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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.

No, they weren't in presence, however the world-famous celebrities were notably consisted of in a slide presentation on social and sweepstakes casinos - the controversial websites offering both complimentary casino-style video games and financially rewarding prizes, such as cash, gift cards or cryptocurrency. In one advertisement, 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.
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The sites are simply two cogs in the multibillion-dollar market that now discovers itself besieged by suits. In the eyes of many gaming corporations, not to discuss claim plaintiffs and state regulators, sweepstakes gambling establishments function as standard gambling establishments, just without the oversight, customer defenses and tax laws. So not only can they avoid the steep 24-percent federal sports betting levy, but sweepstakes operators aren't based on regulatory difficulties like anti-money laundering and responsible-gaming defenses.
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One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits last year alone. Now the business deals with allegations of illegal sports betting in a New york city claim that declares VGW utilizes star endorsers to 'produce a veneer of authenticity' around its product. (See VGW's declaration 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 unlawful operations out of places like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a variety of stars from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom provide any differences between standard gaming and sweepstakes play.

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

Ryan Seacrest prompts fans to play at Chumba Casino, where lots of - but not all - video games are free

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

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Instead, ads typically center around the social aspect of the casinos, while leaving out the capacity for real sports betting losses.

Others lure clients with pledges of rewards. One such operator, Stake, ran a social networks ad displaying Drake's cars and trucks, planes and mansions before rotating to video footage of the rapper playing online casino-style video games.

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

Another caption discussed: 'Because I never quit.'

The discrepancy in between sports betting sites and social or sweepstakes casinos is a bit complicated, 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), explained its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, most of the players on social-sweepstakes casinos are sports betting complimentary.

'Most social sweeps consumers never 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 bet size at real-money online sports betting websites.'

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

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

And therein lies the potential for monetary 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 money and other things of worth.

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

Social sweeps casino Stake ran an advertisement revealing off Drake's cars, aircrafts and mansions

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 actually helped to fuel the popularity of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes sites, which don't need typically need recognition. However, sites like Chumba will request IDs from gamers trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, allow consumers to submit mail-in ask for complimentary sweeps coins, provided the players follow painfully specific instructions. What's more, gamers are frequently rewarded with sweeps coins merely for signing up, consequently offering them a factor to try their hands at any number of gambling establishment video games for a possibility to win - or lose - real cash.

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

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

'Social sweepstakes video games are simply a kind of online entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is required to dip into social gambling establishments with sweepstakes rewards. Consumers never ever need to pay for a chance to win prizes. That lack of a purchase requirement - or" consideration" - is an essential difference in between social sweeps and traditional online sports betting websites like casinos.'

Think about the way that McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and fries that provide them the opportunity to win financially rewarding prizes, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the game itself does not satisfy the definition of gambling in the US.

'Sweepstakes are an enduring approach for promoting all kinds of daily businesses in the United States, everything from burgers to publication subscriptions to coffee and home enhancement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are frequently utilized 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 does not cut it.

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

'They do not last permanently and they're usually not tied to casino-style games of possibility,' Wallach informed DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [casinos] have none of the characteristics typically connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos offer" casino-like" payments, normally 80 percent or more of profits, whereas the typical payment portion for a momentary marketing sweepstakes is an unimportant share of the earnings made by the business [normally less than one percent]'

Wallach is fast to compare the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, using consumers the chance to play casino-style games for real rewards. Many of those brick-and-mortar facilities have given that been shuttered over allegations of illegal sports betting.

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

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

'These distinctions are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have actually consistently been mentioned by courts and state chief law officer as essential elements in identifying that a sweepstakes promotion was in truth a guise for prohibited sports betting.'

One of the casino industry's leading trade organizations, the American Gaming Association, is now pressing legislators to examine sweepstakes operators and, in many cases, enact new legislation on the concern.

'Consumers are being denied of defenses and states are forgoing substantial tax and earnings chances as this sports betting replaces that performed through controlled channels,' checked out a well-circulated AGA memo.

And then there are the plaintiffs who have sued 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 confessing any misbehavior, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action claim, stating 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

In the latest lawsuit, which is mostly similar to its predecessors, New york city state citizens Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is explained in the filing as an 'unlawful gambling business. '

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

'We usually don't talk about matters before the courts,' a VGW spokesperson told DailyMail.com through e-mail. 'However, we note that this claim has actually only just been submitted with the court and VGW has actually not been officially served.

'We have full confidence in our compliance with all laws and guidelines where we run, and stay positive about the future,' the spokesperson continued. 'We continue to offer our free-to-play video games throughout the majority of The United States and Canada, as we have for more than a decade, producing not only terrific games, user experiences and home entertainment, however also ensuring this is done safely, responsibly and at the greatest level of requirements.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are reasonably common throughout the online social games industry (and the US more broadly), and our basic practice is that we mean to intensely protect any claim which may be brought versus us.'

The issues between standard 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 back VGW's Global Poker brand while the NBA is partnered with traditional gaming titans like FanDuel and DraftKings.

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

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

Along with VGW, Apple and Google are being demanded hosting supposedly illegal gambling sites

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

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

Neither an NBA spokesperson nor the players' agents reacted to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise disregarded to respond to DailyMail.com emails.

Asked if their star endorsers have an obligation to discuss to consumers the distinctions and similarities in between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that needs to be done.

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the spokesperson stated. 'Some of our worths are" our players precede" and" we do what's right", and we put our values at the core of everything we do.'
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Glaser, an outspoken opponent of sweepstakes sites, sees things differently.

'Celebrities who provide their names to dubious illegal gambling sites are, at a minimum, putting their reputations at risk in addition to courting civil and class actions by consumers who allege damage,' Glaser said. 'There is likewise some threat that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for facilitating prohibited sports betting.'

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