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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 prohibited gaming.
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No, they weren't personally in participation, but the world-famous celebrities were conspicuously included in a slide discussion on social and sweepstakes gambling establishments - the controversial sites offering both complimentary casino-style games and profitable prizes, such as money, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are just two cogs in the multibillion-dollar industry that now finds itself besieged by suits. In the eyes of lots of gaming corporations, not to discuss claim complainants and state regulators, sweepstakes gambling establishments function as conventional casinos, only without the oversight, customer securities and tax laws. So not just can they avoid the high 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 business faces allegations of illegal gaming in a New York suit that declares VGW uses celebrity endorsers to 'produce a veneer of legitimacy' 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 speaker, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers include a range of celebs from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions between conventional gaming and sweepstakes play.

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

Ryan Seacrest advises fans to dip into Chumba Casino, where lots of - but not all - video games are complimentary

Drake has a deal with social sweeps gambling establishment, Stake, that he routinely promotes on social networks

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Instead, ads typically focus around the social aspect of the casinos, while leaving out the capacity for actual gambling losses.

Others lure customers with guarantees of rewards. One such operator, Stake, ran a social networks advertisement displaying Drake's cars, airplanes and estates before rotating to footage of the rapper playing online casino-style video games.

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

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

The discrepancy in between sports betting websites 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 an industry 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 information, the majority of the players on social-sweepstakes casinos are playing for free.

'Most social sweeps clients never ever purchase,' the SPGA spokesperson told DailyMail.com. 'The minority of customers who make purchases do so in quantities far smaller than the typical deposit or wager size at real-money online gambling websites.'

Social gambling establishments offer clients an opportunity to play casino-style video games with friends. Players have the option to purchase valueless currency frequently referred to as 'gold coins,' which can not be exchanged genuine cash, however can be used to open various functions within the games.

But within the world of social gambling establishments exists sweepstakes gaming, permitting consumers to acquire other currency called 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the capacity for financial losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York City. One player 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 cash and other things of value.

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

Social sweeps casino Stake ran an advertisement displaying Drake's vehicles, airplanes and mansions

Karl-Anthony Towns of the New York Knicks is another NBA star plugging VGW's Global Poker
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Traditional online casinos are banned in all however seven states, which has actually helped to fuel the popularity of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes sites, which don't need generally need recognition. However, sites like Chumba will request IDs from players trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, enable consumers to send mail-in demands for complimentary sweeps coins, supplied the gamers follow painfully particular guidelines. What's more, gamers are frequently rewarded with sweeps coins simply for registering, thus providing a factor to attempt their hands at any number of casino games for a possibility to win - or lose - genuine money.

So why are sweepstakes websites to run in 48 states, while online casinos are banned in all but 7?

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

'Social sweepstakes video games are simply a form of online entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is required to play at social casinos with sweepstakes prizes. Consumers never ever need to pay for a chance to win prizes. That lack of a purchase requirement - or" consideration" - is an important difference between social sweeps and traditional online sports betting sites like casinos.'

Think about the method that McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and fries that provide them the opportunity to win rewarding prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'factor to consider', the video game itself doesn't satisfy the definition of gaming in the US.

'Sweepstakes are an enduring approach for promoting all type of daily companies in the United States, everything from burgers to magazine memberships to coffee and home enhancement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are frequently utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For beginners, gaming lawyer Daniel Wallach explains, McDonald's Monopoly game does not run indefinitely. Rather, it has a well-defined start and end, consequently recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote genuine items like french fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're typically not tied to casino-style video games of chance,' Wallach told DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [casinos] have none of the qualities commonly connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments use" casino-like" payments, normally 80 percent or more of earnings, whereas the normal payout portion for a short-lived promotional sweepstakes is a minor share of the earnings made by the company [generally less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the web coffee shops that sprang up in Florida, offering consumers the opportunity to play casino-style video games for genuine prizes. A lot of those brick-and-mortar facilities have since been shuttered over claims of unlawful sports betting.

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

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

'These differences are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been cited by courts and state attorney general of the United States as key consider identifying that a sweepstakes promotion remained in fact a guise for illegal gaming.'

One of the casino industry'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 concern.

'Consumers are being denied of securities and states are passing up substantial tax and revenue opportunities as this gaming changes that conducted through controlled channels,' read a well-circulated AGA memo.

And then there are the complainants who have actually taken legal action against social casinos in more than a lots states.

Sweepstakes casino operators paid a combined $14.2 million in four separate 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 lawsuits.

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

In the latest claim, which is largely comparable to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is described in the filing as an 'prohibited gaming business. '

Apple and Google have also been named as accuseds in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com's ask for comment.

'We normally do not discuss matters before the courts,' a VGW representative informed DailyMail.com by means of e-mail. 'However, we note that this claim has actually only simply been submitted with the court and VGW has actually not been officially served.

'We have complete self-confidence in our compliance with all laws and guidelines where we run, and remain confident about the future,' the spokesperson continued. 'We continue to use our free-to-play games throughout the majority of North America, as we have for more than a years, developing not just fantastic video games, user experiences and home entertainment, but also guaranteeing this is done safely, properly and at the greatest level of requirements.

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

The concerns between conventional online sports betting and sweepstakes gambling establishments could prove problematic for some celeb endorsers.

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

'It's ironic that professional athletes are hawking unlawful sports betting 'sweeps' sites while at the very same time the leagues want to project a strong position versus unlawful gambling - particularly when trying to tamp down the occasional gaming 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 claims he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes gambling establishments.

Along with VGW, Apple and Google are being sued for hosting apparently unlawful sports betting sites

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

'I 'd expect that a league crackdown on professional athletes endorsing sweepstakes sites 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 also overlooked to respond to DailyMail.com e-mails.

Asked if their celebrity endorsers have a responsibility to discuss to customers the distinctions and similarities in between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that needs to be done.

'We have full confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the representative stated. 'Some of our worths are" our players 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 sites, sees things differently.
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'Celebrities who lend their names to shady prohibited gambling websites are, at a minimum, putting their credibilities at threat in addition to courting civil and class actions by customers who allege harm,' Glaser said. 'There is likewise some danger that state regulators and state lawyers basic rope celeb endorsers into enforcement efforts for assisting in illegal gaming.'

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