Instead, advertisements usually center around the social element of the casinos, while omitting the potential for real gaming losses.
Others tempt customers with pledges of rewards. One such operator, Stake, ran a social media ad flaunting Drake's cars, aircrafts and estates before pivoting to video of the rap artist playing online casino-style games.
'Daddy, why do we have a lot cash?' check out the first caption on the screen.
Another caption discussed: 'Because I never gave up.'
The inconsistency in between sports betting sites and social or sweepstakes gambling establishments is a bit complex, however operators of the latter insist they're not included with the former.
A spokesperson for a market 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, many of the players on social-sweepstakes gambling establishments are sports betting free.
'Most social sweeps customers never purchase,' the SPGA representative informed DailyMail.com. 'The minority of customers who make purchases do so in quantities far smaller than the typical deposit or bet size at real-money online gambling sites.'
Social casinos provide clients an opportunity to play casino-style video games with buddies. Players have the choice to purchase valueless currency often described as 'gold coins,' which can not be exchanged genuine cash, however can be used to open various functions within the video games.
But within the world of social gambling establishments exists sweepstakes video gaming, permitting customers to obtain other currency understood as 'sweeps coins' that can be exchanged for cash or other rewards.
And therein lies the potential for monetary losses, like the ones declared by plaintiffs 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 buy 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 showing off Drake's vehicles, airplanes and estates
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 sustain the popularity of sweepstakes gambling establishments.
Anyone over the age of 18 can access the sweepstakes sites, which don't need normally require identification. However, websites like Chumba will ask for IDs from players trying to withdraw any funds.
Many websites, like the crypto-compatible Stake, permit customers to submit mail-in requests for complimentary sweeps coins, offered the players follow painfully specific directions. What's more, gamers are often rewarded with sweeps coins merely for signing up, consequently providing a factor to try their hands at any variety of gambling establishment games for an opportunity to win - or lose - genuine money.
So why are sweepstakes websites allowed to run in 48 states, while online casinos are banned in all however 7?
According to the stakeholders, their product is the free casino-style gaming, and the real-stakes competition is just a means of promoting their support.
'Social sweepstakes video games are just a form of online entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is required to dip into social gambling establishments with sweepstakes rewards. Consumers never ever need to pay for an opportunity to win prizes. That lack of a purchase requirement - or" factor to consider" - is an important distinction between social sweeps and traditional online sports betting sites like gambling establishments.'
Consider the way that McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and french fries that offer them the opportunity to win rewarding rewards, such as a $1 million prize.
And without a purchase requirement, or 'consideration', the video game itself does not meet the meaning of gambling in the US.
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'Sweepstakes are an enduring technique for promoting all type of daily services in the United States, everything from hamburgers to publication subscriptions to coffee and home enhancement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are routinely used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'
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But to numerous sports betting industry insiders, that argument doesn't cut it.
For beginners, gaming attorney Daniel Wallach explains, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a well-defined start and end, thus recommending the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being used to promote genuine items like french fries, shakes, and the Filet-O-Fish.
'They do not last permanently and they're normally not connected to casino-style games of opportunity,' Wallach told DailyMail.com. 'They're simply cash giveaways.
'The sweepstakes [gambling establishments] possess none of the attributes frequently related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes casinos provide" casino-like" payments, generally 80 percent or more of profits, whereas the typical payment percentage for a temporary promotional sweepstakes is an unimportant share of the revenue made by the business [usually less than one percent]'
Wallach fasts to liken the online social sweeps casinos to the internet cafes that emerged in Florida, using clients the chance to play casino-style games for real prizes. A number of those brick-and-mortar establishments have because been shuttered over claims of prohibited gambling.
DJ Khaled is among numerous celebrity spokespeople for VGW's Global Poker brand name
Now, Wallach argues, social sweeps gambling establishments should deal with similar examination.
'These differences are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have consistently been cited by courts and state lawyer generals as key consider figuring out that a sweepstakes promotion was in truth a guise for illegal gambling.'
Among the casino market's leading trade organizations, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, in many cases, enact brand-new legislation on the concern.
'Consumers are being deprived of protections and states are giving up significant tax and earnings chances as this sports betting replaces that conducted through managed 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 gambling establishment operators paid a combined $14.2 million in four different cases in Kentucky without confessing any misdeed, 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 lawsuits.
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Michael Phelps has actually signed a handle the VGW Group, which owns Global Poker
In the most recent lawsuit, which is mostly similar to its predecessors, New York state locals Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is explained in the filing as an 'illegal gaming enterprise. '
Apple and Google have also been named as defendants in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for comment.
'We usually do not discuss matters before the courts,' a VGW spokesperson informed DailyMail.com via email. 'However, we keep in mind that this claim has only just been filed with the court and VGW has actually not been formally served.
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'We have full self-confidence in our compliance with all laws and guidelines where we operate, and stay positive about the future,' the representative continued. 'We continue to offer our free-to-play video games across many of The United States and Canada, as we have for more than a decade, developing not only excellent games, user experiences and home entertainment, but likewise guaranteeing this is done securely, responsibly and at the greatest level of requirements.
'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are fairly typical throughout the online social games industry (and the US more broadly), and our basic practice is that we plan to intensely protect any claim which might be brought against us.'
The concerns between conventional online sports betting and sweepstakes gambling establishments might prove troublesome for some celeb 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 conventional gaming titans like FanDuel and DraftKings.
'It's ironic that professional athletes are hawking illegal sports betting 'sweeps' sites while at the same time the leagues wish to predict a strong stance versus illegal gambling - particularly when trying to tamp down the periodic gaming scandal,' Glaser informed DailyMail.com.
It was just 8 months ago that Toronto Raptors forward Jontay Porter got a lifetime restriction from the NBA over allegations he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes gambling establishments.
In addition to VGW, Apple and Google are being sued for hosting apparently prohibited gambling sites
Regardless, Glaser sees sweepstakes casinos as a major issue for leagues such as the NBA.
'I 'd expect that a league crackdown on athletes backing sweepstakes sites is a matter of when, not if,' Glaser included.
Neither an NBA spokesperson nor the players' agents reacted to DailyMail.com's ask 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 celeb endorsers have a responsibility to discuss to clients the distinctions and resemblances between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that needs to be done.
'We have complete confidence in our influencer and ambassadorial collaborations, and our business practices more broadly,' the representative said. 'A few of our values are" our gamers come initially" 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 in a different way.
'Celebrities who provide their names to dubious illegal gaming sites are, at a minimum, putting their reputations at danger as well as courting civil and class actions by customers who declare damage,' Glaser said. 'There is also some threat that state regulators and state chief law officers rope celebrity endorsers into enforcement efforts for assisting in unlawful gambling.'
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Sweepstakes Casino Controversy And Celebrities' All important Role
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