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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 prohibited gaming.

No, they weren't personally in attendance, but the world-famous celebrities were notably consisted of in a slide presentation on social and sweepstakes gambling establishments - the controversial sites using both complimentary casino-style games and profitable prizes, such as money, present cards or cryptocurrency. In one advertisement, 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.
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The sites are simply 2 cogs in the multibillion-dollar industry that now discovers itself besieged by suits. In the eyes of lots of gaming corporations, not to mention suit plaintiffs and state regulators, sweepstakes gambling establishments act as standard casinos, just without the oversight, customer protections and tax laws. So not only can they avoid the steep 24-percent federal sports betting levy, but sweepstakes operators aren't based on regulatory hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings last year alone. Now the business deals with accusations of illegal gaming in a New york city lawsuit that declares VGW utilizes celebrity endorsers to 'create a veneer of authenticity' around its item. (See VGW's statement below)

'I'm uncertain" if you do not trust us, you can trust Paris Hilton" is a winning message for companies operating multibillion-dollar prohibited 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 consist of a variety of celebs from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom provide any differences in between standard sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of lots of sweepstakes casinos found online

Ryan Seacrest advises fans to play at Chumba Casino, where numerous - however not all - video games are totally free

Drake has a deal with social sweeps gambling establishment, Stake, that he frequently promotes on social networks

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Instead, ads generally center around the social aspect of the gambling establishments, while leaving out the potential for real sports betting losses.

Others tempt clients with pledges of prizes. One such operator, Stake, ran a social networks advertisement displaying Drake's vehicles, aircrafts and estates before pivoting to video footage of the rapper playing online casino-style video games.

'Daddy, why do we have a lot cash?' check out the very first caption on the screen.

Another caption explained: 'Because I never ever offered up.'

The inconsistency in between gaming websites and social or sweepstakes casinos is a bit complex, however operators of the latter insist they're not included with the former.

A representative 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 information, the majority of the players on social-sweepstakes casinos are playing for free.

'Most social sweeps clients never ever make a purchase,' the SPGA spokesperson told DailyMail.com. 'The minority of customers who make purchases do so in amounts far smaller sized than the typical deposit or bet size at real-money online sports betting sites.'

Social casinos use clients an opportunity to play casino-style video games with friends. Players have the choice to purchase valueless currency often described as 'gold coins,' which can not be exchanged genuine money, but can be used to open various functions within the video games.

But within the world of social casinos exists sweepstakes video gaming, allowing consumers to obtain other currency referred to as 'sweeps coins' that can be exchanged for money or other prizes.

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

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

Social sweeps gambling establishment Stake ran an ad displaying Drake's vehicles, airplanes and mansions

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

Traditional online gambling establishments are banned in all however 7 states, which has actually assisted to sustain the popularity of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes sites, which don't need generally require recognition. However, sites like Chumba will request for IDs from gamers attempting to withdraw any funds.

Many sites, like the crypto-compatible Stake, allow consumers to submit mail-in demands for free sweeps coins, provided the players follow painfully particular directions. What's more, gamers are typically rewarded with sweeps coins simply for signing up, thereby providing them a reason to attempt their hands at any number of casino games for an opportunity to win - or lose - real cash.
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So why are sweepstakes sites allowed to in 48 states, while online casinos are prohibited in all but 7?

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

'Social sweepstakes video games are simply a kind of online entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is required to dip into social gambling establishments with sweepstakes rewards. Consumers never ever have to pay for an opportunity to win prizes. That lack of a purchase requirement - or" factor to consider" - is an essential difference between social sweeps and conventional online gaming sites like casinos.'

Think about the method that McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and french fries that provide them the opportunity to win financially rewarding rewards, such as a $1 million prize.

And without a purchase requirement, or 'factor to consider', the video game itself does not fulfill the definition of sports betting in the US.

'Sweepstakes are a long-standing approach for promoting all type of everyday companies in the United States, whatever from hamburgers to magazine memberships to coffee and home improvement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are regularly utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting market insiders, that argument does not cut it.

For starters, gaming lawyer Daniel Wallach mentions, McDonald's Monopoly game does not run forever. Rather, it has a well-defined beginning and end, consequently recommending the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being utilized to promote genuine products like fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're normally not tied to casino-style video games of possibility,' Wallach told DailyMail.com. 'They're just money giveaways.

'The sweepstakes [gambling establishments] possess none of the qualities frequently associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos provide" casino-like" payouts, normally 80 percent or more of incomes, whereas the normal payout portion for a momentary advertising sweepstakes is an insignificant share of the profits earned by the business [usually less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the web coffee shops that emerged in Florida, providing clients the opportunity to play casino-style video games for real rewards. Much of those brick-and-mortar facilities have since been shuttered over claims of illegal sports betting.

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

Now, Wallach argues, social sweeps casinos should face similar examination.

'These distinctions are not approximate,' Wallach said of social sweeps gambling establishments. 'They have actually repeatedly been mentioned by courts and state lawyer generals as key consider figuring out that a sweepstakes promotion was in fact a guise for unlawful sports betting.'

One of the casino market's leading trade organizations, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, in many cases, enact brand-new legislation on the issue.

'Consumers are being deprived of securities and states are passing up substantial tax and income opportunities as this sports betting replaces that performed through managed channels,' read a well-circulated AGA memo.

And then there are the plaintiffs who have actually sued social gambling establishments in more than a dozen states.
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Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, saying the settlement was made to avoid legal costs and continued litigation.

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

In the most recent claim, which is largely comparable to its predecessors, New york city state citizens Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited gambling enterprise. '

Apple and Google have actually likewise been named as accuseds in claims for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's ask for comment.

'We normally don't comment on matters before the courts,' a VGW spokesperson told DailyMail.com through email. 'However, we keep in mind that this claim has actually only just been submitted with the court and VGW has not been formally served.

'We have complete confidence in our compliance with all laws and guidelines where we run, and remain positive about the future,' the spokesperson continued. 'We continue to offer our free-to-play video games across many of North America, as we have for more than a years, producing not only great video games, user experiences and entertainment, however also guaranteeing this is done securely, responsibly and at the greatest level of requirements.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are relatively typical across the online social games market (and the US more broadly), and our basic practice is that we intend to vigorously safeguard any claim which might be brought versus us.'

The concerns in between traditional online sports betting and sweepstakes casinos could show bothersome for some celeb endorsers.

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

'It's paradoxical that professional athletes are hawking unlawful sports betting wagering 'sweeps' websites while at the same time the leagues want to forecast a strong stance versus unlawful sports betting - especially when attempting to tamp down the occasional gaming scandal,' Glaser informed DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter received a lifetime ban from the NBA over allegations 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 taken legal action against for hosting apparently unlawful sports betting websites

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

'I 'd expect that a league crackdown on athletes endorsing sweepstakes sites refers when, not if,' Glaser included.

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 also neglected to react to DailyMail.com emails.

Asked if their celebrity endorsers have an obligation to explain to customers the distinctions and resemblances in between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that requires to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the representative said. 'Some of our values are" our players precede" and" we do what's right", and we put our values at the core of whatever we do.'

Glaser, an outspoken challenger of sweepstakes sites, sees things in a different way.

'Celebrities who provide their names to shady prohibited gaming sites are, at a minimum, putting their credibilities at threat as well as courting civil and class actions by customers who allege harm,' Glaser said. 'There is likewise some risk that state regulators and state chief law officers rope star endorsers into enforcement efforts for facilitating prohibited sports betting.'

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