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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 unlawful gambling.
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No, they weren't personally in participation, however the world-famous stars were conspicuously consisted of in a slide discussion on social and sweepstakes gambling establishments - the questionable websites offering both free casino-style video games and rewarding prizes, such as money, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The sites are simply two cogs in the multibillion-dollar industry that now discovers itself besieged by claims. In the eyes of numerous video gaming corporations, not to mention lawsuit plaintiffs and state regulators, sweepstakes casinos function as standard gambling establishments, only without the oversight, customer protections and tax laws. So not only can they avoid the steep 24-percent federal gaming levy, however sweepstakes operators aren't subject to regulatory obstacles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the company faces accusations of unlawful gambling in a New york city suit that claims VGW utilizes star endorsers to 'develop a veneer of legitimacy' around its product. (See VGW's statement listed below)

'I'm uncertain" if you do not trust us, you can trust Paris Hilton" is a winning message for companies operating multibillion-dollar unlawful 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 include a range of stars from sports betting 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 distinctions in between standard gambling and sweepstakes play.

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

Ryan Seacrest urges fans to play at Chumba Casino, where numerous - but not all - games are complimentary

Drake has a handle social sweeps gambling establishment, Stake, that he frequently promotes on social media

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Instead, ads typically center around the social element of the casinos, while leaving out the potential for real gaming losses.

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

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

Another caption described: 'Because I never quit.'

The discrepancy between gambling websites and social or sweepstakes gambling establishments is a bit complex, however operators of the latter insist they're not included with the former.

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA information, the majority of the players on social-sweepstakes casinos are playing for complimentary.

'Most social sweeps clients never ever purchase,' the SPGA spokesperson told 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 gambling establishments offer clients a possibility to play casino-style video games with pals. Players have the alternative to buy worthless currency often referred to as 'gold coins,' which can not be exchanged for real cash, but can be used to open different functions within the video games.

But within the world of social gambling establishments exists sweepstakes video gaming, enabling customers to obtain other currency referred to as 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the capacity for financial losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York City. One gamer told the Washington Post he lost more than $100,000 on sweepstakes casinos in the previous year after continuing to buy more coins in pursuit of money and other things of worth.

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

Social sweeps casino Stake ran an ad displaying Drake's cars, aircrafts and estates

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

Traditional online gambling establishments are prohibited in all but seven states, which has actually assisted to fuel the popularity of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes sites, which don't need normally require recognition. However, sites like Chumba will ask for IDs from gamers attempting to withdraw any funds.

Many websites, like the crypto-compatible Stake, permit customers to submit mail-in demands for totally free sweeps coins, provided the gamers follow painfully particular guidelines. What's more, gamers are typically rewarded with sweeps coins merely for registering, thereby providing a factor to attempt their hands at any number of gambling establishment video games for a chance to win - or lose - genuine money.

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

According to the stakeholders, their item is the free casino-style gaming, and the real-stakes competition is just a means of promoting their support.

'Social sweepstakes video games are simply a type of online home entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is needed to dip into social gambling establishments with sweepstakes rewards. Consumers never ever need to spend for a chance to win rewards. That lack of a purchase requirement - or" factor to consider" - is an important distinction in between social sweeps and standard online gambling sites like gambling establishments.'

Think of the method that McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to gamble, however rather they're buying hamburgers and french fries that offer them the chance to win lucrative prizes, such as a $1 million jackpot.
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And without a purchase requirement, or 'consideration', the game itself doesn't fulfill the definition of sports betting in the US.

'Sweepstakes are an enduring approach for promoting all sort of everyday organizations in the United States, everything from hamburgers to magazine memberships to coffee and home enhancement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are frequently 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 industry insiders, that argument does not cut it.

For beginners, video gaming lawyer Daniel Wallach mentions, McDonald's Monopoly game does not run indefinitely. Rather, it has a well-defined beginning and end, thereby suggesting the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being used to promote genuine products like french fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [casinos] possess none of the attributes commonly associated with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments provide" casino-like" payments, usually 80 percent or more of incomes, whereas the typical payout percentage for a short-lived advertising sweepstakes is an insignificant share of the profits earned by the business [normally less than one percent]'

Wallach is fast to compare the online social sweeps gambling establishments to the web cafes that emerged in Florida, providing customers the chance to play casino-style games for genuine prizes. Many of those brick-and-mortar facilities have given that been shuttered over claims of unlawful sports betting.

DJ Khaled is among a number of celeb spokespeople for VGW's Global Poker brand name

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

'These differences are not arbitrary,' Wallach stated of social sweeps casinos. 'They have actually consistently been mentioned by courts and state lawyer generals as crucial aspects in identifying that a sweepstakes promo was in truth a guise for unlawful sports betting.'

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

'Consumers are being deprived of protections and states are forgoing substantial tax and revenue chances as this sports betting changes that carried out through regulated channels,' checked out a well-circulated AGA memo.

And then 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 different cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action claim, stating the settlement was made to prevent legal costs and continued lawsuits.

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

In the latest suit, which is mainly similar to its predecessors, New York state homeowners 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 'illegal gambling business. '

Apple and Google have actually also been called as offenders in claims for hosting the sweepstakes sites. But unlike VGW, neither tech company responded to DailyMail.com's request for comment.

'We normally don't comment on matters before the courts,' a VGW representative informed DailyMail.com via email. 'However, we note that this claim has actually only just been submitted with the court and VGW has actually not been formally served.

'We have complete confidence in our compliance with all laws and guidelines where we run, and stay confident about the future,' the spokesperson continued. 'We continue to use our free-to-play video games throughout most of The United States and Canada, as we have for more than a decade, producing not just fantastic games, user experiences and home entertainment, however likewise ensuring this is done securely, responsibly and at the highest level of requirements.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are reasonably typical throughout the online social video games industry (and the US more broadly), and our basic practice is that we plan to intensely protect any claim which may be brought against us.'

The issues between traditional online gambling and sweepstakes gambling establishments might show problematic for some celeb endorsers.

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

'It's paradoxical that professional athletes are hawking unlawful sports betting wagering 'sweeps' sites while at the very same time the leagues desire to project a strong position versus prohibited sports betting - especially when trying to tamp down the occasional sports betting scandal,' Glaser told DailyMail.com.

It was simply eight months ago that Toronto Raptors forward Jontay Porter got a lifetime restriction from the NBA over claims he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes gambling establishments.

In addition to VGW, Apple and Google are being demanded hosting allegedly unlawful gambling sites

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

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

Neither an NBA representative nor the players' representatives reacted to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also disregarded to react to DailyMail.com emails.

Asked if their star endorsers have an obligation to discuss to clients the distinctions and similarities in between iGaming and sweepstakes casinos, VGW firmly insisted there is absolutely nothing more that needs to be done.

'We have full confidence in our influencer and ambassadorial collaborations, and our business practices more broadly,' the . 'A few of our worths are" our players precede" and" we do what's right", and we put our worths at the core of everything we do.'

Glaser, an outspoken challenger of sweepstakes sites, sees things differently.
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'Celebrities who lend their names to shady unlawful sports betting websites are, at a minimum, putting their credibilities at risk as well as courting civil and class actions by customers who declare damage,' Glaser stated. 'There is likewise some danger that state regulators and state lawyers basic rope star endorsers into enforcement efforts for helping with unlawful gambling.'

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