The Dark Side of Social and Sweepstakes Online Casinos

Golden Hearts Games creates digital Charitable Promotional Games that support USA charities, supposedly.

If you’ve happened upon “The Telemarketers” on HBO Max, it’s easy to lose faith in charities as a whole. I’m sure there are some good one’s out there. St. Jude tugs at the heart strings and it’s Marlo Thomas so I’m fairly convinced this is a children’s hospital to donate to and not have to worry about most of the funds going to something else. Wounded Warriors seems like another good cause.

“The Telemarketers” brought attention to what seemed like the first great telemarketing scam of its time – the ‘ol Police Benevolent Association decal scheme. The caller seems to be working on behalf of the police and urges folks to make a donation, receive the decal and – without saying so much – you’ll be let go without a summons once the officer sees you support the police in the event you’re ever pulled over for speeding.

Without giving too much away, the organizations tied to this scheme receive very little of the money. I personally would fall for this type of call back in the day and it’s indeed debatable whether these decals got folks out of sticky situations. I have one friend who swears they have. With “The Telemarketers” we learn those placing the calls are the complete antithesis to the group they claim to represent. Most of the callers are ex-convicts, drug addicts and other unsavory characters unable to obtain employment elsewhere. As we find out in Episode 3, some of the callers are even DEAD.

In covering the gambling sector, GoFundMe accounts have often gone hand and hand with scams. One poker player recently used a GoFundMe account to claim he had terminal cancer and his last dying wish was to participate in this year’s World Series of Poker main event. We will spare him the embarrassment here. A few poker players joined forces and raised over $12,000 to send this individual to Vegas for the WSOP. One small problem: He had a year to live and the guy isn’t looking sick at all one year later. He’s appeared in YouTube videos celebrating. Those who paid his way to the WSOP asked him for proof of his terminal cancer. The player provided them with a notice from a general practitioner, not an oncologist. It’s indeed rare for your family physician to make such a diagnosis as he or she rarely specializes in this area. Needless-to-say, when the player was finally called out, he went dark on social media. Surprise, surprise.

Now that I have you all hating on most charities, imagine for a moment lumping a charity in with your favorite “sin” activity. When you engage in sexual activity, odds are pretty good you’re not thinking about feeding the hungry (well, some of you at least). Drug users probably aren’t getting high dreaming about wounded warriors. And when we’re at the casino, the last thing that comes to mind is donating funds to anything other than a slot machine or table dealer.

That’s just the reality. There is a certain amount of greed that flows through our blood when we are at the slot machines or roulette table. When the ball lands on the right spot, nobody is thinking “Damn, just won me some money to feed the poor!” 

For this writer the so-called charitable casino is like that Facebook friend we all know who sets up a GoFundMe account claiming he’s poor as he or she checks in from some fancy hotel and posts photos their favorite steakhouse.

The American Gaming Association recently celebrated the Michigan Attorney General shutting down one such website, Massachusetts based Golden Hearts Games, Inc. Of course they were quick to paint this as yet another hit on an unlicensed gambling operator doing business in a regulated environment. Reading their tweet you’d swear they were celebrating the shutdown of one of those dastardly offshore sports books, many of whom are now in business 20 plus years. But, no, this was one of those charitable casinos (sweepstakes casinos) freely operating in Michigan from the US commonwealth of Massachusetts. Only after the MI AG threatened to sue did Golden Hearts Games offer to exit. 

From Golden Hearts Games:

“All donations go to the Golden Hearts Charitable Foundation (EIN: 86-3294297), a U.S. 501(c)(3) public charity, which then makes grants to each individual donor’s selected charity. Donations may be tax-deductible to U.S. residents. No purchase or donation of any kind is necessary to participate or win. A purchase or donation will not increase your chances of winning.”

“Unlicensed gaming robs our schools and our government of essential funding and leaves consumers unprotected,” Michigan Attorney General Dana Nessel said in a statement. “When companies like Golden Hearts attempt to circumvent Michigan’s gaming laws, they create the false impression that their games are legal and safe for consumers. My office is committed to ensuring that our gaming laws are strictly enforced and those who violate those laws are held accountable.”

In other words, AG Nessel is not impressed with the Golden Hearts Games charitable site. Nor are we.

I’ve been doing this for 23 years now and one has to pay special attention to specific groups drawn to a component of this industry. Big names in the space don’t get involved if there’s not money to be made. Social casinos can’t possible really be FREE, can they?

Case in point, years ago, a group of us “gambling elites” (hey, sounds good), the CEO of newly launched Prime Sports among us, descended up one of the first of these social media casino conferences really just to see what the hype was all about. This was right after “Black Friday”, the infamous takedown (err shakedown) of some online poker sites that would go on to cripple the industry. A lesser known but just as effective takedown occurred a few weeks later and was referred to as “Blue Monday”. This one resulted in a bunch of popular websites (poker, bingo, sports betting, the whole gamut) being taken offline (Bovada, Doyles Room, Diamond Sports, Bookmaker among them). BetED, closely linked to covers at the time, was also taken down. One of their founders was fooled into meeting with a “fake” payment processor in the country of Guam, which was in reality a US territory. You get the point. Yep, the payment processor was set up by none ofter than the US feds.

One of the BetED guys arrested was at this social casino conference to join the “good guys (and gals)”. That would be us. BetED’s co-founder was a “good” guy too but he was Canadian and didn’t realize Guam was part of the US so he can be forgiven. At the time of the indictment, BetED was a Gambling911 sponsor. And then there was….well……the people from Cantor Gaming.

This was a small conference and beyond the aforementioned there weren’t a whole lot of other people attending. It was literally OUR group and those five Cantor people. The hilarious part was that Yours Truly kept being told that the Cantor people were doing their part to avoid the rest of us….ME in particular. If there was such a thing as “the deep state” in gambling, it would be Cantor Gaming. We covered them extensively to that point with the best still to come. Google them. Cantor was even well linked to the events of 911 for all you conspiracy theorists out there. It’s one of the few conspiracy theories I can buy into. The people representing Cantor at this event had “CREEP” written across their foreheads.

Moral to the story is that some of us were attending one of the first social media casino (sweepstakes casino) conferences to become better educated. The others that were there? Can’t help but believe they did not have altruistic motives for attending.

Years after this event, a Cantor Fitzgerald affiliate was ordered to pay more than $16 Million In penalties and forfeiture for engaging in illegal gambling and money laundering schemes.

From the U.S. Attorney’s Office, Eastern District of New York:

“Cantor Gaming quickly grew into one of the largest race and sports book operators in the United States. Unacceptably, this growth came at the expense of compliance with the law, and as a result Cantor Gaming became a place where at least two large-scale illegal bookmakers could launder their ill-gotten proceeds. The Cantor Gaming senior officer who oversaw the illegal conduct has pleaded guilty for his involvement in this criminal activity. The non-prosecution agreement recognizes Cantor Gaming’s decision to accept full responsibility, provide complete cooperation, and take remedial measures to enforce best industry practices going forward,” stated U.S. Attorney Capers. Mr. Capers thanked the investigative agencies for their outstanding commitment and dedication over the course of this investigation. Mr. Capers also thanked the District Attorney’s Office for Queens County, the Financial Crimes Enforcement Network of the Department of the Treasury, and the Nevada Gaming Control Board, Enforcement Division for their assistance with the investigation. 

“CG Technology’s admissions that it violated federal laws by accepting messenger betting, out-of-state betting, and processing large amounts of monies which were the proceeds of illegal activities, are significant victories for the government,” said U.S. Attorney Bogden. 

“CG Technology, formerly Cantor Gaming, ran its enterprise with total disregard for government regulations and the penalties associated with breaking the law. As Postal Inspectors and their law enforcement partners continue to prove, greed and eagerness to ‘game’ the system will never be tolerated, and those who choose to ignore the law will be brought to justice,” said USPIS Inspector Bartlett.

“Cantor Gaming bet on never getting caught but this wager didn’t pay off,” said Chief Weber, IRS Criminal Investigation. “Financial transactions always leave a money trail and IRS-CI Special Agents relentlessly follow that trail. This large scale illegal bookmaking investigation uncovered the kind of widespread corruption that is too often associated with criminal enterprises. Working with our law enforcement partners, we will continue to pursue these types of investigations to keep the books clean for consumers and corporations who are following the law.”

Social casinos leverage Facebook user data to target vulnerable gamblers, per PBS. They focus in on one player who enjoyed the social casino experience at first for its “free play” only to find out later she had to “buy more to keep playing”.

“I would say that my spending increased to hundreds of dollars and thousands of dollars within the first month,” Suzie Kelly told PBS.

Even the positive review sites for these types of supposed “free” casinos list as a negative “Questionable sweepstakes business model”.

So are they all bad? No. Just understand the tricks involved a la what Suzie Kelly relayed to PBS.

Even a search for Enemy No. 1 where the Michigan AG is concerned, Golden Hearts Games, yields very little in the way of any negative press. Chumba Casino is among the most recognizable names in the world of social gaming. They, too, have little in the way of bad reviews.

But just remember the best things in life are NOT free….and that includes the so-called FREE Social casinos.

About the author

Chris Costigan, gambling911.com Publisher