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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 gambling.

No, they weren't personally in participation, however the world-famous stars were notably consisted of in a slide discussion on social and sweepstakes gambling establishments - the questionable websites offering both free casino-style games and rewarding prizes, such as cash, present cards or cryptocurrency. In one advertisement, 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.

The websites are just two cogs in the multibillion-dollar market that now finds itself besieged by lawsuits. In the eyes of many video gaming corporations, not to discuss claim plaintiffs and state regulators, sweepstakes casinos act as standard casinos, just without the oversight, consumer defenses and tax laws. So not just can they prevent the high 24-percent federal sports betting levy, but sweepstakes operators aren't based on regulatory difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income last year alone. Now the business deals with allegations of illegal sports betting in a New york city lawsuit that claims VGW utilizes star endorsers to 'develop a veneer of legitimacy' around its item. (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 companies running multibillion-dollar unlawful 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 range of celebrities 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 use any differences between traditional gambling and sweepstakes play.
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Paris Hilton is seen plugging Wow Vegas, among lots of sweepstakes casinos discovered 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, ads normally center around the social element of the gambling establishments, while omitting the potential for actual gaming losses.

Others tempt customers with guarantees of rewards. One such operator, Stake, ran a social media advertisement displaying Drake's vehicles, planes and mansions before pivoting to video footage of the rapper 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 discrepancy between sports betting websites and social or sweepstakes casinos is a bit complicated, however operators of the latter insist they're not involved with the former.

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

'Most social sweeps clients never make a purchase,' the SPGA representative told DailyMail.com. 'The minority of customers who make purchases do so in amounts far smaller sized than the normal deposit or wager size at real-money online sports betting sites.'

Social casinos offer consumers an opportunity to play casino-style video games with good friends. Players have the option to purchase worthless currency typically referred to as 'gold coins,' which can not be exchanged genuine money, however can be used to unlock different functions within the games.

But within the world of social gambling establishments exists sweepstakes video gaming, allowing clients to acquire other currency called 'sweeps coins' that can be exchanged for cash or other prizes.

And therein lies the potential for financial losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York. One gamer 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 cash and other things of value.

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

Social sweeps casino Stake ran an advertisement flaunting Drake's automobiles, aircrafts and mansions
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Karl-Anthony Towns of the New York City Knicks is another NBA star plugging VGW's Global Poker

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

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

Many websites, like the crypto-compatible Stake, allow consumers to submit mail-in demands for complimentary sweeps coins, offered the players follow painfully particular guidelines. What's more, gamers are typically rewarded with sweeps coins merely for registering, consequently offering them a reason to attempt their hands at any number of casino games for a chance to win - or lose - genuine cash.

So why are sweepstakes sites permitted to run in 48 states, while online gambling establishments are banned in all however 7?

According to the stakeholders, their product is the totally free casino-style gaming, and the real-stakes competition is simply a method of promoting their support.

'Social sweepstakes games are merely a form 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 ever have to spend for an opportunity to win prizes. That absence of a purchase requirement - or" consideration" - is an essential difference in between social sweeps and conventional online gambling sites like casinos.'

Think about the manner in which McDonald's uses 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 chance to win profitable prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the video game itself doesn't meet the meaning of sports betting in the US.

'Sweepstakes are an enduring method for promoting all sort of daily companies in the United States, everything from burgers to magazine memberships to coffee and home enhancement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are routinely used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling market experts, that argument does not cut it.

For starters, gaming lawyer Daniel Wallach points out, McDonald's Monopoly game does not run forever. Rather, it has a well-defined beginning and end, thereby recommending the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being utilized to promote genuine products like french fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're typically not connected to casino-style video games of possibility,' Wallach informed DailyMail.com. 'They're simply money free gifts.

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

Wallach is fast to compare the online social sweeps casinos to the internet coffee shops that sprang up in Florida, using clients the chance to play casino-style games for genuine rewards. A lot of those brick-and-mortar facilities have considering that been shuttered over allegations of prohibited sports betting.

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

Now, Wallach argues, social sweeps gambling establishments must deal with similar scrutiny.

'These distinctions are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have consistently been cited by courts and state lawyer generals as key consider identifying that a sweepstakes promotion was in fact a guise for unlawful gambling.'

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

'Consumers are being deprived of defenses and states are passing up significant tax and earnings chances as this sports betting changes that carried out 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 4 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 lawsuit, saying the settlement was made to avoid legal expenses and continued lawsuits.

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

In the current lawsuit, which is largely similar to its predecessors, New york city state citizens 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 gaming business. '
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Apple and Google have likewise been called as offenders in claims for the sweepstakes sites. But unlike VGW, neither tech business responded to DailyMail.com's request for comment.

'We usually do not talk about matters before the courts,' a VGW spokesperson told DailyMail.com through e-mail. 'However, we note that this claim has only just been submitted with the court and VGW has actually not been officially served.

'We have full self-confidence in our compliance with all laws and regulations where we operate, and stay positive about the future,' the spokesperson continued. 'We continue to provide our free-to-play video games across most of North America, as we have for more than a years, creating not just fantastic games, user experiences and entertainment, but likewise guaranteeing this is done securely, properly and at the highest level of requirements.

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

The issues in between traditional online sports betting and sweepstakes casinos could prove 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 conventional video gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking prohibited sports betting 'sweeps' websites while at the same time the leagues want to project a strong position against unlawful gaming - particularly when trying to tamp down the periodic gambling scandal,' Glaser informed DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter received 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.

Along with VGW, Apple and Google are being taken legal action against for hosting allegedly illegal sports betting sites

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

'I 'd anticipate that a league crackdown on professional athletes endorsing sweepstakes sites refers when, not if,' Glaser added.

Neither an NBA representative nor the players' representatives responded to DailyMail.com's demands for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also disregarded to respond to DailyMail.com e-mails.

Asked if their celeb endorsers have a responsibility to explain to consumers the differences and resemblances between iGaming and sweepstakes casinos, VGW insisted there is nothing more that requires to be done.

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the representative said. 'A few of our values are" our players come first" 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.

'Celebrities who lend their names to shady prohibited gambling websites are, at a minimum, putting their credibilities at risk in addition to courting civil and class actions by consumers who allege harm,' Glaser stated. 'There is likewise some threat that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for facilitating unlawful sports betting.'

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