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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 gambling.
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No, they weren't personally in presence, however the world-famous stars were notably consisted of in a slide presentation on social and sweepstakes gambling establishments - the questionable websites providing both complimentary casino-style games and rewarding rewards, such as money, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The sites are just two cogs in the multibillion-dollar market that now discovers itself besieged by lawsuits. In the eyes of numerous gaming corporations, not to mention claim plaintiffs and state regulators, sweepstakes casinos act as traditional gambling establishments, only without the oversight, customer defenses and tax laws. So not only can they prevent 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 income last year alone. Now the company faces accusations of unlawful sports betting in a New york city suit that declares VGW uses celeb endorsers to 'develop a veneer of authenticity' around its item. (See VGW's declaration listed below)

'I'm unsure" 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 places like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of video gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a variety of stars from sports betting lovers 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 in between conventional sports betting and sweepstakes play.

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

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

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

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Instead, ads generally focus around the social element of the casinos, while omitting the potential for real gambling losses.

Others lure consumers with guarantees of rewards. One such operator, Stake, ran a social media advertisement displaying Drake's vehicles, aircrafts and mansions before pivoting to video footage of the rapper playing online casino-style video games.

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

Another caption discussed: 'Because I never quit.'

The disparity between sports betting websites 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 competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, many of the gamers on social-sweepstakes gambling establishments are sports betting totally free.

'Most social sweeps consumers never ever buy,' the SPGA spokesperson told DailyMail.com. 'The minority of customers 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 provide customers a possibility to play casino-style video games with good friends. Players have the alternative to purchase valueless currency often described as 'gold coins,' which can not be exchanged for real money, but can be utilized to open numerous functions within the video games.

But within the world of social gambling establishments exists sweepstakes video gaming, allowing clients to acquire other currency called 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the capacity for losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York City. One player 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 money and other things of value.

The Philadelphia 76ers' Paul George is seen promoting a Global Poker occasion

Social sweeps gambling establishment Stake ran an ad flaunting Drake's automobiles, aircrafts and mansions

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

Traditional online casinos are banned in all but 7 states, which has helped to sustain the appeal of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, allow consumers to send mail-in requests for totally free sweeps coins, provided the gamers follow painfully specific instructions. What's more, gamers are often rewarded with sweeps coins merely for signing up, therefore providing them a factor to attempt their hands at any variety of casino games for a possibility to win - or lose - real money.

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

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

'Social sweepstakes games are merely a kind of online entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is required to dip into social gambling establishments with sweepstakes rewards. Consumers never have to pay for a chance to win rewards. That absence of a purchase requirement - or" factor to consider" - is a crucial difference in between social sweeps and standard online sports betting websites like casinos.'

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

And without a purchase requirement, or 'factor to consider', the game itself doesn't meet the meaning of gambling in the US.

'Sweepstakes are an enduring approach for promoting all kinds of everyday companies in the United States, everything from burgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are routinely used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling industry insiders, that argument does not cut it.

For beginners, gaming lawyer Daniel Wallach mentions, McDonald's Monopoly video game doesn't run forever. Rather, it has a distinct beginning and end, thus recommending the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being used to promote real items like fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're usually not connected to casino-style games of possibility,' Wallach informed DailyMail.com. 'They're just money giveaways.

'The sweepstakes [gambling establishments] possess none of the qualities frequently related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments offer" casino-like" payouts, generally 80 percent or more of earnings, whereas the typical payment portion for a momentary promotional sweepstakes is a minor 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 internet cafes that emerged in Florida, offering consumers the chance to play casino-style games for real prizes. A lot of those brick-and-mortar establishments have actually given that been shuttered over accusations of unlawful gaming.

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

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

'These distinctions are not arbitrary,' Wallach said of social sweeps casinos. 'They have repeatedly been pointed out by courts and state chief law officer as crucial factors in determining that a sweepstakes promotion remained in fact a guise for illegal gambling.'

Among the gambling establishment industry's leading trade companies, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, in some cases, enact brand-new legislation on the problem.

'Consumers are being deprived of defenses and states are passing up substantial tax and profits chances as this gambling replaces that performed through regulated channels,' read a well-circulated AGA memo.

And after that there are the complainants who have sued social gambling establishments in more than a dozen states.

Sweepstakes gambling establishment 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 lawsuit, saying the settlement was made to avoid legal expenses and continued lawsuits.

Michael Phelps has actually signed an offer with the VGW Group, which owns Global Poker

In the current suit, which is mostly comparable to its predecessors, New York 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 'illegal gambling business. '

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

'We typically don't discuss matters before the courts,' a VGW spokesperson informed DailyMail.com via e-mail. 'However, we keep in mind that this claim has actually only simply been submitted with the court and VGW has not been formally served.

'We have full self-confidence in our compliance with all laws and regulations where we run, and remain confident about the future,' the spokesperson continued. 'We continue to offer our free-to-play games across the majority of The United States and Canada, as we have for more than a years, producing not only great games, user experiences and home entertainment, but also guaranteeing this is done securely, responsibly and at the greatest level of requirements.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are reasonably common throughout the online social games market (and the US more broadly), and our standard practice is that we mean to vigorously defend any claim which may be brought versus us.'

The issues between conventional online sports betting and sweepstakes casinos could show problematic for some star 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 professional athletes are hawking prohibited sports betting 'sweeps' websites while at the same time the leagues wish to project a strong position versus prohibited gambling - specifically when attempting to tamp down the occasional gambling scandal,' Glaser told DailyMail.com.

It was simply eight months ago that Toronto Raptors forward Jontay Porter received 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 casinos.

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

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

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

Neither an NBA representative nor the players' agents responded 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 describe to consumers 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 representative said. 'Some of our values 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 opponent of sweepstakes sites, sees things differently.
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'Celebrities who lend their names to shady illegal sports betting websites are, at a minimum, putting their credibilities at risk along with courting civil and class actions by consumers who declare harm,' Glaser said. 'There is likewise some threat that state regulators and state attorneys general rope star endorsers into enforcement efforts for helping with illegal gaming.'

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