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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 sports betting.
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No, they weren't personally in participation, however the world-famous celebs were conspicuously included in a slide discussion on social and sweepstakes casinos - the questionable websites using both totally free casino-style video games and profitable prizes, such as cash, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for free,' 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 finds itself besieged by lawsuits. In the eyes of many video gaming corporations, not to discuss claim complainants and state regulators, sweepstakes casinos serve as standard casinos, just without the oversight, consumer defenses and tax laws. So not just can they avoid the steep 24-percent federal gambling levy, however sweepstakes operators aren't subject to regulatory hurdles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the business deals with accusations of unlawful sports betting in a New york city suit that declares VGW uses celeb endorsers to 'create a veneer of legitimacy' around its item. (See VGW's statement listed below)

'I'm not sure" if you don't trust us, you can rely on Paris Hilton" is a winning message for companies running multibillion-dollar illegal 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 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 offer any differences in between traditional gambling and sweepstakes play.

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

Ryan Seacrest advises fans to dip into Chumba Casino, where numerous - but not all - video games are free

Drake has a deal with social sweeps gambling establishment, Stake, that he regularly touts on social networks

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Instead, ads usually focus around the social aspect of the gambling establishments, while omitting the capacity for actual gaming losses.

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

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

Another caption described: 'Because I never quit.'

The inconsistency in between gaming sites and social or sweepstakes gambling establishments is a bit complicated, however operators of the latter insist they're not included with the former.

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, the majority of the gamers on social-sweepstakes gambling establishments are sports betting free.

'Most social sweeps consumers never buy,' the SPGA representative informed DailyMail.com. 'The minority of customers who make purchases do so in quantities far smaller than the typical deposit or wager size at real-money online sports betting websites.'

Social gambling establishments offer consumers an opportunity to play casino-style games with friends. Players have the choice to purchase worthless currency often referred to as 'gold coins,' which can not be exchanged for genuine cash, but can be used to unlock numerous features within the video games.

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

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

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

Social sweeps gambling establishment Stake ran an ad flaunting Drake's automobiles, airplanes and estates

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

Traditional online gambling establishments are prohibited in all however 7 states, which has actually assisted to fuel the appeal of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, permit clients to send mail-in ask for free sweeps coins, offered the gamers follow painfully particular guidelines. What's more, gamers are typically rewarded with sweeps coins just for registering, therefore providing a factor to attempt their hands at any variety of gambling establishment games for a chance to win - or lose - genuine cash.

So why are sweepstakes websites enabled to operate in 48 states, while online gambling establishments are banned in all however 7?

According to the stakeholders, their product is the free casino-style gaming, and the real-stakes competition is just a method of promoting their bread and butter.

'Social sweepstakes video games are merely a type of online home entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is needed to play at social gambling establishments with sweepstakes prizes. Consumers never have to spend for a chance to win rewards. That lack of a purchase requirement - or" consideration" - is a crucial difference in between social sweeps and traditional online gambling websites like gambling establishments.'

Consider the way that McDonald's utilizes its annual Monopoly game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and fries that offer them the chance to win lucrative prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the game itself does not satisfy the definition of sports betting in the US.

'Sweepstakes are a long-standing approach for promoting all sort of daily businesses in the United States, everything from hamburgers to magazine subscriptions to coffee and home improvement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are regularly used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting market experts, that argument doesn't cut it.

For starters, gaming attorney Daniel Wallach mentions, McDonald's Monopoly game doesn't run forever. Rather, it has a well-defined start and end, consequently recommending the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being used to promote real items like fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're normally not connected to casino-style games of chance,' Wallach informed DailyMail.com. 'They're just cash free gifts.

'The sweepstakes [casinos] possess none of the attributes typically connected with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments offer" casino-like" payouts, normally 80 percent or more of profits, whereas the normal payment percentage for a momentary advertising sweepstakes is an insignificant share of the earnings earned by the company [usually less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the web coffee shops that emerged in Florida, using clients the chance to play casino-style video games for real rewards. Much of those brick-and-mortar facilities have since been shuttered over allegations of illegal gaming.

DJ Khaled is amongst numerous celebrity spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps casinos ought to face similar scrutiny.

'These differences are not arbitrary,' Wallach said of social sweeps casinos. '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 was in reality a guise for prohibited gambling.'

Among the casino market's leading trade organizations, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, in many cases, enact new legislation on the problem.

'Consumers are being deprived of securities and states are passing up substantial tax and profits chances as this gambling replaces that performed through regulated channels,' read a well-circulated AGA memo.

And then there are the complainants who have actually sued social casinos in more than a dozen states.

Sweepstakes casino operators paid a combined $14.2 million in 4 separate cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, saying the settlement was made to prevent legal expenses and continued litigation.

Michael Phelps has signed an offer with the VGW Group, which owns Global Poker

In the current claim, which is largely similar to its predecessors, New york city state locals Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited gaming business. '

Apple and Google have also been called as defendants in suits for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's request for remark.

'We generally don't comment on matters before the courts,' a VGW representative told DailyMail.com by means of e-mail. 'However, we note that this claim has only just been filed with the court and VGW has actually not been officially served.

'We have complete confidence in our compliance with all laws and policies where we run, and stay confident about the future,' the spokesperson continued. 'We continue to use our free-to-play games across many of The United States and Canada, as we have for more than a decade, creating not just excellent video games, user experiences and entertainment, however also ensuring this is done safely, properly and at the greatest level of standards.

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

The issues in between conventional online gaming and sweepstakes gambling establishments could prove troublesome for some celeb 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 'sweeps' websites while at the very same time the leagues wish to project a strong stance against prohibited gaming - particularly when trying to tamp down the occasional sports betting 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 allegations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes gambling establishments.

Along with VGW, Apple and Google are being demanded hosting apparently prohibited sports betting sites

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

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

Neither an NBA representative nor the gamers' agents reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also overlooked to react to DailyMail.com e-mails.

Asked if their star endorsers have an obligation to explain to the distinctions and similarities between iGaming and sweepstakes casinos, VGW firmly insisted there is absolutely nothing more that requires to be done.

'We have full self-confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the spokesperson stated. 'A few 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 differently.
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'Celebrities who provide their names to shady illegal gaming sites are, at a minimum, putting their reputations at danger as well as courting civil and class actions by customers who declare harm,' Glaser stated. 'There is likewise some risk that state regulators and state chief law officers rope celeb endorsers into enforcement efforts for facilitating illegal sports betting.'

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