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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.

No, they weren't personally in participation, however the world-famous celebrities were notably consisted of in a slide discussion on social and sweepstakes casinos - the controversial websites offering both free casino-style video games and financially rewarding prizes, such as money, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for totally free,' 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 market that now finds itself besieged by claims. In the eyes of many gaming corporations, not to discuss claim plaintiffs and state regulators, sweepstakes gambling establishments act as traditional casinos, only without the oversight, customer securities and tax laws. So not only can they avoid the steep 24-percent federal sports betting levy, but sweepstakes operators aren't subject to regulative difficulties like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits last year alone. Now the business faces accusations of unlawful gaming in a New york city lawsuit that declares VGW utilizes star endorsers to 'produce a veneer of authenticity' around its product. (See VGW's declaration listed below)

'I'm unsure" if you don't trust us, you can trust 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 video gaming corporation Light & Wonder, told DailyMail.com.

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

Paris Hilton is seen plugging Wow Vegas, among numerous sweepstakes gambling establishments found online

Ryan Seacrest prompts fans to play at Chumba Casino, where many - but not all - video games are complimentary

Drake has a handle social sweeps gambling establishment, Stake, that he frequently promotes on social networks
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Instead, advertisements normally center around the social element of the casinos, while omitting the potential for real gaming losses.

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

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

Another caption discussed: 'Because I never quit.'

The disparity in between gambling websites and social or sweepstakes gambling establishments is a bit complicated, however operators of the latter insist they're not involved with the former.

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

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

Social gambling establishments provide customers an opportunity to play casino-style video games with friends. Players have the option to buy valueless currency often referred to as 'gold coins,' which can not be exchanged for genuine cash, but can be utilized to open various features within the games.

But within the world of social casinos exists sweepstakes video gaming, allowing consumers to get other currency known as 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the capacity for monetary losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York. One gamer informed the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the previous year after continuing to buy more coins in pursuit of money and other things of value.
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The Philadelphia 76ers' Paul George is seen promoting an International Poker occasion

Social sweeps casino Stake ran an advertisement flaunting Drake's automobiles, airplanes and estates

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

Traditional online gambling establishments are prohibited 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 don't require usually need identification. However, sites like Chumba will request IDs from players trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, allow clients to submit mail-in ask for totally free sweeps coins, provided the gamers follow painfully particular instructions. What's more, players are frequently rewarded with sweeps coins just for registering, thereby providing a factor to try their hands at any number of gambling establishment games for a possibility to win - or lose - real money.

So why are sweepstakes websites permitted to operate in 48 states, while online gambling establishments are banned in all however 7?

According to the stakeholders, their product is the totally free casino-style video gaming, and the real-stakes competitors is simply a way of promoting their support.

'Social sweepstakes games are merely a kind of online home entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is required to dip into social casinos with sweepstakes prizes. Consumers never have to spend for an opportunity to win prizes. That lack of a purchase requirement - or" consideration" - is an important distinction between social sweeps and traditional online gambling websites like gambling establishments.'

Think about the manner in which McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and french fries that offer them the chance to win rewarding rewards, such as a $1 million prize.

And without a purchase requirement, or 'factor to consider', the video game itself does not meet the meaning of gambling in the US.
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'Sweepstakes are an enduring technique for promoting all type of everyday services in the United States, whatever from burgers to publication subscriptions to coffee and home improvement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are routinely used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting industry experts, that argument doesn't cut it.

For starters, video gaming lawyer Daniel Wallach mentions, McDonald's Monopoly video game doesn't run forever. Rather, it has a distinct start and end, thereby recommending the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being used to promote genuine items like french fries, shakes, and the Filet-O-Fish.
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'They don't last permanently and they're usually not tied to casino-style games of opportunity,' Wallach informed DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [gambling establishments] have none of the characteristics commonly related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos use" casino-like" payments, normally 80 percent or more of profits, whereas the common payment percentage for a momentary marketing sweepstakes is an unimportant share of the profits earned by the business [generally less than one percent]'

Wallach is fast to compare the online social sweeps gambling establishments to the internet cafes that emerged in Florida, using clients the chance to play casino-style video games for genuine prizes. Many of those brick-and-mortar facilities have because been shuttered over claims of unlawful gambling.

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

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

'These distinctions are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been mentioned by courts and state chief law officer as key consider figuring out that a sweepstakes promo remained in reality a guise for prohibited sports betting.'

One of the casino market's leading trade organizations, the American Gaming Association, is now pushing legislators to examine sweepstakes operators and, in some cases, enact brand-new legislation on the problem.

'Consumers are being deprived of defenses and states are giving up significant tax and revenue opportunities as this gambling changes that conducted through regulated channels,' checked out a well-circulated AGA memo.

And after that there are the complainants who have actually sued social gambling establishments in more than a dozen states.

Sweepstakes casino operators paid a combined $14.2 million in four different cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action claim, saying the settlement was made to prevent legal expenses and continued litigation.

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

In the newest suit, which is largely comparable to its predecessors, New York 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 gambling . '

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

'We normally do not comment on matters before the courts,' a VGW representative told DailyMail.com through e-mail. 'However, we keep in mind that this claim has actually only simply been submitted with the court and VGW has not been officially served.

'We have full self-confidence in our compliance with all laws and guidelines where we run, and stay confident about the future,' the representative continued. 'We continue to offer our free-to-play video games throughout most of North America, as we have for more than a decade, creating not just fantastic games, user experiences and home entertainment, but also guaranteeing this is done safely, responsibly and at the greatest level of standards.

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

The concerns in between traditional online gaming and sweepstakes casinos might prove bothersome for some star endorsers.

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

'It's paradoxical that professional athletes are hawking illegal sports betting 'sweeps' sites while at the very same time the leagues want to project a strong stance versus illegal sports betting - especially when attempting to tamp down the occasional gaming scandal,' Glaser informed DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter got a life time ban 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.

In addition to VGW, Apple and Google are being taken legal action against for hosting allegedly prohibited sports betting websites

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

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

Neither an NBA representative nor the players' agents responded to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to react to DailyMail.com emails.

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

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the representative said. 'A few of our worths are" our gamers come first" and" we do what's right", and we put our values at the core of everything we do.'

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

'Celebrities who lend their names to dubious illegal sports betting sites are, at a minimum, putting their credibilities at threat as well as courting civil and class actions by customers who declare harm,' Glaser said. 'There is likewise some danger that state regulators and state chief law officers rope celebrity endorsers into enforcement efforts for facilitating illegal gambling.'

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