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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, but the world-famous stars were notably included in a slide discussion on social and sweepstakes casinos - the questionable sites offering both totally free casino-style games and lucrative prizes, such as money, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody 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 two cogs in the multibillion-dollar market that now discovers itself besieged by suits. In the eyes of numerous gaming corporations, not to point out claim plaintiffs and state regulators, sweepstakes casinos function as conventional gambling establishments, only without the oversight, consumer defenses and tax laws. So not only can they avoid the steep 24-percent federal gaming levy, but 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 revenue in 2015 alone. Now the company faces allegations of unlawful gambling in a New york city suit that declares VGW utilizes celeb endorsers to 'create a veneer of authenticity' around its item. (See VGW's declaration listed below)

'I'm not exactly sure" if you do not trust us, you can trust Paris Hilton" is a winning message for business running multibillion-dollar prohibited operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers include a variety of celebs from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions in between traditional gambling and sweepstakes play.

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

Ryan Seacrest urges fans to dip into Chumba Casino, where many - however not all - games are complimentary

Drake has a deal with social sweeps casino, Stake, that he routinely promotes on social networks

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Instead, ads typically center around the social element of the casinos, while omitting the capacity for actual gambling losses.

Others lure customers with pledges of prizes. One such operator, Stake, ran a social media advertisement displaying Drake's automobiles, planes and mansions before rotating to footage of the rap artist playing online casino-style games.

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

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

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

A representative for an industry trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA information, most of the players on social-sweepstakes gambling establishments are sports betting free.

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

Social gambling establishments use consumers a chance to play casino-style video games with good friends. Players have the alternative to buy worthless currency typically described as 'gold coins,' which can not be exchanged genuine cash, but can be used to open numerous features within the video games.

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

And therein lies the potential 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 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 gambling establishment Stake ran an advertisement displaying Drake's automobiles, planes 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 7 states, which has actually assisted to fuel the popularity of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, permit clients to send mail-in requests for totally free sweeps coins, offered the gamers follow painfully specific directions. What's more, players are often rewarded with sweeps coins just for signing up, thus providing them a factor to try their hands at any variety of casino video games for an opportunity to win - or lose - real money.

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

According to the stakeholders, their product is the free casino-style video gaming, and the real-stakes competition is merely a way of promoting their bread and butter.

'Social sweepstakes video games are merely a type of online entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is required to dip into social casinos with sweepstakes rewards. Consumers never ever have to spend for a chance to win prizes. That lack of a purchase requirement - or" factor to consider" - is a vital difference between social sweeps and traditional online gambling websites like casinos.'

Consider the way that McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to gamble, but rather they're buying hamburgers and fries that provide them the chance to win lucrative prizes, such as a $1 million jackpot.

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

'Sweepstakes are a long-standing technique for promoting all type of daily services in the United States, whatever from burgers to publication memberships to coffee and home improvement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are regularly utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous sports betting industry experts, that argument doesn't cut it.
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For beginners, gaming lawyer Daniel Wallach points out, McDonald's Monopoly game does not run forever. Rather, it has a distinct beginning and end, therefore suggesting the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being utilized to promote real products like french fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're typically not tied to casino-style games of possibility,' Wallach told DailyMail.com. 'They're just money free gifts.

'The sweepstakes [gambling establishments] have none of the qualities commonly connected with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos use" casino-like" payouts, normally 80 percent or more of incomes, whereas the typical payout percentage for a short-term promotional sweepstakes is an insignificant share of the profits made by the business [generally less than one percent]'

Wallach is fast to compare the online social sweeps gambling establishments to the web cafes that emerged in Florida, the possibility to play casino-style video games for genuine rewards. A number of those brick-and-mortar establishments have because been shuttered over accusations of prohibited gambling.

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

Now, Wallach argues, social sweeps casinos ought to face comparable scrutiny.

'These differences are not approximate,' Wallach stated of social sweeps casinos. 'They have repeatedly been pointed out by courts and state lawyer generals as crucial consider figuring out that a sweepstakes promotion was in truth a guise for prohibited gaming.'

Among the gambling establishment industry's leading trade companies, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, in many cases, enact brand-new legislation on the issue.

'Consumers are being deprived of securities and states are passing up substantial tax and revenue chances as this sports betting replaces that carried out through controlled channels,' checked out a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without admitting any misbehavior, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action claim, saying the settlement was made to avoid legal expenses and continued lawsuits.

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

In the most current lawsuit, which is largely similar to its predecessors, New York state locals 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 gambling business. '

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

'We generally don't discuss matters before the courts,' a VGW spokesperson told 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 guidelines where we operate, and stay positive about the future,' the representative continued. 'We continue to provide our free-to-play video games throughout the majority of The United States and Canada, as we have for more than a decade, developing not just terrific video 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 reiterate that class actions and other litigations and arbitrations are relatively typical across the online social games market (and the US more broadly), and our standard practice is that we intend to intensely safeguard any claim which might be brought against us.'

The concerns between conventional online gambling and sweepstakes casinos might prove troublesome for some celebrity endorsers.

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

'It's ironic that expert athletes are hawking unlawful sports betting 'sweeps' websites while at the exact same time the leagues desire to forecast a strong stance versus unlawful gambling - specifically when trying to tamp down the periodic gambling scandal,' Glaser informed DailyMail.com.

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

Together with VGW, Apple and Google are being taken legal action against for hosting presumably illegal sports betting sites

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

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

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

Asked if their celebrity endorsers have a responsibility to describe to customers the differences and similarities in between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is absolutely nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the representative stated. 'Some of our worths are" our gamers come first" 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.
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'Celebrities who lend their names to shady prohibited sports betting sites are, at a minimum, putting their credibilities at danger along with courting civil and class actions by customers who declare harm,' Glaser said. 'There is likewise some danger that state regulators and state chief law officers rope star endorsers into enforcement efforts for helping with unlawful gaming.'

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