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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 illegal gaming.
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No, they weren't personally in presence, however 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 profitable rewards, such as cash, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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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 lawsuit plaintiffs and state regulators, sweepstakes casinos function as conventional gambling establishments, just without the oversight, consumer defenses and tax laws. So not just can they prevent the steep 24-percent federal gaming levy, but sweepstakes operators aren't to regulatory hurdles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the company faces allegations of prohibited sports betting in a New york city lawsuit that declares VGW uses celeb endorsers to 'create a veneer of legitimacy' around its item. (See VGW's declaration listed below)

'I'm unsure" if you don't trust us, you can rely on Paris Hilton" is a winning message for companies operating multibillion-dollar unlawful 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 variety of celebrities from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions between conventional sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among lots of sweepstakes gambling establishments found online

Ryan Seacrest advises fans to dip into Chumba Casino, where lots of - however not all - games are free

Drake has a handle social sweeps casino, Stake, that he regularly promotes on social media

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Instead, ads normally center around the social element of the casinos, while leaving out the capacity for real sports betting losses.

Others lure customers with promises of rewards. One such operator, Stake, ran a social media ad flaunting Drake's vehicles, airplanes and estates before pivoting to footage of the rapper playing online casino-style games.

'Daddy, why do we have so much money?' read the very first caption on the screen.

Another caption discussed: 'Because I never ever provided up.'

The disparity between sports betting websites and social or sweepstakes gambling establishments is a bit complicated, however operators of the latter insist they're not involved with the former.

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), described 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 playing for totally free.

'Most social sweeps clients never ever 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 bet size at real-money online gaming websites.'

Social casinos provide customers a chance to play casino-style games with good friends. Players have the alternative to buy worthless currency often referred to as 'gold coins,' which can not be exchanged genuine cash, however can be utilized to unlock different functions within the video games.

But within the world of social casinos exists sweepstakes video gaming, enabling clients to obtain other currency understood as 'sweeps coins' that can be exchanged for cash or other rewards.

And therein lies the potential for financial losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York. One gamer informed the Washington Post he lost more than $100,000 on sweepstakes casinos in the previous year after continuing to buy more coins in pursuit of money and other things of value.

The Philadelphia 76ers' Paul George is seen promoting an International Poker event

Social sweeps casino Stake ran an advertisement showing off Drake's vehicles, aircrafts and mansions

Karl-Anthony Towns of the New York City Knicks is another NBA star plugging VGW's Global Poker

Traditional online casinos are prohibited in all but 7 states, which has actually helped to sustain the appeal of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, allow consumers to submit mail-in ask for complimentary sweeps coins, offered the gamers follow painfully particular guidelines. What's more, gamers are frequently rewarded with sweeps coins merely for signing up, thus offering them a factor to try their hands at any number 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 but 7?

According to the stakeholders, their product is the complimentary casino-style gaming, and the real-stakes competition is simply a method of promoting their support.

'Social sweepstakes games are simply a kind of online entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is required to play at social casinos with sweepstakes rewards. Consumers never need to spend for an opportunity to win prizes. That absence of a purchase requirement - or" consideration" - is a vital difference in between social sweeps and conventional online gaming websites like casinos.'

Consider the manner in which McDonald's uses its yearly Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and french fries that use them the opportunity to win lucrative rewards, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the video game itself doesn't fulfill the meaning of gaming in the US.

'Sweepstakes are an enduring approach for promoting all type of everyday companies in the United States, whatever from burgers to magazine memberships to coffee and home improvement stores,' 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 sports betting market insiders, that argument doesn't cut it.

For starters, gaming lawyer Daniel Wallach explains, McDonald's Monopoly game doesn't run forever. Rather, it has a distinct start and end, thus suggesting the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being utilized to promote real items like french fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're usually not tied to casino-style games of possibility,' Wallach told DailyMail.com. 'They're just cash free gifts.

'The sweepstakes [gambling establishments] have none of the characteristics typically connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments provide" casino-like" payments, usually 80 percent or more of incomes, whereas the common payout portion for a short-lived promotional sweepstakes is a trivial share of the revenue earned by the business [usually less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the web cafes that emerged in Florida, using clients the possibility to play casino-style games for real prizes. Many of those brick-and-mortar establishments have actually since been shuttered over accusations of unlawful gambling.

DJ Khaled is amongst a number of celeb spokespeople for VGW's Global Poker brand

Now, Wallach argues, social sweeps gambling establishments must face similar analysis.

'These differences are not approximate,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been mentioned by courts and state chief law officer as crucial consider determining that a sweepstakes promotion was in fact a guise for illegal gambling.'

Among the casino industry's leading trade organizations, the American Gaming Association, is now pressing legislators to examine sweepstakes operators and, in some cases, enact brand-new legislation on the concern.

'Consumers are being denied of defenses and states are forgoing considerable tax and income chances as this gambling changes that carried out through controlled channels,' checked out a well-circulated AGA memo.

And then there are the plaintiffs who have actually taken legal action against social gambling establishments in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in four separate cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action claim, saying the settlement was made to prevent legal expenses and continued litigation.

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

In the most current claim, which is mostly comparable to its predecessors, New York state citizens Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'prohibited gaming enterprise. '

Apple and Google have actually also been called as offenders in suits for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for comment.

'We typically do not discuss matters before the courts,' a VGW representative informed DailyMail.com by means of email. 'However, we keep in mind that this claim has only simply been filed with the court and VGW has not been formally served.

'We have complete confidence in our compliance with all laws and regulations where we run, and remain confident about the future,' the representative continued. 'We continue to offer our free-to-play games across many of The United States and Canada, as we have for more than a decade, producing not only terrific games, user experiences and home entertainment, however also ensuring this is done safely, properly and at the greatest level of requirements.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are fairly typical throughout the online social games industry (and the US more broadly), and our standard practice is that we mean to strongly protect any claim which may be brought against us.'

The concerns between conventional online sports betting and sweepstakes casinos might prove bothersome for some star endorsers.

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

'It's ironic that professional athletes are hawking prohibited sports betting wagering 'sweeps' sites while at the same time the leagues wish to forecast a strong stance against prohibited sports betting - particularly when trying to tamp down the occasional sports betting scandal,' Glaser informed DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter got a lifetime ban from the NBA over accusations he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes casinos.

In addition to VGW, Apple and Google are being sued for hosting supposedly unlawful sports betting sites

Regardless, Glaser sees sweepstakes gambling establishments as a major issue for leagues such as the NBA.

'I 'd expect that a league crackdown on athletes backing sweepstakes websites is a matter of when, not if,' Glaser added.

Neither an NBA spokesperson nor the players' agents reacted to DailyMail.com's demands for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise overlooked to react to DailyMail.com e-mails.
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Asked if their celebrity endorsers have an obligation to discuss to consumers the distinctions and resemblances between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is absolutely nothing more that needs to be done.

'We have full confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the spokesperson stated. 'Some of our values are" our gamers precede" 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.
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'Celebrities who lend their names to shady prohibited sports betting sites are, at a minimum, putting their reputations at danger in addition to courting civil and class actions by consumers who declare harm,' Glaser stated. 'There is likewise some danger that state regulators and state lawyers basic rope celebrity endorsers into enforcement efforts for helping with prohibited gambling.'

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