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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 prohibited gaming.
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No, they weren't personally in presence, however the world-famous stars were notably included in a slide discussion on social and sweepstakes casinos - the questionable websites providing both complimentary casino-style games and financially rewarding prizes, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet totally 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 finds itself besieged by lawsuits. In the eyes of lots of gaming corporations, not to discuss suit complainants and state regulators, sweepstakes casinos serve as conventional casinos, just without the oversight, consumer protections and tax laws. So not just can they prevent the steep 24-percent federal gambling levy, however sweepstakes operators aren't based on regulative obstacles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the business faces allegations of prohibited sports betting in a New york city suit that declares VGW utilizes star endorsers to 'produce a veneer of authenticity' around its item. (See VGW's declaration 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 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 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 conventional sports betting and sweepstakes play.

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

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

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

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Instead, ads typically center around the social element of the gambling establishments, while leaving out the capacity for real gambling losses.

Others tempt consumers with guarantees of rewards. One such operator, Stake, ran a social media advertisement flaunting Drake's automobiles, aircrafts and mansions before rotating to footage of the rapper playing online casino-style games.

'Daddy, why do we have so much money?' read the first caption on the screen.

Another caption described: 'Because I never quit.'

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

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

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

Social gambling establishments provide clients a possibility to play casino-style games with pals. Players have the option to buy valueless currency often referred to as 'gold coins,' which can not be exchanged for genuine money, however can be used to unlock various features within the games.

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

And therein lies the potential for monetary losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York. One gamer informed the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the previous year after continuing to buy more coins in pursuit of cash and other things of value.

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

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

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 but 7 states, which has actually helped to sustain the popularity of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, permit customers to submit mail-in ask for free sweeps coins, provided the players follow painfully specific instructions. What's more, gamers are frequently rewarded with sweeps coins simply for signing up, therefore providing a reason to attempt their hands at any number of casino video games for a possibility to win - or lose - genuine cash.

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

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

'Social sweepstakes video games are merely a kind of online home entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is required to play at social casinos with sweepstakes prizes. Consumers never ever have to pay for an opportunity to win rewards. That lack of a purchase requirement - or" factor to consider" - is an important between social sweeps and conventional online sports betting websites like gambling establishments.'

Think about the way that McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and fries that use them the opportunity to win rewarding rewards, such as a $1 million prize.

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

'Sweepstakes are a long-standing approach for promoting all type of everyday services in the United States, whatever from hamburgers to magazine subscriptions to coffee and home enhancement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions 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 market experts, that argument doesn't cut it.

For beginners, video gaming lawyer Daniel Wallach points out, McDonald's Monopoly video game does not run indefinitely. Rather, it has a distinct start and end, consequently recommending the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being utilized to promote real items like french fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're typically not connected to casino-style video games of chance,' Wallach informed DailyMail.com. 'They're just money free gifts.

'The sweepstakes [gambling establishments] possess none of the characteristics frequently related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos offer" casino-like" payments, normally 80 percent or more of incomes, whereas the typical payment percentage for a temporary marketing sweepstakes is an unimportant share of the earnings earned by the business [usually less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the web cafes that sprang up in Florida, providing consumers the possibility to play casino-style games for real prizes. Many of those brick-and-mortar establishments have considering that been shuttered over claims of prohibited sports betting.

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 scrutiny.

'These distinctions are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have actually repeatedly been cited by courts and state chief law officer as key consider identifying that a sweepstakes promo remained in fact a guise for prohibited gambling.'

Among the gambling establishment industry's leading trade organizations, the American Gaming Association, is now pushing legislators to examine sweepstakes operators and, in some cases, enact brand-new legislation on the concern.

'Consumers are being deprived of securities and states are forgoing considerable tax and earnings opportunities as this gaming replaces that conducted through controlled channels,' checked out a well-circulated AGA memo.

And then there are the plaintiffs who have actually sued social casinos in more than a dozen states.

Sweepstakes casino operators paid a combined $14.2 million in four different cases in Kentucky without confessing 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 costs and continued litigation.

Michael Phelps has signed a deal with the VGW Group, which owns Global Poker

In the current lawsuit, which is largely comparable to its predecessors, New York state citizens Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is described in the filing as an 'illegal gambling enterprise. '

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

'We generally don't talk about matters before the courts,' a VGW spokesperson informed DailyMail.com via email. 'However, we keep in mind that this claim has only just been submitted with the court and VGW has actually not been officially served.

'We have complete confidence in our compliance with all laws and regulations where we operate, and remain positive about the future,' the spokesperson continued. 'We continue to offer our free-to-play video games across the majority of North America, as we have for more than a decade, developing not only great games, user experiences and entertainment, however also ensuring this is done safely, responsibly and at the highest level of requirements.

'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are reasonably typical across the online social games industry (and the US more broadly), and our standard practice is that we intend to strongly protect any claim which might be brought versus us.'

The issues in between standard online sports betting and sweepstakes gambling establishments could show problematic 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 traditional video gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking unlawful sports betting wagering 'sweeps' sites while at the same time the leagues wish to predict a strong stance versus prohibited gaming - especially when trying to tamp down the occasional gambling scandal,' Glaser told DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter got a lifetime restriction from the NBA over allegations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes casinos.

Together with VGW, Apple and Google are being sued for hosting allegedly unlawful sports betting sites

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

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

Neither an NBA spokesman nor the gamers' agents responded to DailyMail.com's requests for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to react to DailyMail.com e-mails.

Asked if their celeb endorsers have a duty to describe to customers the differences and similarities between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that requires to be done.

'We have full self-confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the spokesperson said. 'Some of our values are" our gamers come initially" and" we do what's right", and we put our worths at the core of everything we do.'

Glaser, an outspoken challenger of sweepstakes websites, sees things in a different way.
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'Celebrities who provide their names to shady unlawful sports betting websites are, at a minimum, putting their credibilities at threat in addition to courting civil and class actions by customers who allege harm,' Glaser stated. 'There is also some threat that state regulators and state attorneys general rope celeb endorsers into enforcement efforts for facilitating illegal sports betting.'

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