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The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on prohibited gaming.
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No, they weren't personally in presence, but the world-famous stars were conspicuously consisted of in a slide discussion on social and sweepstakes casinos - the controversial sites using both totally free casino-style games and rewarding prizes, such as cash, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are just two cogs in the multibillion-dollar market that now discovers itself by claims. In the eyes of many video gaming corporations, not to point out suit plaintiffs and state regulators, sweepstakes gambling establishments function as traditional gambling establishments, just without the oversight, customer securities and tax laws. So not only can they prevent the steep 24-percent federal gaming levy, but 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 profits in 2015 alone. Now the company faces accusations of prohibited gambling in a New York claim that claims VGW utilizes star endorsers to 'develop a veneer of legitimacy' around its product. (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 business running multibillion-dollar prohibited operations out of places like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers include a variety of stars from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions in between conventional gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of many sweepstakes gambling establishments discovered online

Ryan Seacrest urges fans to dip into Chumba Casino, where lots of - but not all - video games are free

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

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Instead, ads usually center around the social element of the casinos, while omitting the potential for real sports betting losses.

Others tempt clients with promises of prizes. One such operator, Stake, ran a social networks ad displaying Drake's cars, planes and mansions before pivoting to footage of the rap artist playing online casino-style video games.

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

Another caption described: 'Because I never gave up.'

The disparity between gaming websites and social or sweepstakes casinos is a bit complex, however operators of the latter insist they're not involved with the previous.

A representative for an industry trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, many of the players on social-sweepstakes gambling establishments are sports betting totally free.

'Most social sweeps consumers never buy,' the SPGA spokesperson told 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 gaming sites.'

Social casinos offer clients a chance to play casino-style games with buddies. Players have the choice to buy worthless currency frequently referred to as 'gold coins,' which can not be exchanged genuine cash, however can be used to unlock numerous features within the video games.

But within the world of social casinos exists sweepstakes gaming, permitting consumers to acquire other currency called 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the capacity for financial losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York City. One player informed 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 value.

The Philadelphia 76ers' Paul George is seen promoting a Worldwide Poker event

Social sweeps casino Stake ran an ad displaying Drake's cars, aircrafts and mansions

Karl-Anthony Towns of the New York Knicks is another NBA star plugging VGW's Global Poker
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Traditional online gambling establishments are prohibited in all however seven states, which has actually helped to fuel the popularity of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, allow clients to submit mail-in ask for totally free sweeps coins, provided the gamers follow painfully particular guidelines. What's more, gamers are often rewarded with sweeps coins merely for signing up, thus offering them a factor to attempt their hands at any number of gambling establishment games for a possibility to win - or lose - real money.

So why are sweepstakes sites permitted to run in 48 states, while online gambling establishments are banned in all however 7?

According to the stakeholders, their item is the complimentary casino-style gaming, and the real-stakes competitors is just a method of promoting their support.

'Social sweepstakes games are simply a type of online entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is needed to play at social casinos with sweepstakes prizes. Consumers never have to pay for a chance to win prizes. That absence of a purchase requirement - or" consideration" - is a vital distinction in between social sweeps and conventional online gambling sites like gambling establishments.'

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

And without a purchase requirement, or 'consideration', the game itself does not fulfill the meaning of gambling in the US.

'Sweepstakes are an enduring approach for promoting all sort of daily businesses in the United States, everything from burgers to magazine memberships to coffee and home improvement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are frequently used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous sports betting industry insiders, that argument doesn't cut it.

For beginners, gaming attorney Daniel Wallach mentions, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a well-defined start and end, thereby suggesting the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being utilized to promote genuine items like french fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're typically not tied to casino-style video games of possibility,' Wallach informed DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [gambling establishments] have none of the attributes typically associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments provide" casino-like" payments, generally 80 percent or more of revenues, whereas the normal payout portion for a short-lived advertising sweepstakes is an insignificant share of the earnings earned by the business [typically less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, using clients the opportunity to play casino-style video games for real prizes. A number of those brick-and-mortar facilities have actually considering that been shuttered over allegations of unlawful gaming.

DJ Khaled is among numerous celeb spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps casinos ought to deal with comparable scrutiny.

'These distinctions are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have actually repeatedly been pointed out by courts and state attorney general of the United States as crucial consider determining that a sweepstakes promo remained in fact a guise for unlawful gambling.'

One of the casino market's leading trade companies, the American Gaming Association, is now pushing legislators to examine sweepstakes operators and, in some cases, enact brand-new legislation on the problem.

'Consumers are being denied of securities and states are forgoing considerable tax and profits opportunities as this sports betting replaces that carried out through controlled channels,' read a well-circulated AGA memo.

And after that there are the complainants who have taken legal action against social casinos in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 different cases in Kentucky without admitting any misbehavior, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action claim, stating the settlement was made to avoid legal expenses and continued lawsuits.

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

In the current suit, which is mostly comparable to its predecessors, New york city state homeowners Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is described in the filing as an 'prohibited sports betting enterprise. '

Apple and Google have likewise been named as defendants in suits for hosting the sweepstakes websites. But unlike VGW, neither tech company responded to DailyMail.com's ask for remark.

'We generally don't discuss matters before the courts,' a VGW representative informed DailyMail.com via email. 'However, we note that this claim has actually only just been submitted with the court and VGW has not been formally served.

'We have full confidence in our compliance with all laws and regulations where we run, and stay confident about the future,' the representative continued. 'We continue to use our free-to-play games across the majority of The United States and Canada, as we have for more than a decade, creating not only great video games, user experiences and home entertainment, however likewise guaranteeing this is done safely, properly and at the greatest level of standards.

'More broadly, we 'd restate that class actions and other litigations and arbitrations are reasonably typical across the online social video games industry (and the US more broadly), and our standard practice is that we plan to intensely protect any claim which may be brought against us.'

The concerns between traditional online gambling and sweepstakes casinos could 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 traditional gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking unlawful sports betting 'sweeps' sites while at the exact same time the leagues desire to predict a strong position against prohibited gaming - particularly when attempting to tamp down the occasional gaming scandal,' Glaser told DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter received a life time restriction from the NBA over claims he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes gambling establishments.

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

Regardless, Glaser sees sweepstakes gambling establishments as a significant concern for leagues such as the NBA.

'I 'd anticipate that a league crackdown on athletes endorsing sweepstakes websites is a matter of when, not if,' Glaser included.

Neither an NBA spokesman nor the players' agents responded to DailyMail.com's requests for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise neglected to react to DailyMail.com emails.

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

'We have full confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the representative stated. 'Some of our values are" our players 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 sites, sees things in a different way.
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'Celebrities who lend their names to shady unlawful gaming sites are, at a minimum, putting their track records at risk as well as courting civil and class actions by consumers who allege damage,' Glaser said. 'There is likewise some threat that state regulators and state attorneys basic rope celeb endorsers into enforcement efforts for helping with unlawful gambling.'

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