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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 sports betting.
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No, they weren't personally in attendance, however the world-famous celebrities were notably consisted of in a slide discussion on social and sweepstakes casinos - the questionable sites providing both free casino-style games and lucrative 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 simply two cogs in the multibillion-dollar market that now finds itself besieged by suits. In the eyes of lots of video gaming corporations, not to discuss lawsuit plaintiffs and state regulators, sweepstakes casinos function as conventional casinos, only without the oversight, consumer protections and tax laws. So not only can they prevent the steep 24-percent federal sports betting levy, but sweepstakes operators aren't subject to regulative hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the business deals with allegations of unlawful gaming in a New york city suit that claims VGW uses celeb endorsers to 'develop a veneer of legitimacy' around its item. (See VGW's statement listed below)

'I'm uncertain" if you do not trust us, you can trust 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 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 between traditional sports betting and sweepstakes play.

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

Ryan Seacrest advises fans to play at Chumba Casino, where many - however not all - games are totally free

Drake has a handle social sweeps gambling establishment, Stake, that he regularly promotes on social networks

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

Others lure clients with guarantees of rewards. One such operator, Stake, ran a social media advertisement displaying Drake's automobiles, planes and estates before pivoting to footage of the rapper playing online casino-style games.

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

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

The inconsistency between sports betting websites and social or sweepstakes gambling is a bit complex, however 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), 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 casinos are playing for complimentary.

'Most social sweeps clients never ever purchase,' the SPGA representative told DailyMail.com. 'The minority of consumers who make purchases do so in amounts far smaller than the normal deposit or bet size at real-money online gambling websites.'

Social gambling establishments offer clients a possibility to play casino-style video games with pals. Players have the choice to purchase worthless currency frequently described as 'gold coins,' which can not be exchanged genuine cash, however can be used to unlock numerous features within the games.

But within the world of social casinos exists sweepstakes gaming, allowing clients to obtain other currency understood as '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. One player told the Washington Post he lost more than $100,000 on sweepstakes casinos in the past 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 event

Social sweeps casino Stake ran an ad flaunting Drake's vehicles, planes and mansions

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

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

Anyone over the age of 18 can access the sweepstakes sites, which do not need normally 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 submit mail-in ask for free sweeps coins, provided the players follow painfully specific instructions. What's more, gamers are typically rewarded with sweeps coins just for signing up, thereby providing a reason to attempt their hands at any variety of gambling establishment games for a chance to win - or lose - real cash.

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

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

'Social sweepstakes video games are merely 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 need to pay for an opportunity to win rewards. That absence of a purchase requirement - or" consideration" - is a vital difference between social sweeps and traditional online sports betting websites like casinos.'

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

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

'Sweepstakes are a long-standing technique for promoting all kinds of daily businesses in the United States, everything from burgers to magazine memberships to coffee and home improvement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are regularly utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For starters, video gaming lawyer Daniel Wallach mentions, McDonald's Monopoly video game doesn't run forever. Rather, it has a well-defined start and end, thereby suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote real products like french fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're usually not tied to casino-style video games of opportunity,' Wallach told DailyMail.com. 'They're simply money free gifts.
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'The sweepstakes [gambling establishments] possess none of the characteristics commonly connected with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments offer" casino-like" payouts, typically 80 percent or more of profits, whereas the normal payout percentage for a short-lived marketing sweepstakes is a trivial share of the profits earned by the business [generally less than one percent]'

Wallach is fast to compare the online social sweeps casinos to the web cafes that sprang up in Florida, using consumers the opportunity to play casino-style games for genuine rewards. Much of those brick-and-mortar establishments have considering that been shuttered over claims of unlawful sports betting.

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

Now, Wallach argues, social sweeps casinos must deal with similar examination.

'These differences are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have actually consistently been cited by courts and state attorney generals as essential consider determining that a sweepstakes promo remained in fact a guise for illegal gaming.'

Among the gambling establishment industry's leading trade companies, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, sometimes, enact new legislation on the issue.

'Consumers are being deprived of protections and states are passing up considerable tax and income chances as this sports betting replaces that performed through managed channels,' read a well-circulated AGA memo.

And then there are the plaintiffs who have taken legal action against social gambling establishments in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in four separate cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action suit, saying the settlement was made to prevent legal costs and continued litigation.

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

In the current suit, which is mainly similar to its predecessors, New York state locals Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is explained in the filing as an 'unlawful gaming business. '

Apple and Google have likewise been called as defendants in suits for hosting the sweepstakes sites. But unlike VGW, neither tech company responded to DailyMail.com's demand for comment.

'We usually don't discuss matters before the courts,' a VGW representative told DailyMail.com via e-mail. 'However, we note that this claim has only simply been submitted with the court and VGW has not been formally served.

'We have full self-confidence in our compliance with all laws and guidelines where we operate, and stay positive about the future,' the spokesperson continued. 'We continue to provide our free-to-play video games throughout the majority of North America, as we have for more than a years, developing not only excellent video games, user experiences and home entertainment, but also guaranteeing this is done safely, responsibly 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 games industry (and the US more broadly), and our standard practice is that we intend to intensely protect any claim which might be brought against us.'

The issues between standard online gambling 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 name while the NBA is partnered with traditional gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking unlawful sports betting wagering 'sweeps' websites while at the very same time the leagues want to project a strong stance against illegal gambling - specifically when attempting to tamp down the occasional sports betting scandal,' Glaser informed DailyMail.com.

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

Together with VGW, Apple and Google are being demanded hosting presumably illegal gambling websites

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

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

Neither an NBA spokesperson nor the players' representatives reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to respond to DailyMail.com e-mails.

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

'We have complete confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the spokesperson said. 'Some of our values are" our gamers come first" 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 dubious unlawful gaming websites are, at a minimum, putting their track records at threat as well as courting civil and class actions by consumers who allege harm,' Glaser stated. 'There is likewise some risk that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for assisting in unlawful sports betting.'

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