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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 sports betting.
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No, they weren't personally in participation, but the world-famous celebrities were notably included in a slide presentation on social and sweepstakes casinos - the questionable websites providing both free casino-style video games and rewarding rewards, such as money, present 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 simply two cogs in the multibillion-dollar industry that now finds itself besieged by suits. In the eyes of numerous video gaming corporations, not to mention claim complainants and state regulators, sweepstakes gambling establishments function as standard casinos, 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 regulative hurdles 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 faces allegations of unlawful gaming in a New York lawsuit that declares VGW uses celeb endorsers to 'create a veneer of legitimacy' around its product. (See VGW's declaration listed below)

'I'm uncertain" if you do not trust us, you can trust Paris Hilton" is a winning message for business 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.
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Sweepstakes endorsers consist of a range of celebrities from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom provide any differences between conventional sports betting and sweepstakes play.

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

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

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

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Instead, ads generally center around the social element of the casinos, while leaving out the capacity for actual gaming losses.

Others tempt customers with pledges of prizes. One such operator, Stake, ran a social networks advertisement displaying Drake's cars, planes and estates before pivoting to video of the rapper playing online casino-style video games.

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

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

The discrepancy between gambling sites and social or sweepstakes gambling establishments is a bit complicated, but 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), discussed its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA information, the majority of the gamers on social-sweepstakes gambling establishments are playing for free.

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

Social gambling establishments offer consumers a possibility to play casino-style video games with buddies. Players have the alternative to buy valueless currency typically referred to as 'gold coins,' which can not be exchanged genuine cash, but can be used to unlock different features within the games.
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But within the world of social gambling establishments exists sweepstakes video gaming, permitting consumers to get other currency referred to as 'sweeps coins' that can be exchanged for cash or other prizes.
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And therein lies the capacity for financial losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York. One gamer told 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 cash and other things of value.

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

Social sweeps gambling establishment Stake ran an ad displaying Drake's cars and trucks, airplanes and mansions

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

Traditional online gambling establishments are banned in all however 7 states, which has assisted to sustain the popularity of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes websites, which don't require usually require identification. However, sites like Chumba will ask for IDs from gamers trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, enable consumers to send mail-in ask for free sweeps coins, provided the gamers follow painfully specific instructions. What's more, gamers are frequently rewarded with sweeps coins just for signing up, consequently providing a factor to attempt their hands at any variety of gambling establishment games for a chance to win - or lose - real cash.

So why are sweepstakes websites enabled to operate in 48 states, while online gambling establishments are prohibited in all however 7?

According to the stakeholders, their item is the complimentary casino-style video gaming, and the real-stakes competitors is simply a way of promoting their support.

'Social sweepstakes video games are just a form of online entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is required to play at social casinos with sweepstakes prizes. Consumers never have to spend for an opportunity to win prizes. That absence of a purchase requirement - or" factor to consider" - is a crucial difference in between social sweeps and traditional online sports betting sites like gambling establishments.'

Consider 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 financially rewarding rewards, such as a $1 million prize.

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

'Sweepstakes are an enduring technique for promoting all type of daily companies in the United States, everything from hamburgers to publication subscriptions to coffee and home improvement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are frequently used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many sports betting market experts, that argument doesn't cut it.

For beginners, video gaming attorney Daniel Wallach mentions, McDonald's Monopoly game doesn't run forever. Rather, it has a well-defined beginning and end, thus recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote real products like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [gambling establishments] possess none of the attributes frequently connected with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes casinos offer" casino-like" payouts, normally 80 percent or more of earnings, whereas the normal payout percentage for a momentary advertising sweepstakes is an unimportant share of the profits made by the business [usually less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the web coffee shops that sprang up in Florida, using clients the possibility to play casino-style games for genuine rewards. Many of those brick-and-mortar establishments have considering that been shuttered over allegations of prohibited gaming.

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

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

'These differences are not arbitrary,' Wallach stated of social sweeps casinos. 'They have repeatedly been pointed out by courts and state chief law officer as crucial aspects in identifying that a sweepstakes promotion remained in truth a guise for illegal gaming.'

One of the gambling establishment industry's leading trade organizations, the American Gaming Association, is now pressing legislators to examine sweepstakes operators and, sometimes, enact new legislation on the problem.

'Consumers are being denied of defenses and states are giving up considerable tax and earnings opportunities as this sports betting changes that carried out through managed channels,' checked out 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 4 separate cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action lawsuit, saying the settlement was made to avoid legal expenses and continued litigation.

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

In the latest lawsuit, which is largely similar to its predecessors, New York state residents Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'unlawful gambling business. '

Apple and Google have likewise been named as defendants in claims for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for comment.
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'We normally do not comment on matters before the courts,' a VGW representative informed DailyMail.com via e-mail. 'However, we note that this claim has actually only simply been filed with the court and VGW has not been formally served.

'We have complete confidence in our compliance with all laws and where we operate, and remain confident about the future,' the spokesperson continued. 'We continue to provide our free-to-play games throughout many of North America, as we have for more than a decade, creating not just fantastic games, user experiences and home entertainment, however likewise ensuring this is done securely, properly and at the greatest level of requirements.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are reasonably common throughout the online social video games market (and the US more broadly), and our basic practice is that we intend to intensely safeguard any claim which may be brought versus us.'

The issues between conventional online gaming 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 very same time the leagues wish to project a strong position against illegal sports betting - especially when attempting to tamp down the periodic gambling scandal,' Glaser informed DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter got a lifetime restriction from the NBA over allegations he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes casinos.

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

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

'I 'd anticipate that a league crackdown on professional athletes backing sweepstakes sites is a matter of when, not if,' Glaser added.

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

Asked if their star endorsers have an obligation to discuss to customers the differences and resemblances in between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial collaborations, and our business practices more broadly,' the spokesperson said. 'A few of our worths 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 in a different way.

'Celebrities who provide their names to shady prohibited gaming sites are, at a minimum, putting their track records at threat as well as courting civil and class actions by customers who declare harm,' Glaser said. 'There is also some danger that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for assisting in prohibited gambling.'

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