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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 illegal gaming.
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No, they weren't personally in attendance, but the world-famous celebrities were notably consisted of in a slide presentation on social and sweepstakes gambling establishments - the controversial sites providing both totally free casino-style games and lucrative prizes, such as money, gift 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 just two cogs in the multibillion-dollar industry that now discovers itself besieged by claims. In the eyes of many gaming corporations, not to discuss claim plaintiffs and state regulators, sweepstakes gambling establishments serve as conventional gambling establishments, only without the oversight, consumer defenses and tax laws. So not only can they prevent the steep 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulative difficulties like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the company deals with allegations of prohibited sports betting in a New York lawsuit that declares VGW uses celeb endorsers to 'develop a veneer of authenticity' around its product. (See VGW's statement below)

'I'm unsure" if you do not trust us, you can rely on Paris Hilton" is a winning message for business operating multibillion-dollar illegal operations out of locations 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 series of celebs 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 use any differences between traditional gambling and sweepstakes play.

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

Ryan Seacrest advises fans to dip into Chumba Casino, where many - however not all - games are free

Drake has a deal with social sweeps gambling establishment, Stake, that he frequently touts on social networks

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Instead, advertisements typically center around the social aspect of the gambling establishments, while omitting the capacity for actual gambling losses.

Others tempt consumers with pledges of rewards. One such operator, Stake, ran a social media advertisement flaunting Drake's cars and trucks, aircrafts and estates before pivoting to video footage of the rapper 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 described: 'Because I never gave up.'

The inconsistency in between gaming websites and social or sweepstakes casinos is a bit intricate, however operators of the latter insist they're not included with the former.

A spokesperson for a market trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, many of the gamers on social-sweepstakes gambling establishments are playing for totally free.

'Most social sweeps customers never make a purchase,' the SPGA representative told DailyMail.com. 'The minority of consumers who make purchases do so in amounts far smaller sized than the normal deposit or wager size at real-money online sports betting websites.'

Social gambling establishments provide consumers a chance to play casino-style video games with good friends. Players have the option to purchase valueless currency often referred to as 'gold coins,' which can not be exchanged for real money, however can be utilized to unlock different functions within the games.

But within the world of social gambling establishments exists sweepstakes video gaming, allowing consumers to get other called '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 gamer informed the Washington Post he lost more than $100,000 on sweepstakes casinos in the previous year after continuing to purchase more coins in pursuit of cash and other things of worth.

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

Social sweeps gambling establishment Stake ran an advertisement revealing off Drake's automobiles, aircrafts and mansions
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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 helped to fuel the popularity of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, allow consumers to submit mail-in requests for totally free sweeps coins, provided the gamers follow painfully specific directions. What's more, gamers are frequently rewarded with sweeps coins simply for signing up, thus providing a reason to attempt their hands at any number of casino games for an opportunity to win - or lose - real cash.

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

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

'Social sweepstakes games are simply a kind of online home entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is required to play at social casinos with sweepstakes prizes. Consumers never ever need to pay for a chance to win rewards. That lack of a purchase requirement - or" consideration" - is a crucial distinction in between social sweeps and standard online sports betting websites like casinos.'

Consider the method that McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to gamble, but rather they're buying hamburgers and french fries that offer them the possibility to win financially rewarding prizes, such as a $1 million jackpot.

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

'Sweepstakes are a long-standing method for promoting all type of everyday organizations in the United States, everything from burgers to magazine memberships to coffee and home enhancement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are frequently used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many sports betting market insiders, that argument doesn't cut it.

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

'They do not last permanently and they're typically not tied to casino-style video games of possibility,' Wallach told DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [gambling establishments] have none of the attributes frequently connected with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos use" casino-like" payments, typically 80 percent or more of revenues, whereas the typical payment portion for a short-lived promotional sweepstakes is a trivial share of the income earned by the company [typically less than one percent]'

Wallach is quick to compare the online social sweeps gambling establishments to the web coffee shops that emerged in Florida, providing clients the possibility to play casino-style games for genuine prizes. Much of those brick-and-mortar facilities have actually since been shuttered over accusations of unlawful sports betting.

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

Now, Wallach argues, social sweeps casinos should deal with similar examination.

'These differences are not arbitrary,' Wallach stated of social sweeps casinos. 'They have actually consistently been mentioned by courts and state attorney general of the United States as essential factors in identifying that a sweepstakes promotion was in fact a guise for illegal gaming.'

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

'Consumers are being deprived of securities and states are giving up significant tax and revenue opportunities as this gambling changes that conducted through controlled channels,' read a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action lawsuit, saying the settlement was made to avoid legal costs and continued litigation.

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

In the most recent suit, which is largely 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 'unlawful sports betting business. '

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

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

'We have complete confidence in our compliance with all laws and regulations where we run, and stay confident about the future,' the spokesperson continued. 'We continue to use our free-to-play games across the majority of The United States and Canada, as we have for more than a years, creating not just great games, user experiences and entertainment, but also ensuring this is done safely, properly and at the greatest level of requirements.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are relatively common across the online social games industry (and the US more broadly), and our basic practice is that we mean to strongly protect any claim which might be brought versus us.'

The issues in between standard online gaming and sweepstakes casinos might show bothersome for some star endorsers.

Towns, a star center with the Knicks, and the 76ers' George both back VGW's Global Poker brand name while the NBA is partnered with standard gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking prohibited sports betting wagering 'sweeps' websites while at the exact same time the leagues wish to predict a strong position versus prohibited gaming - especially when trying to tamp down the periodic gaming scandal,' Glaser informed DailyMail.com.

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

Together with VGW, Apple and Google are being demanded hosting supposedly prohibited gambling sites

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

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

Neither an NBA spokesperson 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 ignored to react to DailyMail.com emails.

Asked if their celebrity endorsers have a duty to discuss to clients the differences and resemblances between iGaming and sweepstakes casinos, VGW insisted there is nothing more that requires to be done.

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

Glaser, an outspoken challenger of sweepstakes websites, sees things differently.
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'Celebrities who lend their names to dubious prohibited gaming sites are, at a minimum, putting their reputations at risk as well as courting civil and class actions by consumers who allege harm,' 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 gambling.'

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