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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 gambling.
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No, they weren't personally in participation, but the world-famous stars were notably consisted of in a slide discussion on social and sweepstakes gambling establishments - the questionable sites offering both complimentary casino-style video games and lucrative prizes, such as money, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for 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 plaintiffs and state regulators, sweepstakes casinos act as standard gambling establishments, only without the oversight, consumer defenses and tax laws. So not only can they avoid the steep 24-percent federal gambling levy, but sweepstakes operators aren't subject to regulative hurdles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the company deals with allegations of illegal gambling in a New York suit that declares VGW utilizes celeb endorsers to 'produce a veneer of legitimacy' around its item. (See VGW's statement below)

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

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

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

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

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Instead, ads normally focus around the social aspect of the gambling establishments, while leaving out the capacity for actual sports betting losses.

Others tempt customers with guarantees of prizes. One such operator, Stake, ran a social networks advertisement flaunting Drake's cars, airplanes and mansions before rotating to video of the rap artist playing online casino-style video games.

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

Another caption discussed: 'Because I never quit.'

The inconsistency in between sports betting websites and social or sweepstakes casinos is a bit complex, but operators of the latter insist they're not included with the previous.

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

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

Social casinos provide clients a chance to play casino-style video games with buddies. Players have the option to purchase worthless currency often described as 'gold coins,' which can not be exchanged genuine cash, however can be used to unlock various functions within the games.

But within the world of social gambling establishments exists sweepstakes video gaming, enabling customers to get other currency referred to as 'sweeps coins' that can be exchanged for cash 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 gamer informed the Washington Post he lost more than $100,000 on sweepstakes casinos 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 gambling establishment Stake ran an advertisement flaunting Drake's cars, airplanes and estates

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

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

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

Many websites, like the crypto-compatible Stake, permit customers to submit mail-in requests for free sweeps coins, offered the gamers follow painfully specific directions. What's more, gamers are typically rewarded with sweeps coins just for registering, thus offering them a factor to try their hands at any variety of gambling establishment games for an opportunity to win - or lose - real cash.
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So why are sweepstakes sites permitted to operate in 48 states, while online casinos are prohibited in all but 7?

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

'Social sweepstakes video games are just a form of online entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is needed to dip into social gambling establishments with sweepstakes prizes. Consumers never ever need to spend for a chance to win prizes. That absence of a purchase requirement - or" factor to consider" - is a vital difference in between social sweeps and conventional online gambling sites like gambling establishments.'

Think of the manner in which McDonald's utilizes its annual Monopoly game to promote its food: Customers aren't paying to bet, but rather they're buying hamburgers and french fries that use them the opportunity to win profitable rewards, such as a $1 million jackpot.

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

'Sweepstakes are an enduring approach for promoting all kinds of daily businesses in the United States, whatever from hamburgers to publication subscriptions to coffee and home enhancement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions 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 experts, that argument does not cut it.

For starters, video gaming lawyer Daniel Wallach points out, McDonald's Monopoly game does not run indefinitely. Rather, it has a distinct beginning and end, therefore suggesting the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being utilized to promote genuine products 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 opportunity,' Wallach informed DailyMail.com. 'They're simply cash giveaways.
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'The sweepstakes [gambling establishments] possess none of the qualities typically related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos provide" casino-like" payments, normally 80 percent or more of profits, whereas the common payout percentage for a temporary promotional sweepstakes is a minor share of the income earned by the company [normally less than one percent]'

Wallach is fast to compare the online social sweeps casinos to the internet cafes that sprang up in Florida, offering clients the possibility to play casino-style games for genuine rewards. A number of those brick-and-mortar establishments have actually considering that been shuttered over claims of unlawful sports betting.

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

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

'These differences are not arbitrary,' Wallach stated of social sweeps casinos. 'They have consistently been cited by courts and state lawyer generals as crucial consider figuring out that a sweepstakes promotion was in fact a guise for illegal gaming.'

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

'Consumers are being denied of protections and states are passing up substantial tax and revenue chances as this sports betting changes that carried out through managed channels,' read a well-circulated AGA memo.

And then there are the plaintiffs who have 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 confessing any wrongdoing, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action suit, saying the settlement was made to prevent legal costs and continued litigation.

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

In the current suit, which is mostly similar to its predecessors, New york city state residents 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 enterprise. '

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

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

'We have complete self-confidence in our compliance with all laws and guidelines where we operate, and stay positive about the future,' the spokesperson continued. 'We continue to provide our free-to-play video games across the majority of North America, as we have for more than a decade, producing not only fantastic video games, user experiences and entertainment, but also guaranteeing this is done securely, responsibly and at the highest level of standards.

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

The issues in between standard online sports betting and sweepstakes gambling establishments could show problematic for some celebrity 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 conventional video gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking prohibited sports betting 'sweeps' websites while at the same time the leagues wish to project a strong stance against - especially when attempting to tamp down the periodic sports betting scandal,' Glaser informed DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter got a lifetime restriction 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.

Together with VGW, Apple and Google are being sued for hosting apparently prohibited sports betting sites

Regardless, Glaser sees sweepstakes casinos as a significant issue 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 added.

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

Asked if their star 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 collaborations, and our business practices more broadly,' the spokesperson stated. 'A few of our values are" our gamers 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 websites, sees things differently.
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'Celebrities who provide their names to dubious unlawful gaming sites are, at a minimum, putting their reputations at risk along with courting civil and class actions by customers who allege harm,' Glaser said. 'There is likewise some threat that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for helping with illegal gaming.'

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