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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 illegal gambling.
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No, they weren't personally in participation, but the world-famous celebs were conspicuously consisted of in a slide discussion on social and sweepstakes gambling establishments - the questionable sites providing both complimentary casino-style video games and financially rewarding rewards, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are simply two cogs in the multibillion-dollar market that now discovers itself besieged by lawsuits. In the eyes of numerous video gaming corporations, not to mention suit plaintiffs and state regulators, sweepstakes gambling establishments function as standard gambling establishments, just without the oversight, consumer defenses and tax laws. So not just can they avoid the high 24-percent federal sports betting levy, however sweepstakes operators aren't based on regulatory obstacles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the company deals with allegations of illegal gaming in a New york city suit that claims VGW uses star endorsers to 'develop a veneer of authenticity' around its product. (See VGW's statement listed below)

'I'm uncertain" if you don't trust us, you can rely on 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 gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers include a series of celebrities from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom provide any distinctions between standard gambling and sweepstakes play.

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

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

Drake has a deal with social sweeps gambling establishment, Stake, that he routinely touts on social media

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Instead, ads usually center around the social element of the casinos, while leaving out the potential for actual gambling losses.

Others tempt customers with guarantees of rewards. One such operator, Stake, ran a social media ad flaunting Drake's vehicles, airplanes and estates before pivoting to video footage of the rapper playing online casino-style games.

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

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

The inconsistency between sports betting websites and social or sweepstakes gambling establishments is a bit intricate, but operators of the latter insist they're not involved with the former.

A representative for an industry 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 data, the majority of the players on social-sweepstakes gambling establishments are playing for complimentary.

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

Social gambling establishments offer customers a chance to play casino-style games with good friends. Players have the option to buy valueless currency frequently described as 'gold coins,' which can not be exchanged for real money, but can be used to open various functions within the video games.

But within the world of social gambling establishments exists sweepstakes video gaming, enabling customers to get other currency known as 'sweeps coins' that can be exchanged for cash or other prizes.

And therein lies the capacity for financial 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 casinos in the past year after continuing to purchase more coins in pursuit of cash and other things of worth.

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

Social sweeps casino Stake ran an advertisement flaunting Drake's automobiles, planes and mansions

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

Traditional online casinos are prohibited in all however seven states, which has actually helped to sustain the popularity of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, permit consumers to send mail-in ask for complimentary sweeps coins, provided the gamers follow painfully specific directions. What's more, players are often rewarded with sweeps coins merely for signing up, thus providing a reason to attempt their hands at any number of gambling establishment video games for a chance to win - or lose - genuine cash.

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

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

'Social sweepstakes video games are merely a form of online home entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is required to play at social casinos with sweepstakes rewards. Consumers never have to spend for an opportunity to win prizes. That absence of a purchase requirement - or" consideration" - is an important difference in between social sweeps and standard online sports betting websites like gambling establishments.'

Think of the way that McDonald's utilizes its annual Monopoly game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and french fries that offer them the opportunity to win rewarding rewards, such as a $1 million prize.

And without a purchase requirement, or 'factor to consider', the video game itself does not meet the definition of gaming in the US.

'Sweepstakes are an enduring method for promoting all sort of everyday organizations in the United States, everything from hamburgers to magazine subscriptions to coffee and home improvement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are routinely used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling market experts, that argument doesn't cut it.

For beginners, video gaming attorney Daniel Wallach points out, McDonald's Monopoly video game does not run indefinitely. Rather, it has a well-defined beginning and end, therefore suggesting the sweepstakes is not the fast-food giant's primary product. 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 tied to casino-style video games of possibility,' Wallach informed DailyMail.com. 'They're simply cash giveaways.

'The sweepstakes [gambling establishments] possess none of the attributes frequently associated with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments provide" casino-like" payouts, typically 80 percent or more of incomes, whereas the normal payout percentage for a momentary advertising sweepstakes is a minor share of the income earned by the business [usually less than one percent]'
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Wallach fasts to liken the online social sweeps casinos to the web coffee shops that emerged in Florida, providing customers the chance to play casino-style games for real rewards. A lot of those brick-and-mortar facilities have since been shuttered over claims of prohibited sports betting.

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

Now, Wallach argues, social sweeps gambling establishments should face comparable analysis.

'These distinctions are not approximate,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been cited by courts and state attorney general of the United States as essential consider determining that a sweepstakes promotion was in truth a guise for unlawful sports betting.'

One of the casino market's leading trade companies, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, in some cases, enact new legislation on the issue.

'Consumers are being deprived of protections and states are giving up significant tax and revenue opportunities as this gaming replaces that conducted through controlled channels,' read a well-circulated AGA memo.

And after that there are the complainants who have actually taken legal action against social gambling establishments in more than a lots states.

Sweepstakes casino operators paid a combined $14.2 million in four different cases in Kentucky without admitting any misbehavior, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action suit, saying the settlement was made to prevent legal costs and continued litigation.

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

In the latest claim, which is mainly similar to its predecessors, New york city state homeowners 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 'unlawful gaming business. '

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

'We typically do not talk about before the courts,' a VGW representative told DailyMail.com by means of e-mail. 'However, we note that this claim has only just been submitted with the court and VGW has actually not been formally served.

'We have complete self-confidence in our compliance with all laws and regulations where we run, and remain confident about the future,' the representative continued. 'We continue to use our free-to-play video games across the majority of North America, as we have for more than a decade, producing not just great games, user experiences and home entertainment, however also guaranteeing this is done safely, properly and at the highest level of requirements.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are reasonably common across 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 traditional online gambling 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 gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking prohibited sports betting wagering 'sweeps' sites while at the same time the leagues wish to forecast a strong stance against illegal sports betting - especially when trying to tamp down the occasional sports betting scandal,' Glaser informed DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter received a lifetime ban from the NBA over accusations he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes gambling establishments.

In addition to VGW, Apple and Google are being sued for hosting supposedly unlawful sports betting websites

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

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

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

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

'We have full confidence in our influencer and ambassadorial collaborations, and our service practices more broadly,' the spokesperson said. 'A few of our values are" our gamers come first" 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.

'Celebrities who lend their names to dubious unlawful gambling sites are, at a minimum, putting their track records at threat as well as courting civil and class actions by customers who allege harm,' Glaser said. 'There is likewise some threat that state regulators and state lawyers general rope celebrity endorsers into enforcement efforts for facilitating illegal gambling.'

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