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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 unlawful sports betting.

No, they weren't personally in attendance, but the world-famous celebs were notably consisted of in a slide discussion on social and sweepstakes casinos - the controversial sites offering both totally free casino-style video games and financially rewarding rewards, such as money, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The websites are simply 2 cogs in the multibillion-dollar market that now discovers itself besieged by suits. In the eyes of numerous gaming corporations, not to point out claim complainants and state regulators, sweepstakes gambling establishments serve as standard casinos, just without the oversight, consumer defenses and tax laws. So not just can they prevent the high 24-percent federal sports betting levy, but sweepstakes operators aren't based on regulatory hurdles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the company deals with allegations of illegal gaming in a New york city suit that claims VGW utilizes star endorsers to 'produce a veneer of legitimacy' around its item. (See VGW's statement listed below)

'I'm uncertain" if you don't trust us, you can rely on Paris Hilton" is a winning message for business running multibillion-dollar prohibited operations out of places like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.

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

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

Ryan Seacrest advises fans to play at Chumba Casino, where numerous - however not all - games are free
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Drake has an offer with social sweeps gambling establishment, Stake, that he routinely touts on social networks

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Instead, advertisements usually focus around the social aspect of the gambling establishments, while omitting the capacity for actual gaming losses.

Others tempt consumers with promises of prizes. One such operator, Stake, ran a social networks advertisement displaying Drake's cars and trucks, planes and mansions before rotating to video footage of the rap artist playing online casino-style video games.

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

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

The discrepancy in between sports betting websites and social or sweepstakes gambling establishments is a bit intricate, but operators of the latter insist they're not included with the previous.

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA data, many of the gamers on social-sweepstakes gambling establishments are sports betting complimentary.

'Most social sweeps clients never buy,' 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 websites.'

Social gambling establishments offer clients a possibility to play casino-style games with pals. Players have the choice to buy valueless currency typically referred to as 'gold coins,' which can not be exchanged for real cash, but can be utilized to unlock different functions within the video games.

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

And therein lies the capacity for monetary losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York. One gamer told the Washington Post he lost more than $100,000 on sweepstakes casinos in the past year after continuing to purchase more coins in pursuit of cash and other things of value.

The Philadelphia 76ers' Paul George is seen promoting a Worldwide Poker event
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Social sweeps casino Stake ran an ad showing off Drake's automobiles, airplanes and mansions

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

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

Anyone over the age of 18 can access the sweepstakes websites, which do not need normally need identification. However, sites like Chumba will ask for IDs from gamers attempting to withdraw any funds.

Many sites, like the crypto-compatible Stake, allow customers to send mail-in requests for free sweeps coins, provided the players follow painfully particular instructions. What's more, players are typically rewarded with sweeps coins just for signing up, consequently giving them a reason to attempt their hands at any number of gambling establishment games for a chance to win - or lose - real money.
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So why are sweepstakes websites enabled to operate in 48 states, while online casinos are prohibited in all however 7?

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

'Social sweepstakes games are simply a kind of online entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is needed to dip into social casinos with sweepstakes prizes. Consumers never need to spend for a chance to win rewards. That absence of a purchase requirement - or" factor to consider" - is an important distinction between social sweeps and traditional online sports betting websites like gambling establishments.'

Think about the manner in which McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and fries that use them the possibility to win lucrative prizes, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the video game itself does not satisfy the meaning of gaming in the US.

'Sweepstakes are an enduring technique for promoting all sort of daily services in the United States, everything from burgers to magazine subscriptions to coffee and home enhancement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are frequently used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of gambling market experts, that argument doesn't cut it.

For starters, gaming attorney Daniel Wallach explains, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a distinct beginning and end, therefore suggesting the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being utilized to promote real items like french fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're normally not connected to casino-style games of chance,' Wallach informed DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [casinos] have none of the qualities frequently connected with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments offer" casino-like" payouts, usually 80 percent or more of revenues, whereas the normal payment portion for a temporary advertising sweepstakes is a trivial share of the revenue made by the business [normally less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the that sprang up in Florida, using consumers the opportunity to play casino-style video games for genuine prizes. A lot of those brick-and-mortar facilities have because been shuttered over accusations of unlawful gambling.

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

Now, Wallach argues, social sweeps casinos should face similar scrutiny.

'These differences are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have consistently been pointed out by courts and state lawyer generals as key consider figuring out that a sweepstakes promo remained in truth a guise for illegal sports betting.'

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

'Consumers are being deprived of protections and states are forgoing significant tax and profits chances as this gaming replaces that performed through regulated 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 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 consented to pay $11.75 million in one class-action claim, stating the settlement was made to prevent legal costs and continued litigation.

Michael Phelps has signed a handle the VGW Group, which owns Global Poker

In the current suit, which is largely comparable to its predecessors, New york city state homeowners 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 business. '

Apple and Google have actually also been called as offenders in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech company responded to DailyMail.com's ask for remark.

'We typically don't comment on matters before the courts,' a VGW spokesperson told DailyMail.com through e-mail. 'However, we note that this claim has only simply been filed with the court and VGW has actually not been officially served.

'We have complete confidence in our compliance with all laws and regulations where we operate, and remain positive about the future,' the representative continued. 'We continue to use our free-to-play video games throughout the majority of North America, as we have for more than a decade, producing not only excellent video games, user experiences and entertainment, but also guaranteeing this is done safely, responsibly and at the highest level of requirements.

'More broadly, we 'd restate that class actions and other litigations and arbitrations are reasonably common across the online social games industry (and the US more broadly), and our standard practice is that we intend to vigorously protect any claim which may be brought against us.'

The concerns between conventional online sports betting and sweepstakes gambling establishments might prove 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 ironic that professional athletes are hawking prohibited sports betting wagering 'sweeps' websites while at the exact same time the leagues want to forecast a strong position versus illegal sports betting - specifically when attempting to tamp down the occasional sports betting scandal,' Glaser told DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter got a lifetime 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 gambling establishments.

Along with VGW, Apple and Google are being demanded hosting presumably unlawful gambling sites

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

'I 'd expect that a league crackdown on athletes endorsing sweepstakes websites refers when, not if,' Glaser added.

Neither an NBA representative nor the players' representatives reacted to DailyMail.com's demands for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise disregarded to react to DailyMail.com e-mails.

Asked if their celeb endorsers have an obligation to describe to clients the distinctions and similarities between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that requires to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the representative stated. 'Some of our worths are" our gamers come initially" and" we do what's right", and we put our values at the core of whatever we do.'

Glaser, an outspoken challenger of sweepstakes websites, sees things differently.

'Celebrities who lend their names to dubious unlawful sports betting sites are, at a minimum, putting their track records at risk as well as courting civil and class actions by customers who allege damage,' Glaser said. 'There is also some danger that state regulators and state chief law officers rope celebrity endorsers into enforcement efforts for facilitating unlawful gaming.'

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