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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 illegal sports betting.
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No, they weren't personally in attendance, however the world-famous celebs were notably included in a slide presentation on social and sweepstakes casinos - the controversial sites using both free casino-style video games and profitable prizes, such as money, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone 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 sites are simply 2 cogs in the multibillion-dollar industry that now discovers itself besieged by suits. In the eyes of numerous video gaming corporations, not to point out lawsuit complainants and state regulators, sweepstakes gambling establishments function as conventional gambling establishments, only without the oversight, customer defenses and tax laws. So not only can they prevent the high 24-percent federal gaming levy, but sweepstakes operators aren't based on regulatory difficulties like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the business deals with accusations of prohibited gaming in a New york city suit that claims VGW uses celeb endorsers to 'produce a veneer of authenticity' around its product. (See VGW's statement below)

'I'm not sure" if you don't trust us, you can trust Paris Hilton" is a winning message for business operating 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 stars from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions in between standard gaming and sweepstakes play.

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

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

Drake has an offer with social sweeps gambling establishment, Stake, that he regularly touts on social networks
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Instead, advertisements generally center around the social element of the gambling establishments, while omitting the capacity for real gambling losses.

Others lure consumers with promises of prizes. One such operator, Stake, ran a social media ad displaying Drake's automobiles, airplanes and mansions before rotating to video of the rapper playing online casino-style games.

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

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

The discrepancy between gaming websites and social or sweepstakes casinos is a bit complex, 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), discussed its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, many of the gamers on social-sweepstakes casinos are playing for free.

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

Social casinos use customers an opportunity to play casino-style games with friends. Players have the option to buy worthless currency frequently referred to as 'gold coins,' which can not be exchanged for real cash, however can be utilized to open different features within the 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 money or other prizes.

And therein lies the potential for financial losses, like the ones declared 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 gambling establishments in the previous year after continuing to purchase more coins in pursuit of money and other things of worth.

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

Social sweeps casino Stake ran an advertisement revealing off Drake's cars and trucks, planes and mansions

Karl-Anthony Towns of the New York City Knicks is another NBA star plugging VGW's Global Poker
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Traditional online casinos are banned in all but 7 states, which has actually assisted to sustain the appeal of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, enable clients to send mail-in ask for free sweeps coins, supplied the gamers follow painfully specific instructions. What's more, gamers are frequently rewarded with sweeps coins simply for signing up, thereby providing them a reason to try their hands at any variety of gambling establishment games for an opportunity to win - or lose - genuine cash.

So why are sweepstakes websites allowed to run in 48 states, while online casinos are prohibited in all but 7?

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

'Social sweepstakes games are just a kind of online home entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is required to play at social casinos with sweepstakes rewards. Consumers never have to spend for a chance to win rewards. That lack of a purchase requirement - or" factor to consider" - is a crucial difference between social sweeps and standard online gambling sites like casinos.'

Think of the way that McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and french fries that offer them the opportunity to win profitable rewards, such as a $1 million jackpot.

And without a purchase requirement, or 'factor to consider', the game itself doesn't meet the meaning of gambling in the US.

'Sweepstakes are a long-standing approach for promoting all sort of daily companies in the United States, whatever from burgers to magazine subscriptions to coffee and home improvement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos 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 gambling market insiders, that argument does not cut it.

For starters, video gaming attorney Daniel Wallach mentions, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a distinct start and end, thereby suggesting the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being utilized to promote real products like fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're usually not tied to casino-style games of possibility,' Wallach told DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [gambling establishments] have none of the attributes commonly associated with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos use" casino-like" payouts, generally 80 percent or more of incomes, whereas the typical payout portion for a short-term promotional sweepstakes is an unimportant share of the earnings earned by the business [generally less than one percent]'

Wallach is quick to compare the online social sweeps casinos to the internet cafes that sprang up in Florida, providing customers the chance to play casino-style games for real rewards. A lot of those brick-and-mortar establishments have actually considering that been shuttered over allegations of prohibited sports betting.

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

Now, Wallach argues, social sweeps gambling establishments need to deal with similar examination.

'These differences are not approximate,' Wallach said of social sweeps casinos. 'They have actually repeatedly been cited by courts and state attorney generals as crucial consider determining that a sweepstakes promo remained in fact a guise for unlawful gaming.'

Among the casino industry's leading trade organizations, the American Gaming Association, is now pressing lawmakers to investigate sweepstakes operators and, in some cases, enact new legislation on the problem.

'Consumers are being denied of defenses and states are forgoing significant tax and income chances as this sports betting changes that performed through regulated channels,' read a well-circulated AGA memo.

And after that there are the plaintiffs who have actually sued social casinos in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in four 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 prevent legal expenses and continued litigation.

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

In the most recent lawsuit, which is mostly similar to its predecessors, New york city state locals Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'illegal gaming business. '

Apple and Google have likewise been named as defendants in suits for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com's demand for comment.

'We usually do not discuss matters before the courts,' a VGW spokesperson informed DailyMail.com via e-mail. 'However, we keep in mind that this claim has only simply been submitted with the court and VGW has actually not been officially served.

'We have complete self-confidence in our compliance with all laws and regulations where we run, and stay confident about the future,' the spokesperson continued. 'We continue to offer our free-to-play games across the majority of The United States and Canada, as we have for more than a years, creating not just excellent games, user experiences and entertainment, however also guaranteeing this is done securely, properly and at the highest level of standards.

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

The problems in between conventional online sports betting and sweepstakes gambling establishments might show problematic for some star 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 gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking unlawful sports betting 'sweeps' sites while at the same time the leagues want to predict a strong position against prohibited gambling - especially when attempting to tamp down the occasional gaming scandal,' Glaser told DailyMail.com.

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

Along with VGW, Apple and Google are being demanded hosting apparently unlawful sports betting websites

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

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

Neither an NBA spokesperson nor the gamers' agents reacted to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise overlooked to react to DailyMail.com emails.

Asked if their celeb endorsers have a duty to describe to customers the distinctions and resemblances in between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that requires to be done.

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

Glaser, an outspoken opponent of sweepstakes sites, sees things differently.

'Celebrities who lend their names to shady illegal gambling sites are, at a minimum, putting their reputations at danger as well as courting civil and class actions by customers who allege damage, stated. 'There is also some risk that state regulators and state attorneys general rope celebrity endorsers into enforcement efforts for assisting in unlawful gambling.'

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