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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.

No, they weren't personally in presence, however the world-famous stars were conspicuously included in a slide discussion on social and sweepstakes gambling establishments - the controversial websites providing both free 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 '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 simply two cogs in the multibillion-dollar industry that now discovers itself besieged by claims. In the eyes of many video gaming corporations, not to discuss claim complainants and state regulators, sweepstakes gambling establishments serve as traditional casinos, only without the oversight, consumer securities and tax laws. So not just can they prevent the steep 24-percent federal gambling levy, but sweepstakes operators aren't subject to regulative 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 company deals with allegations of unlawful gambling in a New york city claim that claims VGW uses celeb endorsers to 'create a veneer of authenticity' around its item. (See VGW's statement listed below)

'I'm not sure" 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 presenter, Howard Glaser of video gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers include a variety of celebs from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions in between standard sports betting and sweepstakes play.

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

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

Drake has an offer with social sweeps gambling establishment, Stake, that he frequently promotes on social networks

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Instead, advertisements usually center around the social aspect of the casinos, while omitting the capacity for real gambling losses.

Others lure clients with guarantees of rewards. One such operator, Stake, ran a social media ad flaunting Drake's cars and trucks, airplanes and estates before pivoting to footage of the rap artist playing online casino-style video games.

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

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

The disparity in between gaming sites and social or sweepstakes casinos is a bit complicated, but operators of the latter insist they're not involved with the previous.

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 data, the majority of the gamers on social-sweepstakes casinos are sports betting free.

'Most social sweeps clients never buy,' the SPGA representative told DailyMail.com. 'The minority of consumers who make purchases do so in quantities far smaller sized than the normal deposit or bet size at real-money online gaming sites.'

Social casinos use customers an opportunity to play casino-style video games with pals. Players have the choice to purchase valueless currency frequently referred to as 'gold coins,' which can not be exchanged genuine money, but 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 called 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the potential for financial 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 buy more coins in pursuit of money and other things of value.

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

Social sweeps casino Stake ran an ad revealing off Drake's vehicles, 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 banned in all however 7 states, which has actually helped to fuel the appeal of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, enable customers to send mail-in requests for complimentary sweeps coins, provided the gamers follow painfully particular directions. What's more, gamers are often rewarded with sweeps coins simply for registering, thereby providing a reason to try their hands at any number of gambling establishment video games for a chance to win - or lose - genuine cash.

So why are sweepstakes websites enabled to operate in 48 states, while online casinos are banned in all however 7?

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

'Social sweepstakes video games are just a kind of online home entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is needed to dip into social casinos with sweepstakes rewards. Consumers never have to spend for a chance to win prizes. That absence of a purchase requirement - or" consideration" - is an important difference between social sweeps and conventional online gaming websites like gambling establishments.'

Think of the method that McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're buying hamburgers and fries that provide them the opportunity to win profitable prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'factor to consider', the video game itself does not meet the definition of gaming in the US.

'Sweepstakes are an enduring technique for promoting all kinds of everyday services in the United States, everything from hamburgers to publication subscriptions to coffee and home improvement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are routinely utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting market experts, that argument does not cut it.

For starters, video gaming lawyer Daniel Wallach explains, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a distinct start and end, thus recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to products like french fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're usually not connected to casino-style games of chance,' Wallach informed DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [gambling establishments] have none of the attributes commonly associated with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos offer" casino-like" payments, normally 80 percent or more of earnings, whereas the normal payout percentage for a temporary promotional sweepstakes is a minor share of the profits made by the business [normally less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the internet cafes that emerged in Florida, using customers the chance to play casino-style video games for real prizes. Much of those brick-and-mortar facilities have actually because been shuttered over accusations of unlawful gaming.

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

Now, Wallach argues, social sweeps casinos need to face comparable analysis.

'These differences are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have repeatedly been mentioned by courts and state attorney general of the United States as key consider identifying that a sweepstakes promotion remained in reality a guise for unlawful sports betting.'

One of the gambling establishment market's leading trade companies, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, in some cases, enact new legislation on the problem.

'Consumers are being deprived of defenses and states are passing up significant tax and revenue chances as this sports betting replaces that conducted through controlled channels,' checked out a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action claim, stating the settlement was made to prevent legal expenses and continued lawsuits.

Michael Phelps has signed a handle the VGW Group, which owns Global Poker
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In the most recent suit, which is mostly similar to its predecessors, New York state citizens Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'illegal gambling business. '

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

'We generally don't comment on matters before the courts,' a VGW representative informed DailyMail.com through e-mail. 'However, we note that this claim has only just been submitted with the court and VGW has not been officially served.

'We have full confidence in our compliance with all laws and regulations where we operate, and stay positive about the future,' the spokesperson continued. 'We continue to use our free-to-play games across the majority of North America, as we have for more than a years, producing not only fantastic games, user experiences and home entertainment, but also guaranteeing this is done securely, properly and at the greatest level of requirements.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are reasonably common throughout the online social games market (and the US more broadly), and our standard practice is that we plan to intensely defend any claim which might be brought versus us.'

The problems in between conventional online sports betting and sweepstakes casinos could prove bothersome 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 standard gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking illegal sports betting 'sweeps' websites while at the exact same time the leagues wish to project a strong stance versus prohibited gaming - particularly 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 got a life time 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 prohibited sports betting sites

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

'I 'd expect that a league crackdown on professional athletes endorsing sweepstakes sites is a matter of when, not if,' Glaser added.

Neither an NBA spokesperson nor the gamers' agents reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also disregarded to react to DailyMail.com emails.

Asked if their star endorsers have a duty to describe to consumers the differences and similarities in between iGaming and sweepstakes casinos, VGW firmly insisted there is absolutely nothing more that needs to be done.

'We have full self-confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the spokesperson said. 'A few of our values 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 in a different way.

'Celebrities who provide their names to shady illegal gaming websites are, at a minimum, putting their reputations at risk along with courting civil and class actions by consumers who allege harm,' Glaser stated. 'There is likewise some risk that state regulators and state attorneys basic rope celebrity endorsers into enforcement efforts for facilitating unlawful sports betting.'

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