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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 unlawful gaming.
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No, they weren't personally in attendance, however the world-famous celebrities were notably consisted of in a slide presentation on social and sweepstakes gambling establishments - the controversial websites using both free casino-style video games and lucrative prizes, such as cash, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody 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 websites are just two cogs in the multibillion-dollar market that now finds itself besieged by suits. In the eyes of numerous gaming corporations, not to mention lawsuit complainants and state regulators, sweepstakes gambling establishments function as conventional casinos, only without the oversight, consumer securities and tax laws. So not just can they prevent the high 24-percent federal sports betting levy, but sweepstakes operators aren't subject to regulatory obstacles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits last year alone. Now the business deals with accusations of unlawful gambling in a New York lawsuit that claims VGW uses celeb endorsers to 'develop a veneer of legitimacy' around its product. (See VGW's statement listed below)

'I'm not sure" if you do not trust us, you can trust Paris Hilton" is a winning message for business operating multibillion-dollar prohibited operations out of places like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of video gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers consist of a series of stars from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom offer any differences in between standard gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of numerous sweepstakes casinos discovered online
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Ryan Seacrest advises fans to play at Chumba Casino, where many - however not all - games are free

Drake has a deal with social sweeps casino, Stake, that he routinely touts on social networks

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Instead, advertisements normally center around the social aspect of the gambling establishments, while omitting the capacity for real gambling losses.

Others tempt clients with pledges of . One such operator, Stake, ran a social media advertisement showing off Drake's cars, aircrafts and estates before pivoting to video footage of the rap artist playing online casino-style video games.

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

Another caption explained: 'Because I never ever quit.'

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

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

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

Social gambling establishments offer consumers a possibility to play casino-style video games with friends. Players have the option to purchase worthless currency frequently described as 'gold coins,' which can not be exchanged for real money, however can be used to open different functions within the video games.

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

And therein lies the potential for financial losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York. One player informed the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the previous 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 Global Poker occasion

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake's cars and trucks, aircrafts 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 seven states, which has assisted to sustain the appeal of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, permit clients to submit mail-in ask for complimentary sweeps coins, offered the players follow painfully particular instructions. What's more, gamers are frequently rewarded with sweeps coins simply for signing up, thereby providing a factor to attempt their hands at any number of gambling establishment video games for a chance to win - or lose - real money.

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

According to the stakeholders, their product is the complimentary casino-style video gaming, and the real-stakes competitors is merely a means of promoting their support.

'Social sweepstakes games are merely a kind of online home entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is needed to play at social casinos with sweepstakes rewards. Consumers never ever have to spend for an opportunity to win rewards. That absence of a purchase requirement - or" consideration" - is an essential distinction between social sweeps and conventional online gaming websites like casinos.'

Consider the manner in which McDonald's uses its yearly Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and fries that offer them the possibility to win lucrative prizes, such as a $1 million prize.

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

'Sweepstakes are a long-standing method for promoting all type of everyday companies in the United States, whatever from hamburgers to publication subscriptions to coffee and home enhancement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are regularly used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting industry experts, that argument does not cut it.

For starters, gaming lawyer Daniel Wallach mentions, McDonald's Monopoly video game does not run indefinitely. Rather, it has a well-defined start and end, consequently suggesting the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being utilized to promote real items like french fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [gambling establishments] possess none of the attributes typically connected with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments provide" casino-like" payments, usually 80 percent or more of incomes, whereas the normal payout percentage for a momentary promotional sweepstakes is a trivial share of the income made 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 customers the possibility to play casino-style games for real rewards. A lot of those brick-and-mortar facilities have actually since been shuttered over accusations of prohibited sports betting.

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

Now, Wallach argues, social sweeps casinos must face comparable examination.

'These distinctions are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have consistently been mentioned by courts and state attorney general of the United States as crucial consider determining that a sweepstakes promo remained in fact a guise for prohibited sports betting.'

Among the casino market's leading trade companies, the American Gaming Association, is now pressing legislators to investigate sweepstakes operators and, in many cases, enact brand-new legislation on the concern.

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

And after that there are the plaintiffs who have sued social gambling establishments in more than a dozen states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in four separate 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, saying the settlement was made to avoid legal costs and continued litigation.

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

In the most current suit, which is largely similar to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is explained in the filing as an 'illegal sports betting business. '

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

'We generally don't talk about matters before the courts,' a VGW representative informed DailyMail.com through 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 remain confident about the future,' the representative continued. 'We continue to offer our free-to-play games across most of The United States and Canada, as we have for more than a decade, creating not only fantastic games, user experiences and home entertainment, but likewise guaranteeing this is done safely, responsibly and at the highest level of standards.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are reasonably common across the online social games market (and the US more broadly), and our basic practice is that we mean to intensely defend any claim which may be brought against us.'

The issues between traditional online sports betting and sweepstakes gambling establishments could show troublesome 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 traditional gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking illegal sports betting wagering 'sweeps' sites while at the same time the leagues want to project a strong stance versus prohibited gaming - specifically when trying to tamp down the occasional gambling scandal,' Glaser told DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter received a life time ban 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.

In addition to VGW, Apple and Google are being taken legal action against for hosting supposedly illegal gambling websites

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

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

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

Asked if their celeb endorsers have an obligation to explain to consumers the differences and similarities between iGaming and sweepstakes gambling establishments, VGW firmly 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. 'A few of our worths 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 opponent of sweepstakes websites, sees things differently.
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'Celebrities who lend their names to shady prohibited gambling sites are, at a minimum, putting their reputations at risk along with courting civil and class actions by customers who declare damage,' Glaser stated. 'There is also some threat that state regulators and state attorneys basic rope celebrity endorsers into enforcement efforts for assisting in prohibited gambling.'

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