The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on prohibited gambling.
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No, they weren't personally in participation, but the world-famous stars were conspicuously included in a slide discussion on social and sweepstakes casinos - the controversial sites providing both free casino-style games and profitable rewards, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The websites are just two cogs in the multibillion-dollar market that now finds itself besieged by suits. In the eyes of numerous video gaming corporations, not to point out lawsuit plaintiffs and state regulators, sweepstakes gambling establishments function as standard gambling establishments, just without the oversight, customer defenses and tax laws. So not just can they prevent the steep 24-percent federal sports betting levy, however sweepstakes operators aren't subject to regulatory hurdles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the company deals with allegations of prohibited sports betting in a New york city lawsuit that claims VGW uses star endorsers to 'create a veneer of legitimacy' around its product. (See VGW's declaration listed below)

'I'm uncertain" if you do not trust us, you can rely on Paris Hilton" is a winning message for business operating multibillion-dollar prohibited 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 consist of a variety of stars from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions in between standard gaming and sweepstakes play.

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

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

Drake has a handle social sweeps gambling establishment, Stake, that he routinely touts on social media

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

Others tempt consumers with pledges of prizes. One such operator, Stake, ran a social networks ad flaunting Drake's cars, planes and mansions before pivoting to footage of the rapper playing online casino-style video games.

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

Another caption discussed: 'Because I never ever quit.'

The disparity between gaming websites and social or sweepstakes casinos is a bit complicated, but 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), described its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA information, most of the players on social-sweepstakes gambling establishments are sports betting free.

'Most social sweeps clients never purchase,' the SPGA spokesperson informed DailyMail.com. 'The minority of consumers 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 customers a chance to play casino-style games with buddies. Players have the choice to purchase worthless currency often described as 'gold coins,' which can not be exchanged genuine cash, but can be used to open different features within the games.

But within the world of social casinos exists sweepstakes gaming, allowing customers to get other currency called 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the potential for monetary losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York. One gamer 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 Worldwide Poker occasion

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake's automobiles, planes and mansions

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

Traditional online gambling establishments are banned in all but 7 states, which has helped to sustain the appeal of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, enable clients to send mail-in ask for complimentary sweeps coins, supplied the gamers follow painfully specific directions. What's more, gamers are frequently rewarded with sweeps coins just for signing up, consequently providing a factor to attempt their hands at any number of casino video games for a possibility to win - or lose - genuine money.

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

According to the stakeholders, their item is the free casino-style video gaming, and the real-stakes competitors is simply a way of promoting their bread and butter.

'Social sweepstakes video games are merely a type of online home 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 have to spend for a chance to win prizes. That absence of a purchase requirement - or" factor to consider" - is an essential distinction in between social sweeps and standard online gambling websites like gambling establishments.'

Consider the manner in which McDonald's utilizes its annual Monopoly game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and french fries that provide them the chance to win rewarding prizes, such as a $1 million jackpot.

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

'Sweepstakes are an enduring approach for promoting all sort of everyday businesses in the United States, whatever from hamburgers to publication memberships to coffee and home improvement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are routinely utilized by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous sports betting industry insiders, that argument does not cut it.

For beginners, video gaming attorney Daniel Wallach points out, McDonald's Monopoly video game does not run forever. Rather, it has a well-defined beginning and end, consequently suggesting the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being used to promote real products like fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're usually not connected to casino-style games of chance,' Wallach told DailyMail.com. 'They're just cash free gifts.

'The sweepstakes [casinos] possess none of the qualities typically associated with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos offer" casino-like" payouts, normally 80 percent or more of incomes, whereas the common payment percentage for a short-term marketing sweepstakes is an unimportant share of the earnings earned by the company [typically less than one percent]'

Wallach is fast to liken the online social sweeps casinos to the web cafes that sprang up in Florida, using clients the opportunity to play casino-style games for real rewards. A lot of those brick-and-mortar establishments have actually given that been shuttered over accusations of unlawful sports betting.

DJ Khaled is amongst several celeb spokespeople for VGW's Global Poker brand

Now, Wallach argues, social sweeps gambling establishments must face comparable analysis.

'These distinctions are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have actually repeatedly been mentioned by courts and state lawyer generals as key factors in figuring out that a sweepstakes promotion was in truth a guise for unlawful sports betting.'

One of the casino market's leading trade organizations, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, sometimes, enact new legislation on the issue.

'Consumers are being denied of protections and states are passing up significant tax and income opportunities as this sports betting changes that carried out through regulated channels,' checked out a well-circulated AGA memo.

And then there are the plaintiffs 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 4 different cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW accepted 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 latest claim, which is mainly comparable to its predecessors, New York state residents Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is explained in the filing as an 'unlawful gaming enterprise. '

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

'We normally do not talk about matters before the courts,' a VGW spokesperson informed DailyMail.com by means of email. 'However, we note that this claim has only just been submitted with the court and VGW has actually not been officially served.

'We have complete confidence in our compliance with all laws and guidelines where we run, and stay positive about the future,' the spokesperson continued. 'We continue to use our free-to-play video games throughout most of North America, as we have for more than a decade, developing not only great video games, user experiences and entertainment, however likewise ensuring this is done securely, properly and at the greatest level of requirements.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are reasonably common throughout the online social video games industry (and the US more broadly), and our basic practice is that we mean to vigorously defend any claim which might be brought against us.'

The issues between traditional online gaming and sweepstakes casinos could show problematic for some celeb 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 traditional gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking prohibited sports betting wagering 'sweeps' websites while at the same time the leagues desire to predict a strong position against illegal gambling - specifically when attempting to tamp down the occasional sports betting scandal,' Glaser informed DailyMail.com.

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

In addition to VGW, Apple and Google are being demanded hosting presumably unlawful gambling websites

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

'I 'd expect that a league crackdown on professional athletes backing sweepstakes websites is a matter of when, not if,' Glaser included.

Neither an NBA spokesperson nor the gamers' agents reacted to DailyMail.com's ask for remark. For that matter, for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise ignored to react to DailyMail.com e-mails.

Asked if their celeb endorsers have a responsibility to describe to customers the differences and similarities between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that needs to be done.

'We have full confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the representative stated. '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 differently.

'Celebrities who lend their names to shady unlawful gaming sites are, at a minimum, putting their credibilities at threat along with courting civil and class actions by customers who declare damage,' Glaser said. 'There is likewise some threat that state regulators and state chief law officers rope celeb endorsers into enforcement efforts for facilitating prohibited gambling.'

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