The smiling faces of Paris Hilton and Ryan Seacrest made surprise looks before the Louisiana Senate for Friday's hearing on unlawful gambling.
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No, they weren't personally in presence, but the world-famous celebrities were notably consisted of in a slide discussion on social and sweepstakes casinos - the controversial sites using both complimentary casino-style video 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 complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are just two cogs in the multibillion-dollar market that now discovers itself besieged by lawsuits. In the eyes of lots of gaming corporations, not to point out lawsuit complainants and state regulators, sweepstakes gambling establishments act as traditional casinos, only without the oversight, consumer protections and tax laws. So not only can they prevent the high 24-percent federal sports betting levy, however sweepstakes operators aren't subject to regulatory obstacles 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 accusations of unlawful gambling in a New York claim that declares VGW uses star endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's statement listed below)

'I'm unsure" 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 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 variety of celebrities 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 offer any distinctions in between standard sports betting and sweepstakes play.
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Paris Hilton is seen plugging Wow Vegas, among many sweepstakes gambling establishments discovered online

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

Drake has an offer with social sweeps casino, Stake, that he frequently touts on social networks

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Instead, ads generally center around the social element of the gambling establishments, while omitting the potential for actual gaming losses.

Others tempt clients with guarantees of prizes. One such operator, Stake, ran a social networks advertisement displaying Drake's vehicles, aircrafts and estates before pivoting to video footage of the rap artist playing online casino-style games.

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

Another caption described: 'Because I never provided up.'

The inconsistency between gambling sites and social or sweepstakes casinos is a bit intricate, but operators of the latter insist they're not involved with the previous.

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA data, many of the players on social-sweepstakes gambling establishments are playing for totally free.

'Most social sweeps customers never ever purchase,' the SPGA representative told DailyMail.com. 'The minority of consumers who make purchases do so in quantities far smaller than the common deposit or wager size at real-money online gaming sites.'

Social casinos offer clients a possibility to play casino-style games with friends. Players have the option to purchase valueless currency frequently described as 'gold coins,' which can not be exchanged for real cash, however can be used to unlock different features within the video games.

But within the world of social gambling establishments exists sweepstakes gaming, enabling consumers to obtain other currency referred to as 'sweeps coins' that can be exchanged for cash or other prizes.

And therein lies the capacity for monetary losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York City. One player told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments 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 an International Poker event

Social sweeps casino Stake ran an advertisement displaying Drake's cars, aircrafts 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 seven states, which has actually assisted to fuel the popularity of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, enable customers to send mail-in requests for free sweeps coins, supplied the gamers follow painfully particular directions. What's more, players are often rewarded with sweeps coins just for signing up, thereby providing a factor to attempt their hands at any variety of casino games for a possibility to win - or lose - real cash.

So why are sweepstakes sites enabled to run in 48 states, while online gambling establishments are banned in all however 7?

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

'Social sweepstakes games are just a kind of online home entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is required to play at social casinos with sweepstakes rewards. Consumers never ever have to pay for an opportunity to win rewards. That lack of a purchase requirement - or" consideration" - is a vital difference between social sweeps and conventional online sports betting websites like casinos.'

Consider the method that McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and french fries that provide them the chance to win financially rewarding prizes, such as a $1 million prize.

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

'Sweepstakes are an enduring technique for promoting all type of daily services in the United States, whatever from burgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are routinely used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

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

'They do not last forever and they're generally not connected to casino-style games of chance,' Wallach told DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [casinos] have none of the characteristics frequently connected with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments provide" casino-like" payments, generally 80 percent or more of profits, whereas the typical payout portion for a short-term advertising sweepstakes is a trivial share of the revenue earned by the business [usually less than one percent]'

Wallach is quick to compare the online social sweeps casinos to the web cafes that emerged in Florida, using consumers the chance to play casino-style video games for genuine prizes. A number of those brick-and-mortar facilities have given that been shuttered over claims of unlawful gambling.

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

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

'These differences are not approximate,' Wallach stated of social sweeps casinos. 'They have consistently been cited by courts and state lawyer generals as essential consider figuring out that a sweepstakes promotion was in reality a guise for illegal gaming.'

Among the gambling establishment market's leading trade companies, the American Gaming Association, is now pressing lawmakers to investigate sweepstakes operators and, sometimes, enact brand-new legislation on the issue.

'Consumers are being denied of and states are passing up significant tax and income chances as this gaming changes that carried out through managed channels,' checked out a well-circulated AGA memo.

And then there are the plaintiffs who have actually sued social casinos in more than a lots states.

Sweepstakes casino operators paid a combined $14.2 million in four separate cases in Kentucky without confessing any misbehavior, 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 lawsuits.

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

In the newest claim, which is mainly similar to its predecessors, New york city state locals Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is described in the filing as an 'prohibited gaming enterprise. '

Apple and Google have likewise been called as defendants in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's demand for remark.

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

'We have full confidence in our compliance with all laws and policies where we operate, and remain confident about the future,' the spokesperson continued. 'We continue to offer our free-to-play video games throughout the majority of North America, as we have for more than a decade, developing not only fantastic video games, user experiences and entertainment, however likewise guaranteeing this is done safely, responsibly and at the greatest level of standards.
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'More broadly, we 'd restate that class actions and other litigations and arbitrations are fairly common throughout the online social video games industry (and the US more broadly), and our standard practice is that we intend to vigorously safeguard any claim which may be brought against us.'

The concerns in between standard online sports betting and sweepstakes gambling establishments could show troublesome 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 illegal sports betting 'sweeps' websites while at the very same time the leagues wish to predict a strong position against prohibited sports betting - particularly when trying to tamp down the periodic gaming scandal,' Glaser told DailyMail.com.

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

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

Regardless, Glaser sees sweepstakes casinos as a significant issue for leagues such as the NBA.
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'I 'd anticipate that a league crackdown on professional athletes endorsing sweepstakes sites refers when, not if,' Glaser included.

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

Asked if their celebrity endorsers have a duty to discuss to customers the differences and similarities in between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that requires to be done.

'We have full self-confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the spokesperson said. 'A few of our worths are" our gamers come initially" 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.
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'Celebrities who lend their names to shady unlawful sports betting websites are, at a minimum, putting their track records at risk along with courting civil and class actions by customers who allege damage,' Glaser stated. 'There is also some risk that state regulators and state attorneys basic rope celeb endorsers into enforcement efforts for facilitating illegal gambling.'

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