The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Senate for Friday’s hearing on prohibited gaming.
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No, they weren’t personally in attendance, but the world-famous stars were conspicuously consisted of in a slide presentation on social and sweepstakes casinos - the controversial websites using both complimentary casino-style games and financially rewarding rewards, such as money, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can ‘play for complimentary,’ while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are simply two cogs in the multibillion-dollar market that now discovers itself besieged by suits. In the eyes of many gaming corporations, not to discuss suit plaintiffs and state regulators, sweepstakes casinos act as conventional casinos, only without the oversight, consumer protections and tax laws. So not just can they avoid the steep 24-percent federal gaming levy, however sweepstakes operators aren’t subject to regulative hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the company deals with accusations of unlawful gaming in a New York suit that claims VGW utilizes celebrity endorsers to ‘develop a veneer of legitimacy’ around its product. (See VGW’s declaration listed below)

‘I’m not sure” if you don’t trust us, you can trust Paris Hilton” is a winning message for business running multibillion-dollar unlawful operations out of locations like Malta, Isle of Man, or US mail drops,’ Friday’s speaker, Howard Glaser of video gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers include a series 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 use any differences between conventional gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among numerous sweepstakes gambling establishments discovered online

Ryan Seacrest advises fans to dip into Chumba Casino, where numerous - but not all - video games are free

Drake has a handle social sweeps casino, Stake, that he regularly touts on social networks

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Instead, ads generally focus around the social element of the casinos, while leaving out the potential for actual gambling losses.

Others lure customers with guarantees of prizes. One such operator, Stake, ran a social networks ad displaying Drake’s vehicles, aircrafts and mansions before pivoting to video footage of the rapper playing online casino-style video games.

‘Daddy, why do we have so much money?’ check out the first caption on the screen.

Another caption discussed: ‘Because I never ever provided up.’

The disparity between gaming sites and social or sweepstakes casinos is a bit complicated, however 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), discussed its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA data, the majority of the players on social-sweepstakes casinos are sports betting complimentary.

‘Most social sweeps consumers never make a purchase,’ the SPGA representative informed DailyMail.com. ‘The minority of customers who make purchases do so in quantities far smaller than the normal deposit or wager size at real-money online gambling sites.’

Social casinos offer customers a possibility to play casino-style games with pals. Players have the choice to purchase valueless currency typically referred to 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 casinos exists sweepstakes video gaming, enabling clients to get other currency called ‘sweeps coins’ that can be exchanged for cash or other rewards.

And therein lies the potential 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.
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The Philadelphia 76ers’ Paul George is seen promoting an International Poker occasion

Social sweeps casino Stake ran an advertisement displaying Drake’s automobiles, aircrafts and mansions

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 actually helped to fuel the appeal of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes sites, which do not require normally need recognition. However, sites like Chumba will ask for IDs from players attempting to withdraw any funds.

Many sites, like the crypto-compatible Stake, permit clients to send mail-in ask for free sweeps coins, provided the players follow painfully specific directions. What’s more, players are often rewarded with sweeps coins merely for registering, thereby providing a factor to attempt their hands at any number of casino video games for an opportunity to win - or lose - genuine cash.

So why are sweepstakes websites enabled to run in 48 states, while online gambling establishments are prohibited in all but 7?

According to the stakeholders, their product is the free casino-style gaming, and the real-stakes competitors is simply a way of promoting their support.

‘Social sweepstakes video games are simply a type of online entertainment,’ an SPGA representative informed DailyMail.com by email. ‘No purchase is needed to dip into social casinos with sweepstakes prizes. Consumers never ever need to pay for an opportunity to win rewards. That lack of a purchase requirement - or” consideration” - is a crucial distinction between social sweeps and standard online gambling sites like casinos.’

Consider the manner in which McDonald’s uses its annual Monopoly video game to promote its food: Customers aren’t paying to bet, but rather they’re buying hamburgers and french fries that offer them the chance to win lucrative prizes, such as a $1 million prize.

And without a purchase requirement, or ‘consideration’, the game itself doesn’t meet the meaning of gaming in the US.

‘Sweepstakes are a long-standing method for promoting all type of daily organizations in the United States, whatever from hamburgers to publication subscriptions to coffee and home enhancement stores,’ the SPGA representative told DailyMail.com. ‘Sweepstakes promotions are routinely utilized by a who’s who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.’

But to many gambling industry insiders, that argument doesn’t cut it.

For beginners, video gaming lawyer Daniel Wallach points out, McDonald’s Monopoly game does not run forever. Rather, it has a well-defined start and end, thus suggesting the sweepstakes is not the fast-food giant’s primary item. Instead, the sweepstakes is being used to promote real items like fries, shakes, and the Filet-O-Fish.

‘They don’t last forever and they’re usually not connected to casino-style video games of opportunity,’ Wallach informed DailyMail.com. ‘They’re just money free gifts.

‘The sweepstakes [casinos] have none of the attributes frequently related to McDonald’s-style sweepstakes promotions,’ Wallach continued. ‘Besides running in all time, the sweepstakes casinos provide” casino-like” payments, typically 80 percent or more of profits, whereas the common payment portion for a short-lived promotional sweepstakes is an insignificant share of the revenue earned by the company [normally less than one percent]’

Wallach fasts to liken the online social sweeps casinos to the internet cafes that emerged in Florida, providing customers the opportunity to play casino-style video games for genuine prizes. Much of those brick-and-mortar establishments have actually given that been shuttered over claims of illegal sports betting.

DJ Khaled is among several star spokespeople for VGW’s Global Poker brand name

Now, Wallach argues, social sweeps casinos must deal with similar analysis.

‘These differences are not approximate,’ Wallach stated of social sweeps gambling establishments. ‘They have actually repeatedly been pointed out by courts and state lawyer generals as key consider figuring out that a sweepstakes promotion remained in truth a guise for unlawful sports betting.’

Among the casino industry’s leading trade organizations, the American Gaming Association, is now pushing lawmakers to examine sweepstakes operators and, sometimes, enact new legislation on the problem.

‘Consumers are being deprived of protections and states are forgoing significant tax and income opportunities as this sports betting changes that conducted through controlled channels,’ read a well-circulated AGA memo.

And then there are the plaintiffs who have actually sued social casinos in more than a dozen states.

Sweepstakes casino operators paid a combined $14.2 million in four different cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action lawsuit, saying the settlement was made to prevent legal expenses and continued lawsuits.

Michael Phelps has signed a deal with the VGW Group, which owns Global Poker

In the most current suit, which is largely comparable to its predecessors, New york city state locals Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is explained in the filing as an ‘illegal gaming business. ‘

Apple and Google have likewise been named as defendants in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com’s ask for remark.

‘We generally do not comment on matters before the courts,’ a VGW spokesperson told DailyMail.com through e-mail. ‘However, we keep in mind that this claim has actually only simply been submitted with the court and VGW has actually not been officially served.

‘We have full self-confidence in our compliance with all laws and policies where we operate, and stay positive about the future,’ the representative continued. ‘We continue to offer our free-to-play games throughout most of The United States and Canada, as we have for more than a decade, producing not just great video games, user experiences and entertainment, however likewise guaranteeing this is done safely, responsibly and at the highest level of standards.

‘More broadly, we ’d reiterate that class actions and other lawsuits and arbitrations are fairly typical across the online social video games industry (and the US more broadly), and our standard practice is that we plan to vigorously defend any claim which might be brought against us.’

The concerns between standard online gambling and sweepstakes casinos could prove troublesome for some celeb endorsers.

Towns, a star center with the Knicks, and the 76ers’ George both endorse VGW’s Global Poker brand name while the NBA is partnered with traditional gaming titans like FanDuel and DraftKings.

‘It’s ironic that professional athletes are hawking illegal sports betting wagering ‘sweeps’ websites while at the exact same time the leagues desire to project a strong position versus prohibited gaming - particularly when attempting to tamp down the occasional gambling scandal,’ Glaser told DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter got a life time restriction from the NBA over claims he conspired with gamblers. 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 demanded hosting allegedly illegal sports betting sites

Regardless, Glaser sees sweepstakes casinos as a significant issue for leagues such as the NBA.

‘I ’d anticipate that a league crackdown on athletes endorsing sweepstakes sites refers when, not if,’ Glaser added.

Neither an NBA representative nor the players’ representatives reacted to DailyMail.com’s requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise ignored to react to DailyMail.com emails.

Asked if their celeb endorsers have a responsibility to discuss to consumers the distinctions and similarities between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that requires to be done.

‘We have full self-confidence in our influencer and ambassadorial collaborations, and our business practices more broadly,’ the representative said. ‘Some of our worths are” our gamers precede” and” we do what’s right”, and we put our values at the core of whatever we do.’

Glaser, an outspoken opponent of sweepstakes websites, sees things differently.
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‘Celebrities who provide their names to shady prohibited gambling sites are, at a minimum, putting their credibilities at risk as well as courting civil and class actions by consumers who declare damage,’ Glaser said. ‘There is also some risk that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for assisting in unlawful gambling.’

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