The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on prohibited gaming.
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No, they weren't personally in presence, but the world-famous celebrities were notably included in a slide presentation on social and sweepstakes casinos - the controversial websites using both complimentary casino-style games and profitable prizes, such as money, gift cards or cryptocurrency. In one ad, 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 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 lawsuit plaintiffs and state regulators, sweepstakes casinos function as standard casinos, just without the oversight, customer defenses and tax laws. So not just can they prevent the steep 24-percent federal sports betting levy, however sweepstakes operators aren't based on regulative difficulties like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings last year alone. Now the company faces accusations of unlawful gaming in a New York claim that claims VGW utilizes celebrity endorsers to 'develop a veneer of authenticity' around its item. (See VGW's statement below)

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

Sweepstakes endorsers include a series of celebrities from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom use any differences in between traditional gaming and sweepstakes play.

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

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

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

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Instead, advertisements typically focus around the social aspect of the casinos, while leaving out the capacity for actual gambling losses.

Others lure clients with promises of prizes. One such operator, Stake, ran a social networks advertisement displaying Drake's cars and trucks, aircrafts and estates before pivoting 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 described: 'Because I never ever quit.'

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

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, the majority of the players on social-sweepstakes casinos are playing for totally free.

'Most social sweeps clients never ever purchase,' the SPGA spokesperson informed 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 sports betting websites.'

Social gambling establishments use customers a chance to play casino-style games with good friends. Players have the option to purchase valueless currency frequently described as 'gold coins,' which can not be exchanged genuine cash, however can be utilized to unlock different functions within the games.
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But within the world of social gambling establishments exists sweepstakes video gaming, allowing clients to get other currency called 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the capacity for financial losses, like the ones claimed by complainants 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 past 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 gambling establishment Stake ran an advertisement displaying Drake's cars and trucks, airplanes 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 banned in all however seven states, which has assisted to fuel the appeal of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, allow customers to submit mail-in ask for complimentary sweeps coins, offered the players follow painfully particular guidelines. What's more, gamers are typically rewarded with sweeps coins just for signing up, therefore providing a reason to attempt their hands at any number of gambling establishment games for a possibility to win - or lose - real money.
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So why are sweepstakes websites allowed to run in 48 states, while online gambling establishments are prohibited in all however 7?

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

'Social sweepstakes games are simply a type of online entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is needed to dip into social gambling establishments with sweepstakes prizes. Consumers never ever have to pay for a chance to win rewards. That lack of a purchase requirement - or" consideration" - is a crucial distinction between social sweeps and standard online gaming websites like casinos.'

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

And without a purchase requirement, or 'factor to consider', the game itself does not meet the meaning of sports betting in the US.

'Sweepstakes are a long-standing method for promoting all sort of daily services in the United States, everything from hamburgers to magazine subscriptions to coffee and home improvement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are frequently used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many gambling market insiders, that argument doesn't cut it.

For starters, video gaming lawyer Daniel Wallach explains, 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 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 permanently and they're typically not tied to casino-style games of opportunity,' Wallach told DailyMail.com. 'They're just cash free gifts.
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'The sweepstakes [gambling establishments] possess none of the attributes frequently associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments use" casino-like" payouts, normally 80 percent or more of revenues, whereas the typical payout portion for a temporary promotional sweepstakes is a minor share of the income earned by the business [usually less than one percent]'

Wallach is fast to liken the online social sweeps casinos to the internet cafes that emerged in Florida, providing customers the chance to play casino-style video games for real rewards. A number of those brick-and-mortar facilities have actually considering that been shuttered over allegations of unlawful gaming.

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

Now, Wallach argues, social sweeps gambling establishments need to deal with similar examination.

'These differences are not approximate,' Wallach stated of social sweeps casinos. 'They have actually consistently been cited by courts and state attorney generals as key consider identifying that a sweepstakes promotion remained in truth a guise for prohibited gaming.'

Among the casino industry's leading trade organizations, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, sometimes, enact brand-new legislation on the problem.

'Consumers are being denied of protections and states are giving up substantial tax and income chances as this sports betting replaces that performed through regulated channels,' read a well-circulated AGA memo.

And after that there are the complainants who have taken legal action against social casinos in more than a dozen states.

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

Michael Phelps has actually signed a deal with the VGW Group, which owns Global Poker
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In the current claim, which is mostly similar to its predecessors, New york city state citizens Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited gambling business. '

Apple and Google have actually also been named as defendants in claims for hosting the sweepstakes sites. But unlike VGW, neither tech business responded to DailyMail.com's demand for remark.

'We usually do not comment on matters before the courts,' a VGW representative told DailyMail.com via email. 'However, we keep in mind that this claim has actually 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 guidelines where we run, and stay confident about the future,' the representative continued. 'We continue to offer our free-to-play video games throughout the majority of North America, as we have for more than a years, producing not just terrific video games, user experiences and home entertainment, however also ensuring this is done securely, responsibly and at the greatest level of standards.

'More broadly, we 'd restate that class actions and other litigations and arbitrations are fairly typical across the online social video games market (and the US more broadly), and our standard practice is that we plan to strongly defend any claim which may be brought against us.'

The problems in between conventional online gambling and sweepstakes gambling establishments might prove problematic 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 conventional video gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking illegal sports betting wagering 'sweeps' websites while at the very same time the leagues wish to predict a strong stance against unlawful sports betting - particularly when trying to tamp down the periodic gaming scandal,' Glaser told DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter got a life time ban from the NBA over claims he conspired with bettors. 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 sued for hosting supposedly unlawful gambling websites

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 endorsing sweepstakes sites is a matter of when, not if,' Glaser added.

Neither an NBA spokesperson nor the players' representatives reacted to DailyMail.com's requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise ignored to react to DailyMail.com emails.

Asked if their star endorsers have a duty to explain to consumers the differences and resemblances in between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that needs to be done.
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'We have complete self-confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the representative said. 'Some of our values 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 opponent of sweepstakes websites, sees things differently.

'Celebrities who lend their names to dubious unlawful sports betting websites are, at a minimum, putting their credibilities at risk in addition to courting civil and class actions by customers who declare damage,' Glaser stated. 'There is likewise some danger that state regulators and state chief law officers rope star endorsers into enforcement efforts for facilitating unlawful sports betting.'

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