Fame, FTC, and Fine Print: Navigating Advertising Rules in an Evolving Landscape

By: Abbey Block

Ryan Seacrest is most well-known for his role as the charismatic host of popular television shows like American Idol and Wheel of Fortune.  But more recently, Seacrest has taken on a new business venture, becoming the spokesperson for the social casino platform, Chumba Casino.

Chumba Casino, launched in 2012, allows players to engage in online casino-style games. Seacrest began his partnership with the brand in December of 2023, and has been featured prominently in the platform’s promotional materials on social media platforms such as YouTube and Instagram.

But Seacrest recently found himself in a bit of legal hot water, being named as a co-defendant in a lawsuit brought against Chumba’s parent company, VGW. In the lawsuit, plaintiff Aubrey Carillo alleges that the platform violates California consumer protection laws and criticizes Seacrest’s endorsement stating:

“Someone this blessed in life does not need to hurt people for more money, but Defendant Seacrest does that by serving as the official celebrity endorser for ChumbaCasino.com. Defendant Seacrest promotes illegal gambling and in so doing, contributes to the rise of online gambling addiction among adults and adolescents.”

The merits of Carillo’s allegations are dubious and plaintiff will face many hurdles in the quest to impose liability on both VGW and Mr. Seacrest. Notwithstanding its deficiencies, the suit highlights that celebrity endorsers are not immune to legal liability for their promotional representations. Put differently, when it comes to advertising, what is said, and who says it, matters. Indeed, as more and more gaming brands turn to social media influencers to promote their products, they should be aware that traditional principles governing advertising practices still apply.

Although there is no uniform set of federal regulations explicitly governing the advertisement of online gaming platforms, the Federal Trade Commission (“FTC”), which is the most prominent regulator of consumer-facing advertising practices, requires that claims in advertisements be “truthful,” and advises that they “cannot be deceptive or unfair, and must be evidence-based.”[1]

To promote the principle of evidence-based and truthful advertising, the FTC publishes formal rules and more general guidelines outlining certain principles that businesses and advertisers should follow. Below, we’ve provided a summary of several of the most prominent guidelines that gaming platform providers should follow when partnering with endorsers and influencers to promote their brand.

Avoid Making Unsubstantiated Claims Regarding Money-Making Opportunities: When creating promotional materials, avoid making unsubstantiated or exaggerated claims about the ability to win prizes or money on the platform.  For example, if you pay an influencer to post a video about winnings hundreds of dollars by playing games on your platform, you should include a disclaimer advising viewers that such results are not typical.

Moreover, you should avoid creating the impression that engaging in gameplay on your platform can be used as a source of regular income or as a way to make a living. Such representations create the misleading impression that so-called “big wins” are a regular occurrence that can be relied upon for financial stability. To this end, avoid using promotional language that creates the impression that players can win hundreds or thousands of dollars on the platform given that this is generally not the typical experience of even the luckiest of players. Instead, online gaming platforms should be promoted as a form of entertainment and fun – not as a way to support oneself financially.

Endorsements and Recommendations Must be Truthful and Based on Personal Experience: The use of endorsements – celebrity or otherwise –  is nothing new in the world of marketing. For decades, companies have utilized well-known public figures to promote their product or brand. For example, basketball star Shaquille O’Neal has had several endorsement deals since retiring from the NBA – promoting everything from sleep apnea appliances to  pizza.  Indeed, the Papa Johns website prominently features O’Neal, who is said to be a “lifelong fan of Papa Johns.” O’Neal even has his own specialty pizza with the brand – the “Shaq-a-Roni” and is pictured on the website grinning with a pizza box. Similarly, reality star Khloe Kardashian is the spokesperson for Nurtect ODT – a migraine medication.  In a commercial for the drug, Kardashian speaks about her own struggles with migraines, stating that although “there’s nothing glamorous about migraines” she can “get back to work fast, and prevent [her] next attack” with Nurtec. Endorsements, particularly when they come from a beloved celebrity or public figure, create consumer trust and excitement in a product or brand. But even regular folks can provide effective endorsements, making recommendations or recounting their own experience with a given product or brand.

The FTC permits the use of endorsements but advises that those endorsements “must reflect the honest opinions, findings, beliefs or experience of the endorser.”[2] For example, the FTC would likely disapprove of Shaq’s “Shaq-a-Roni Pizza” if it was later revealed that he was lactose intolerant and had never tasted the pie. Moreover, the “endorsement may not convey any express or implied representation that would be deceptive if made directly by the advertiser.”[3] These standards apply with equal force when relying on the endorsement of non-celebrities.

Additionally, as relevant in the gaming context, endorsements should not create the misleading impression that the endorser’s experience is typical if it is not in fact typical. Thus, when utilizing an endorsement, your company should either (1) have adequate proof to back up the claim that results in the endorsement are typical; or (2) clearly and conspicuously disclose the generally expected performance in the circumstances portrayed in the ad/endorsement.

But do not fret. Full disclosure does not mean the advertisement has to be dour or without the “mere puffery” that is legally acceptable in the advertising world. For instance, weight loss drug commercials consistently show hordes of happy people dancing down their cheerful street in unison. The law still tolerates overstated images of bottled joy, just not unproveable statements of a panacea pill.

Influencers Must Disclose Partnership and Compensation: As social media platforms such as TikTok and Instagram increasingly become mediums for marketing, many brands are turning to social media influencers to promote their products. Although the use of influencers is generally nonproblematic, influencers are held to the same standards discussed above – i.e., they may not promulgate misleading or deceptive content and must  provide appropriate disclosures. Indeed, the FTC has even published a guide for social media influencers outlining rules and practices that must be followed.

The FTC advises that social media influencers should disclose any “financial, employment, personal or family relationship” with a brand they are promoting or otherwise posting about. Simply put, influencers must disclose when they receive compensation for their promotional post. Compensation can come in the form of typical monetary payment or may include the provision of free goods or services. For example, if a gaming company were to provide an influencer with 100 free virtual coins that can be used to play games on its platform, the influencer must disclose that they were provided with compensation in exchange for their posts about the platform. As noted by the FTC, consumers should be made aware when an endorser was compensated, given that this information will (in theory) allow the consumer to more accurately consider the weight to be given to the endorsement.

Disclosures should be featured prominently and in plain language. Influencers can satisfy this requirement by incorporating terms such as “ad” “sponsored” or “advertisement” into their posts. The use of hashtags such as “#ad” or “#sponsored” can also effectively communicate the nature of the partnership.

Finally, like the endorsements discussed above, social media influencers should only promote or discuss a product that they have actually used or engaged with and their content should truthfully reflect their experience. To this end, the FTC instructs influencers that “[i]f you’re paid to talk about a product and thought it was terrible, you can’t say it’s terrific.” Moreover, an influencer should not be paid to promote your gaming platform if the influencer has never actually played the games on it.

Conclusion

Advertising looks much different than it did just a few years ago. Instead of primetime TV commercials or flyers sent in the mail, real consumer impact is made via Instagram influencers, TikTok videos, and Twitch streams. Although the marketing world is constantly evolving, the primary principles of the FTC’s guidelines generally remain the same.  Advertisements must be truthful and not deceptive.

It’s important to remember that the guidelines discussed above are just a snapshot of some of the principles and practices that gaming operators should adopt to mitigate risk when creating content to promote their platforms. The lawsuit against Mr. Seacrest  – while unlikely to succeed – highlights that consumers can use promotional content as a basis to assert legal liability. While such claims are generally unsuccessful and lacking in merit, resolving them can create a headache costing time and money. Although there’s no full-proof way to prevent a plaintiff from filing a meritless lawsuit, incorporating the guidelines discussed above can help mitigate risk and create a strong defense if and when a legal action is filed.

[1] Advertising and Marketing, Fed. Trade Comm’n (last accessed May 9, 2025), https://www.ftc.gov/business-guidance/advertising-marketing.

[2] 16 C.F.R. 255.1.

[3] Id.