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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 gambling.
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No, they weren't personally in attendance, however the world-famous celebrities were notably included in a slide presentation on social and sweepstakes casinos - the controversial sites providing both complimentary casino-style games and lucrative prizes, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are simply two cogs in the multibillion-dollar industry that now finds itself besieged by lawsuits. In the eyes of lots of gaming corporations, not to point out suit plaintiffs and state regulators, sweepstakes gambling establishments serve as traditional gambling establishments, only without the oversight, customer securities and tax laws. So not just can they avoid the high 24-percent federal gambling levy, but sweepstakes operators aren't subject to regulatory hurdles 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 deals with accusations of illegal 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 declaration below)

'I'm unsure" if you don't trust us, you can trust Paris Hilton" is a winning message for companies running multibillion-dollar illegal operations out of places 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 series of celebrities from sports betting 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 differences between traditional sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of many sweepstakes casinos discovered online

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

Drake has a handle social sweeps casino, Stake, that he frequently touts on social media

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Instead, ads generally center around the social aspect of the gambling establishments, while omitting the capacity for real gaming losses.

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

'Daddy, why do we have a lot money?' read the first caption on the screen.

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

The discrepancy in between gambling websites and social or sweepstakes casinos is a bit intricate, but operators of the latter insist they're not involved with the former.
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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 gamers on social-sweepstakes casinos are playing for free.

'Most social sweeps consumers never make a purchase,' the SPGA representative informed 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 gaming sites.'

Social casinos use consumers an opportunity to play casino-style games with friends. Players have the alternative to purchase valueless currency frequently described as 'gold coins,' which can not be exchanged genuine money, however can be used to open various features within the games.

But within the world of social gambling establishments exists sweepstakes gaming, permitting consumers to obtain 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 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 an International Poker occasion

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

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 seven states, which has assisted to sustain the appeal of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes websites, which don't require generally require recognition. However, sites like Chumba will request for IDs from gamers attempting to withdraw any funds.

Many sites, like the crypto-compatible Stake, permit consumers to send mail-in requests for totally free sweeps coins, offered the gamers follow painfully particular guidelines. What's more, players are frequently rewarded with sweeps coins just for signing up, consequently giving them a reason to attempt their hands at any variety of casino video games for an opportunity to win - or lose - genuine money.

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

According to the stakeholders, their item is the totally free casino-style gaming, and the real-stakes competition is just a method of promoting their bread and butter.

'Social sweepstakes games are merely a kind of online home entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is needed to play at social casinos with sweepstakes rewards. Consumers never ever need to pay for a chance to win rewards. That lack of a purchase requirement - or" factor to consider" - is a crucial difference between social sweeps and conventional online gambling websites like casinos.'

Consider the way that McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're buying hamburgers and fries that use them the chance to win profitable rewards, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the game itself does not meet the definition of gambling in the US.
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'Sweepstakes are an enduring method for promoting all kinds of daily services in the United States, everything from burgers to publication memberships to coffee and home enhancement shops,' the SPGA spokesperson told 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 gambling market insiders, that argument doesn't cut it.

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

'They do not last forever and they're typically not tied to casino-style games of opportunity,' Wallach told DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [casinos] have none of the attributes commonly connected with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments offer" casino-like" payments, usually 80 percent or more of earnings, whereas the common payment portion for a momentary marketing sweepstakes is an insignificant share of the revenue earned by the company [typically less than one percent]'

Wallach is fast to compare the online social sweeps casinos to the web coffee shops that emerged in Florida, using clients the opportunity to play casino-style games for genuine rewards. A number of those brick-and-mortar establishments have because been shuttered over allegations of unlawful gaming.

DJ Khaled is amongst numerous celebrity spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps gambling establishments need to deal with similar analysis.

'These differences are not approximate,' Wallach said of social sweeps casinos. 'They have actually consistently been cited by courts and state chief law officer as essential elements in identifying that a sweepstakes promotion remained in reality a guise for prohibited sports betting.'

Among 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 issue.

'Consumers are being denied of protections and states are forgoing substantial tax and profits opportunities as this gaming changes that carried out through regulated channels,' checked out a well-circulated AGA memo.

And then there are the complainants who have actually 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 accepted pay $11.75 million in one class-action claim, stating the settlement was made to avoid legal expenses and continued litigation.

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

Apple and Google have actually likewise been named as accuseds in suits for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com's request for remark.

'We generally do not comment on matters before the courts,' a VGW spokesperson told DailyMail.com via e-mail. 'However, we keep in mind that this claim has only just been filed with the court and VGW has actually not been formally served.

'We have complete confidence in our compliance with all laws and guidelines where we run, and stay confident about the future,' the spokesperson continued. 'We continue to provide our free-to-play games throughout most of The United States and Canada, as we have for more than a decade, creating not just excellent games, user experiences and entertainment, however likewise ensuring this is done securely, properly and at the highest level of requirements.

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

The issues between traditional online sports betting and sweepstakes casinos might show bothersome 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 paradoxical that expert athletes are hawking illegal sports betting wagering 'sweeps' sites while at the same time the leagues wish to a strong stance against illegal sports betting - specifically when trying to tamp down the occasional 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 allegations he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes gambling establishments.

In addition to VGW, Apple and Google are being taken legal action against for hosting apparently illegal gambling sites

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

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

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

Asked if their celebrity endorsers have a responsibility to describe to consumers the distinctions and similarities between iGaming and sweepstakes casinos, VGW firmly insisted there is absolutely nothing more that requires to be done.

'We have full self-confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the spokesperson said. 'A few of our worths 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 sites, sees things differently.
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'Celebrities who lend their names to dubious prohibited gaming sites are, at a minimum, putting their credibilities at risk as well as courting civil and class actions by customers who declare damage,' Glaser said. 'There is also some danger that state regulators and state lawyers basic rope celebrity endorsers into enforcement efforts for facilitating illegal sports betting.'

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