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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 prohibited gambling.
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No, they weren't personally in participation, but the world-famous celebs were notably consisted of in a slide presentation on social and sweepstakes casinos - the questionable sites offering both totally free casino-style games and rewarding rewards, such as cash, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The websites are just 2 cogs in the multibillion-dollar industry that now discovers itself besieged by suits. In the eyes of many gaming corporations, not to discuss suit complainants and state regulators, sweepstakes casinos act as traditional casinos, just 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 regulative hurdles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits last year alone. Now the company faces accusations of prohibited gambling in a New York claim that claims VGW uses star endorsers to 'produce a veneer of authenticity' around its product. (See VGW's statement listed below)

'I'm uncertain" if you don't trust us, you can trust Paris Hilton" is a winning message for business operating multibillion-dollar illegal operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a variety of celebrities 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 provide any differences in between standard gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of lots of sweepstakes casinos found online

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

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

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Instead, advertisements normally center around the social aspect of the casinos, while omitting the potential for real gaming losses.

Others lure consumers with pledges of rewards. One such operator, Stake, ran a social networks ad flaunting Drake's cars and trucks, airplanes and mansions before rotating to video of the rapper playing online casino-style games.

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

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

The inconsistency between sports betting sites and social or sweepstakes casinos is a bit complicated, however operators of the latter insist they're not involved 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 casinos and sportsbooks. Furthermore, according to SPGA information, the majority of the gamers on social-sweepstakes gambling establishments are sports betting totally free.

'Most social sweeps customers never ever make a purchase,' the SPGA spokesperson told DailyMail.com. 'The minority of consumers who make purchases do so in quantities far smaller sized than the common deposit or bet size at real-money online gambling websites.'

Social casinos provide consumers a chance to play casino-style video games with buddies. Players have the option to buy worthless currency typically referred to as 'gold coins,' which can not be exchanged genuine money, however can be utilized to unlock different features within the video games.

But within the world of social casinos exists sweepstakes gaming, enabling clients to get other currency referred to as 'sweeps coins' that can be exchanged for cash or other rewards.

And therein lies the capacity 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 past year after continuing to buy more coins in pursuit of cash and other things of value.

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

Social sweeps gambling establishment Stake ran an advertisement displaying Drake's automobiles, aircrafts and mansions

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 assisted to fuel the appeal of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes sites, which don't need typically need identification. However, websites like Chumba will request IDs from players trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, permit clients to submit mail-in ask for totally free sweeps coins, provided the gamers follow painfully particular directions. What's more, players are frequently rewarded with sweeps coins simply for registering, thereby providing a factor to try their hands at any variety of casino video games for an opportunity to win - or lose - genuine money.

So why are sweepstakes sites enabled to operate 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 competitors is just a means of promoting their support.

'Social sweepstakes video games are simply a kind of online home entertainment,' an SPGA representative informed 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 prizes. That lack of a purchase requirement - or" factor to consider" - is a crucial difference between social sweeps and conventional online sports betting sites like gambling establishments.'

Think about the manner in which McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to gamble, however rather they're buying hamburgers and fries that use them the chance to win lucrative rewards, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the game itself doesn't fulfill the meaning of gaming in the US.

'Sweepstakes are an enduring approach for promoting all type of daily businesses in the United States, whatever from burgers to publication memberships to coffee and home improvement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are frequently used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous sports betting market insiders, that argument doesn't cut it.

For starters, video gaming attorney Daniel Wallach points out, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a well-defined beginning and end, consequently recommending the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being utilized to promote real items like fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're generally not tied to casino-style video games of possibility,' Wallach told DailyMail.com. 'They're just money free gifts.

'The sweepstakes [casinos] have none of the attributes frequently related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes casinos provide" casino-like" payouts, usually 80 percent or more of revenues, whereas the normal payment portion for a temporary advertising sweepstakes is an insignificant share of the profits earned by the business [typically less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the internet coffee shops that sprang up in Florida, offering consumers the chance to play casino-style games for genuine prizes. A number of those brick-and-mortar establishments have actually considering that been shuttered over accusations of illegal gambling.

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

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

'These distinctions are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have actually repeatedly been cited by courts and state chief law officer as key elements in identifying that a sweepstakes promo was in reality a guise for illegal gambling.'

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

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

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

Sweepstakes casino operators paid a combined $14.2 million in four separate cases in Kentucky without admitting 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 avoid legal expenses and continued litigation.

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

In the current claim, which is mostly similar to its predecessors, New York state citizens Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is described in the filing as an 'prohibited gaming business. '

Apple and Google have also been called as defendants in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's demand for comment.

'We normally don't comment on matters before the courts,' a VGW spokesperson told 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 confidence in our compliance with all laws and regulations where we operate, and stay confident about the future,' the representative continued. 'We continue to use our free-to-play 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, but likewise ensuring this is done safely, responsibly and at the highest level of requirements.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are relatively common throughout the online social games market (and the US more broadly), and our basic practice is that we plan to intensely defend any claim which may be brought against us.'

The concerns between conventional online sports betting and sweepstakes gambling establishments 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 name while the NBA is partnered with standard video gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking prohibited sports betting 'sweeps' websites while at the very same time the leagues want to forecast a strong position versus unlawful gaming - particularly when attempting to tamp down the periodic gambling scandal,' Glaser told DailyMail.com.

It was just 8 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 unassociated to anything involving social or sweepstakes gambling establishments.

Together with VGW, Apple and Google are being sued for hosting allegedly unlawful sports betting websites

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

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

Neither an NBA spokesperson nor the gamers' representatives responded to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise disregarded to respond to DailyMail.com emails.

Asked if their celebrity endorsers have an obligation to discuss to customers the distinctions and resemblances in between iGaming and sweepstakes casinos, VGW firmly insisted there is absolutely nothing more that requires to be done.

'We have full self-confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the spokesperson stated. 'Some of our values are" our gamers 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 sites, sees things differently.
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'Celebrities who lend their names to shady illegal gambling websites are, at a minimum, putting their track records at danger as well as courting civil and class actions by customers who declare damage,' Glaser said. 'There is likewise some danger that state regulators and state attorney generals of the United States endorsers into enforcement efforts for helping with prohibited gaming.'

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