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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 gambling.
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No, they weren't personally in presence, however the world-famous stars were conspicuously consisted of in a slide discussion on social and sweepstakes gambling establishments - the controversial sites providing both free casino-style games and profitable rewards, such as cash, gift 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.

The websites are just two cogs in the multibillion-dollar market that now finds itself besieged by lawsuits. In the eyes of numerous gaming corporations, not to point out lawsuit plaintiffs and state regulators, sweepstakes casinos act as traditional gambling establishments, only without the oversight, customer securities and tax laws. So not just can they avoid the steep 24-percent federal gaming levy, however 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 income in 2015 alone. Now the company deals with allegations of prohibited sports betting in a New York lawsuit that claims VGW utilizes star endorsers to 'develop a veneer of authenticity' around its product. (See VGW's declaration below)

'I'm unsure" 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 locations like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of video gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers include a range of celebs from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom provide any distinctions between conventional gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among numerous sweepstakes gambling establishments found online

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

Drake has an offer with social sweeps gambling establishment, Stake, that he regularly promotes on social media

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Instead, advertisements typically center around the social element of the gambling establishments, while omitting the capacity for real gaming losses.

Others lure customers with guarantees of prizes. One such operator, Stake, ran a social media ad showing off Drake's cars, planes and estates before rotating to video footage of the rap artist playing online casino-style games.

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

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

The discrepancy in between gambling sites and social or sweepstakes casinos is a bit complex, however operators of the latter insist they're not involved with the previous.

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA information, the majority of the gamers on social-sweepstakes casinos are playing for complimentary.

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

Social casinos offer clients an opportunity to play casino-style video games with good friends. Players have the choice to purchase worthless currency often described as 'gold coins,' which can not be exchanged genuine cash, however can be used to open different features within the video games.

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

And therein lies the potential for monetary losses, like the ones claimed by plaintiffs 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 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 casino Stake ran an ad flaunting Drake's automobiles, aircrafts and estates

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

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 typically require recognition. However, websites like Chumba will request for IDs from players trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, permit consumers to submit mail-in demands for totally free sweeps coins, supplied the gamers follow painfully particular instructions. What's more, gamers are frequently rewarded with sweeps coins merely for signing up, consequently providing them a factor to try their hands at any number of gambling establishment video games for an opportunity to win - or lose - genuine money.

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

'Social sweepstakes video games are just a kind of online home entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is needed to play at social gambling establishments with sweepstakes rewards. Consumers never ever need to spend for an opportunity to win rewards. That lack of a purchase requirement - or" factor to consider" - is an important difference in between social sweeps and standard online gaming sites like gambling establishments.'

Consider the manner in which McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're buying hamburgers and fries that provide them the opportunity to win financially rewarding rewards, such as a $1 million prize.

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

'Sweepstakes are a long-standing approach for promoting all kinds of everyday companies in the United States, everything from hamburgers to magazine memberships to coffee and home enhancement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos 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 gambling market insiders, that argument doesn't cut it.

For starters, video gaming lawyer Daniel Wallach mentions, McDonald's Monopoly game does not run indefinitely. Rather, it has a well-defined beginning and end, consequently recommending the is not the fast-food giant's main product. 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 normally not tied to casino-style games of opportunity,' Wallach informed DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [gambling establishments] have none of the characteristics typically related to McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes casinos offer" casino-like" payouts, normally 80 percent or more of earnings, whereas the common payout percentage for a short-lived promotional sweepstakes is an insignificant share of the profits made by the company [normally less than one percent]'

Wallach is fast to compare the online social sweeps gambling establishments to the internet coffee shops that sprang up in Florida, providing consumers the possibility to play casino-style video games for genuine prizes. A number of those brick-and-mortar facilities have because been shuttered over allegations of prohibited gambling.

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

Now, Wallach argues, social sweeps gambling establishments should deal with comparable examination.

'These distinctions are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have actually repeatedly been mentioned by courts and state lawyer generals as essential consider determining that a sweepstakes promo remained in truth a guise for illegal gambling.'

Among the gambling establishment industry's leading trade organizations, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, in some cases, enact brand-new legislation on the issue.

'Consumers are being denied of securities and states are forgoing considerable tax and income opportunities as this gaming replaces that performed through managed channels,' checked out a well-circulated AGA memo.

And after that there are the complainants who have sued social gambling establishments in more than a dozen 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 suit, 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 suit, which is mainly similar to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is described in the filing as an 'prohibited gambling business. '

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

'We typically don't discuss matters before the courts,' a VGW representative informed DailyMail.com through e-mail. 'However, we keep in mind that this claim has only just been filed with the court and VGW has not been officially served.

'We have full self-confidence in our compliance with all laws and policies where we operate, and remain positive about the future,' the representative continued. 'We continue to offer our free-to-play video games throughout most of The United States and Canada, as we have for more than a years, creating not just terrific video games, user experiences and entertainment, however also ensuring this is done securely, responsibly and at the greatest level of standards.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are relatively typical across the online social video games industry (and the US more broadly), and our basic practice is that we intend to strongly safeguard any claim which may be brought versus us.'

The concerns between conventional online gambling and sweepstakes casinos could show problematic for some celeb endorsers.

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

'It's paradoxical that professional athletes are hawking prohibited sports betting 'sweeps' websites while at the very same time the leagues wish to predict a strong position against unlawful gaming - especially 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 got a life time restriction from the NBA over allegations he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes casinos.

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

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

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

Neither an NBA representative nor the gamers' representatives responded to DailyMail.com's demands 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 star endorsers have an obligation to describe to clients the distinctions and similarities in between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that requires to be done.

'We have full confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the representative said. 'A few of our values are" our gamers come initially" and" we do what's right", and we put our values at the core of whatever we do.'

Glaser, an outspoken opponent of sweepstakes sites, sees things differently.
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'Celebrities who lend their names to shady illegal gaming websites are, at a minimum, putting their credibilities at threat along with courting civil and class actions by consumers who allege harm,' Glaser stated. 'There is also some danger that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for facilitating unlawful gambling.'

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