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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 attendance, however the world-famous celebrities were conspicuously consisted of in a slide presentation on social and sweepstakes casinos - the questionable sites offering both complimentary casino-style video games and financially rewarding rewards, such as cash, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone 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 just two cogs in the multibillion-dollar market that now finds itself besieged by suits. In the eyes of numerous gaming corporations, not to mention suit plaintiffs and state regulators, sweepstakes gambling establishments function as traditional casinos, just without the oversight, customer securities and tax laws. So not only can they avoid the high 24-percent federal sports betting levy, but sweepstakes operators aren't based on regulative difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the faces allegations of unlawful sports betting in a New york city claim that declares VGW uses celebrity endorsers to 'create a veneer of authenticity' around its item. (See VGW's statement listed below)

'I'm uncertain" if you don't trust us, you can trust Paris Hilton" is a winning message for companies operating multibillion-dollar prohibited 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 series of celebs from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions between traditional gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among lots of sweepstakes casinos found online

Ryan Seacrest prompts fans to dip into Chumba Casino, where lots of - however not all - games are totally free

Drake has a handle social sweeps casino, Stake, that he regularly touts on social media

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Instead, advertisements usually center around the social element of the gambling establishments, while leaving out the potential for actual gambling losses.

Others tempt customers with promises of rewards. One such operator, Stake, ran a social media ad displaying Drake's automobiles, airplanes and estates before rotating to video footage of the rapper playing online casino-style games.

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

Another caption discussed: 'Because I never offered up.'

The inconsistency in between sports betting websites and social or sweepstakes gambling establishments is a bit intricate, but operators of the latter insist they're not included with the former.

A representative for an industry trade group, the Social and Promotional Gaming Association (SPGA), described 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 free.

'Most social sweeps clients never ever purchase,' the SPGA spokesperson told DailyMail.com. 'The minority of clients who make purchases do so in amounts far smaller sized than the common deposit or bet size at real-money online sports betting websites.'

Social gambling establishments use clients an opportunity to play casino-style games with buddies. Players have the choice to purchase valueless currency often referred to as 'gold coins,' which can not be exchanged for genuine cash, but can be used to unlock numerous features within the video games.

But within the world of social gambling establishments exists sweepstakes video gaming, permitting customers to get other currency understood as 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the capacity for financial losses, like the ones declared 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 buy 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 casino Stake ran an advertisement flaunting Drake's cars and trucks, planes 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 however seven states, which has actually assisted to fuel the appeal of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes sites, which do not require typically require recognition. However, websites like Chumba will ask for IDs from gamers attempting to withdraw any funds.

Many websites, like the crypto-compatible Stake, enable consumers to send mail-in demands for free sweeps coins, supplied the players follow painfully particular directions. What's more, gamers are typically rewarded with sweeps coins just for registering, therefore providing a reason to attempt their hands at any number of casino games for an opportunity to win - or lose - genuine money.

So why are sweepstakes sites enabled to operate in 48 states, while online gambling establishments are prohibited in all but 7?

According to the stakeholders, their product is the free casino-style video gaming, and the real-stakes competitors is simply a means of promoting their support.

'Social sweepstakes video games are just a kind of online entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is required to dip into social gambling establishments with sweepstakes prizes. Consumers never ever need to spend for an opportunity to win prizes. That lack of a purchase requirement - or" factor to consider" - is an important difference between social sweeps and conventional online gambling websites like casinos.'

Think about the manner in which McDonald's uses its yearly Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and french fries that use them the possibility to win profitable prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the game itself doesn't fulfill the meaning of gambling in the US.

'Sweepstakes are a long-standing approach for promoting all sort of everyday organizations in the United States, whatever from hamburgers to magazine memberships to coffee and home enhancement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are frequently used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many gambling market experts, that argument does not cut it.

For beginners, gaming attorney Daniel Wallach points out, McDonald's Monopoly game does not run indefinitely. Rather, it has a well-defined start and end, thus 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 don't last permanently and they're typically not connected to casino-style games of possibility,' Wallach informed DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [gambling establishments] have none of the characteristics typically associated with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos offer" casino-like" payments, generally 80 percent or more of incomes, whereas the common payout percentage for a temporary marketing sweepstakes is an unimportant share of the earnings made by the company [typically less than one percent]'

Wallach is quick to liken the online social sweeps casinos to the internet cafes that emerged in Florida, offering consumers the possibility to play casino-style games for real rewards. Many of those brick-and-mortar facilities have given that been shuttered over allegations of unlawful sports betting.

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

Now, Wallach argues, social sweeps gambling establishments need to deal with comparable examination.

'These distinctions are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have repeatedly been pointed out by courts and state lawyer generals as crucial aspects in determining that a sweepstakes promotion was in reality a guise for unlawful gambling.'

Among the gambling establishment market's leading trade organizations, the American Gaming Association, is now pressing lawmakers to investigate sweepstakes operators and, in many cases, enact new legislation on the problem.

'Consumers are being denied of securities and states are forgoing significant tax and earnings chances as this gaming changes that carried out through regulated channels,' read a well-circulated AGA memo.

And then there are the plaintiffs who have actually sued social gambling establishments 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, stating the settlement was made to avoid legal costs and continued litigation.

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

In the newest suit, which is largely similar to its predecessors, New york city state locals Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited gaming business. '

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

'We normally don't discuss matters before the courts,' a VGW spokesperson told DailyMail.com through email. 'However, we note that this claim has actually only just been filed with the court and VGW has actually not been formally served.

'We have complete self-confidence in our compliance with all laws and policies where we operate, and stay confident about the future,' the spokesperson continued. 'We continue to offer our free-to-play video games across many of North America, as we have for more than a years, developing not just fantastic video games, user experiences and entertainment, but likewise ensuring this is done securely, responsibly and at the highest level of requirements.

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

The issues between traditional online sports betting and sweepstakes gambling establishments could show troublesome for some celeb 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 standard video gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking prohibited sports betting wagering 'sweeps' websites while at the same time the leagues want to forecast a strong stance against prohibited gaming - particularly when trying to tamp down the periodic 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 gamblers. 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 supposedly illegal gambling websites

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

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

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

Asked if their celebrity endorsers have an obligation to discuss to customers 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 full self-confidence in our influencer and ambassadorial collaborations, and our organization practices more broadly,' the representative stated. 'A few of our values are" our gamers precede" and" we do what's right", and we put our worths at the core of everything we do.'

Glaser, an outspoken challenger of sweepstakes sites, sees things differently.
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'Celebrities who lend their names to dubious prohibited sports betting websites are, at a minimum, putting their credibilities at risk along with courting civil and class actions by customers who allege harm,' Glaser said. 'There is also some threat that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for facilitating prohibited gaming.'

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