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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 sports betting.

No, they weren't personally in attendance, however the world-famous celebrities were notably consisted of in a slide presentation on social and sweepstakes casinos - the controversial sites providing both complimentary casino-style games and rewarding rewards, such as money, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet 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 industry that now finds itself besieged by claims. In the eyes of lots of gaming corporations, not to mention lawsuit complainants and state regulators, sweepstakes gambling establishments serve as traditional gambling establishments, only without the oversight, customer securities and tax laws. So not only can they prevent the steep 24-percent federal sports betting levy, however sweepstakes operators aren't subject to regulatory obstacles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the business faces allegations of illegal gambling in a New york city suit that declares VGW utilizes star endorsers to 'create a veneer of authenticity' around its product. (See VGW's declaration below)

'I'm unsure" if you do not trust us, you can rely on Paris Hilton" is a winning message for companies running 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 stars from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, along with 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 casinos discovered online

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

Drake has an offer with social sweeps casino, Stake, that he regularly promotes on social networks

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Instead, ads generally focus around the social element of the gambling establishments, while leaving out the capacity for actual gambling losses.

Others tempt customers with guarantees of prizes. One such operator, Stake, ran a social networks advertisement showing off Drake's cars and trucks, aircrafts and mansions before pivoting to video of the rap artist playing online casino-style video games.

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

Another caption explained: 'Because I never ever provided up.'

The inconsistency in between gambling websites and social or sweepstakes casinos is a bit complicated, but 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), described its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA information, many of the gamers on social-sweepstakes gambling establishments are playing for complimentary.

'Most social sweeps consumers never buy,' the SPGA spokesperson informed DailyMail.com. 'The minority of clients who make purchases do so in quantities far smaller than the common deposit or wager size at real-money online sports betting sites.'

Social gambling establishments provide consumers a possibility to play casino-style games with good friends. Players have the choice to buy worthless currency often described as 'gold coins,' which can not be exchanged genuine cash, but can be utilized to open various features within the games.

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

And therein lies the capacity for monetary losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York. One player told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the previous 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 revealing off Drake's cars and trucks, planes and mansions

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

Traditional online gambling establishments are prohibited in all but seven states, which has assisted to fuel the popularity of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes sites, which don't require usually require recognition. However, websites like Chumba will ask for IDs from players trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, enable clients to send mail-in demands for complimentary sweeps coins, supplied the gamers follow painfully specific directions. What's more, gamers are frequently rewarded with sweeps coins merely for signing up, thus offering them a factor to try their hands at any variety of casino video games for an opportunity to win - or lose - real 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 item is the totally free casino-style video gaming, and the real-stakes competition is merely a means of promoting their support.

'Social sweepstakes video games are merely a type of online home entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is needed to play at social casinos with sweepstakes rewards. Consumers never ever need to pay for an opportunity to win rewards. That lack of a purchase requirement - or" consideration" - is a vital difference between social sweeps and conventional online gaming websites like casinos.'

Consider the manner in which McDonald's utilizes its annual Monopoly video 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 financially rewarding rewards, such as a $1 million jackpot.

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

'Sweepstakes are an enduring method for promoting all kinds of daily businesses in the United States, whatever from hamburgers to magazine memberships to coffee and home improvement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are frequently used 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.

For beginners, gaming lawyer Daniel Wallach mentions, McDonald's Monopoly video game doesn't run forever. Rather, it has a well-defined beginning and end, thus recommending the sweepstakes is not the fast-food giant's . 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 generally not connected to casino-style games of chance,' Wallach told DailyMail.com. 'They're just money free gifts.

'The sweepstakes [gambling establishments] have none of the qualities commonly associated with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments offer" casino-like" payments, generally 80 percent or more of profits, whereas the typical payout portion for a momentary promotional sweepstakes is an insignificant share of the revenue made by the company [typically less than one percent]'

Wallach is fast to liken the online social sweeps casinos to the web coffee shops that emerged in Florida, providing clients the chance to play casino-style games for real prizes. A lot of those brick-and-mortar facilities have considering that been shuttered over allegations of illegal sports betting.

DJ Khaled is among numerous celeb spokespeople for VGW's Global Poker brand

Now, Wallach argues, social sweeps gambling establishments ought to face comparable examination.

'These differences are not approximate,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been cited by courts and state attorney general of the United States as essential elements in identifying that a sweepstakes promotion remained in truth a guise for prohibited sports betting.'

One of the casino market's leading trade companies, the American Gaming Association, is now pushing legislators to examine sweepstakes operators and, in many cases, enact brand-new legislation on the concern.

'Consumers are being deprived of protections and states are forgoing significant tax and profits opportunities as this sports betting changes that conducted through regulated channels,' checked out a well-circulated AGA memo.

And then there are the complainants who have taken legal action against social casinos in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in four separate cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action claim, saying the settlement was made to prevent legal costs and continued litigation.
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Michael Phelps has actually signed a deal with the VGW Group, which owns Global Poker

In the most recent lawsuit, which is mainly similar to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is described in the filing as an 'prohibited gambling business. '

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

'We usually do not discuss matters before the courts,' a VGW representative informed DailyMail.com by means of e-mail. 'However, we note that this claim has only just been submitted with the court and VGW has actually not been formally served.

'We have full self-confidence in our compliance with all laws and regulations where we operate, and remain confident about the future,' the representative continued. 'We continue to provide our free-to-play games across the majority of The United States and Canada, as we have for more than a years, developing not just excellent video games, user experiences and entertainment, but also guaranteeing this is done safely, properly and at the greatest level of requirements.

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

The concerns between standard online sports betting and sweepstakes gambling establishments could show troublesome 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 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 wish to predict a strong position against illegal sports betting - specifically 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 accusations he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes casinos.

Together with VGW, Apple and Google are being demanded hosting presumably illegal gambling websites

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

'I 'd expect 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' representatives reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise overlooked to react to DailyMail.com e-mails.

Asked if their celebrity endorsers have a duty to explain to customers the differences and similarities in between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that requires to be done.

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the representative stated. 'A few of our worths are" our players precede" and" we do what's right", and we put our worths at the core of whatever we do.'

Glaser, an outspoken opponent of sweepstakes websites, sees things differently.

'Celebrities who provide their names to shady illegal gambling sites are, at a minimum, putting their credibilities at threat along with courting civil and class actions by customers who allege damage,' Glaser said. 'There is also some risk that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for helping with unlawful gaming.'

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