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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 illegal gambling.

No, they weren't personally in participation, however the world-famous celebs were notably included in a slide presentation on social and sweepstakes gambling establishments - the questionable sites offering both free casino-style 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 '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 2 cogs in the multibillion-dollar industry that now discovers itself besieged by lawsuits. In the eyes of lots of video gaming corporations, not to mention suit plaintiffs and state regulators, sweepstakes gambling establishments function as standard 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 based on regulative hurdles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the company deals with accusations of unlawful gaming in a New york city lawsuit that claims VGW utilizes celeb endorsers to 'develop a veneer of authenticity' around its item. (See VGW's declaration below)

'I'm not sure" if you do not trust us, you can rely on Paris Hilton" is a winning message for business running 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, told DailyMail.com.

Sweepstakes endorsers include a variety of celebrities from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions in between standard sports betting and sweepstakes play.

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

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

Drake has a deal with social sweeps casino, Stake, that he routinely touts on social media

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Instead, advertisements usually center around the social element of the gambling establishments, while omitting the capacity for real sports betting losses.

Others tempt clients with guarantees of rewards. One such operator, Stake, ran a social networks ad revealing off Drake's vehicles, planes and mansions before rotating to video footage of the rapper playing online casino-style video games.

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

Another caption described: 'Because I never quit.'

The disparity between gambling websites and social or sweepstakes casinos is a bit complex, however operators of the latter insist they're not involved with the former.

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

'Most social sweeps customers never ever buy,' the SPGA representative informed DailyMail.com. 'The minority of clients who make purchases do so in quantities far smaller sized than the common deposit or bet size at real-money online gambling websites.'

Social casinos offer consumers a possibility to play casino-style games with buddies. Players have the alternative to purchase worthless currency typically referred to as 'gold coins,' which can not be exchanged genuine cash, however can be utilized to open different functions within the video games.

But within the world of social casinos exists sweepstakes gaming, permitting clients to acquire other currency called 'sweeps coins' that can be exchanged for cash or other prizes.

And therein lies the potential 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 worth.

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

Social sweeps casino Stake ran an ad flaunting 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 casinos are prohibited in all however 7 states, which has actually helped to sustain the popularity of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, permit clients to send mail-in demands for complimentary sweeps coins, supplied the gamers follow painfully particular guidelines. What's more, gamers are often rewarded with sweeps coins merely for registering, thereby giving them a factor to try their hands at any number of casino video games for an opportunity to win - or lose - real cash.

So why are sweepstakes sites allowed to operate in 48 states, while online gambling establishments are banned in all however 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 bread and butter.

'Social sweepstakes games are just a kind of online entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is required to play at social casinos with sweepstakes rewards. Consumers never ever have to pay for a chance to win rewards. That absence of a purchase requirement - or" factor to consider" - is a crucial difference between social sweeps and conventional online sports betting sites like gambling establishments.'

Think of the method that McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're buying hamburgers and fries that offer them the possibility to win financially rewarding prizes, such as a $1 million prize.

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

'Sweepstakes are a long-standing method for promoting all sort of everyday organizations in the United States, whatever from burgers to magazine memberships to coffee and home improvement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are regularly utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous sports betting market experts, that argument doesn't cut it.

For starters, gaming lawyer Daniel Wallach explains, McDonald's Monopoly video game does not run forever. 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 used to promote genuine items like french fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're usually not tied to casino-style video games of opportunity,' Wallach informed DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [gambling establishments] have none of the qualities commonly associated with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos use" casino-like" payouts, typically 80 percent or more of revenues, whereas the typical payment percentage for a short-lived marketing sweepstakes is a minor share of the earnings earned by the business [usually less than one percent]'

Wallach is quick to liken the online social sweeps casinos to the web cafes that emerged in Florida, offering consumers the opportunity to play casino-style video games for real rewards. A number of those brick-and-mortar establishments have since been shuttered over claims of illegal gambling.

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

Now, Wallach argues, social sweeps casinos must face comparable examination.

'These differences are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have repeatedly been cited by courts and state attorney general of the United States as key elements in identifying that a sweepstakes promotion was in truth a guise for prohibited gambling.'

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

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

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

Sweepstakes casino operators paid a combined $14.2 million in 4 separate cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action suit, stating the settlement was made to avoid legal expenses and continued litigation.

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

In the most current lawsuit, which is mainly similar to its predecessors, New york city state locals Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is described in the filing as an 'illegal sports betting business. '

Apple and Google have actually also been named as offenders in suits for hosting the sweepstakes websites. But unlike VGW, neither tech business responded to DailyMail.com's ask for remark.

'We usually don't discuss matters before the courts,' a VGW representative informed DailyMail.com by means of email. 'However, we note that this claim has actually 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 run, and stay confident about the future,' the representative continued. 'We continue to use our free-to-play video games throughout many of The United States and Canada, as we have for more than a years, producing not just terrific video games, user experiences and entertainment, however likewise ensuring this is done safely, responsibly and at the highest level of requirements.

'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are reasonably typical across the online social games industry (and the US more broadly), and our standard practice is that we plan to vigorously defend any claim which may be brought versus us.'

The issues between traditional online sports betting and sweepstakes gambling establishments might show problematic for some star 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 standard video gaming titans like FanDuel and DraftKings.

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

It was simply 8 months ago that Toronto Raptors forward Jontay Porter got a life time restriction from the NBA over allegations he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes casinos.

In addition to VGW, Apple and Google are being demanded hosting allegedly unlawful sports betting sites

Regardless, Glaser sees sweepstakes gambling establishments as a significant problem 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 spokesperson nor the gamers' representatives 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 an obligation to describe to clients the differences and resemblances in between iGaming and sweepstakes casinos, VGW insisted there is nothing more that requires to be done.

'We have full self-confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the spokesperson stated. 'A few of our worths are" our players come first" and" we do what's right", and we put our values at the core of everything we do.'

Glaser, an outspoken challenger of sweepstakes sites, sees things differently.
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'Celebrities who provide their names to gaming websites are, at a minimum, putting their track records at danger in addition to courting civil and class actions by customers who allege damage,' Glaser said. 'There is likewise some danger that state regulators and state chief law officers rope celeb endorsers into enforcement efforts for facilitating prohibited sports betting.'

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