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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 gaming.
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No, they weren't personally in attendance, but the world-famous celebs were conspicuously included in a slide discussion on social and sweepstakes casinos - the controversial websites using both totally free casino-style games and financially rewarding rewards, such as cash, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The websites are just 2 cogs in the multibillion-dollar industry that now discovers itself besieged by lawsuits. In the eyes of many gaming corporations, not to point out lawsuit plaintiffs and state regulators, sweepstakes gambling establishments serve as standard casinos, just without the oversight, customer securities and tax laws. So not just can they prevent the steep 24-percent federal gaming levy, however sweepstakes operators aren't based on regulative hurdles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the company faces accusations of illegal gaming in a New york city suit that declares VGW uses celebrity endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's statement below)

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

Sweepstakes endorsers consist of a series of celebrities from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom offer any differences in between standard sports betting and sweepstakes play.

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

Ryan Seacrest urges fans to play at Chumba Casino, where lots of - but not all - video games are complimentary

Drake has a deal with social sweeps gambling establishment, Stake, that he frequently touts on social media

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Instead, advertisements typically center around the social aspect of the gambling establishments, while leaving out the capacity for actual sports betting losses.

Others lure consumers with promises of rewards. One such operator, Stake, ran a social media advertisement flaunting Drake's cars, planes and estates before pivoting to video of the rapper playing online casino-style video games.

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

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

The inconsistency in between gaming sites and social or sweepstakes gambling establishments is a bit complicated, but operators of the latter insist they're not involved with the former.

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

'Most social sweeps customers never make a purchase,' the SPGA spokesperson told DailyMail.com. 'The minority of clients who make purchases do so in quantities far smaller than the normal deposit or bet size at real-money online gaming sites.'

Social casinos use consumers a possibility to play casino-style video games with pals. Players have the choice to purchase valueless currency typically described as 'gold coins,' which can not be exchanged for genuine cash, however can be utilized to open various functions within the video games.

But within the world of social gambling establishments exists sweepstakes gaming, enabling clients 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 declared by plaintiffs in Florida, Georgia, New Jersey and New York. One player 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 worth.

The Philadelphia 76ers' Paul George is seen promoting an International Poker event

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 casinos are prohibited in all but seven states, which has helped to fuel the appeal of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, enable consumers to submit mail-in demands for complimentary sweeps coins, offered the gamers follow painfully particular guidelines. What's more, gamers are frequently rewarded with sweeps coins simply for signing up, therefore providing them a reason to try their hands at any number of casino video games for a chance to win - or lose - real 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 product is the complimentary casino-style gaming, and the real-stakes competition is simply a method of promoting their bread and butter.

'Social sweepstakes games are merely a type of online entertainment,' an SPGA spokesperson informed 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 . That absence of a purchase requirement - or" factor to consider" - is a vital difference between social sweeps and traditional online gambling websites like casinos.'

Think about the method that McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and fries that provide them the possibility to win financially rewarding rewards, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the game itself does not meet the meaning of sports betting in the US.

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

But to numerous sports betting market experts, that argument doesn't cut it.

For beginners, gaming lawyer Daniel Wallach points out, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a distinct start and end, thereby recommending the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being used to promote genuine products like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [gambling establishments] have none of the qualities commonly associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments offer" casino-like" payouts, typically 80 percent or more of earnings, whereas the common payout portion for a short-term promotional sweepstakes is an insignificant share of the revenue earned by the business [normally less than one percent]'

Wallach is quick to liken the online social sweeps casinos to the internet coffee shops that sprang up in Florida, using customers the opportunity to play casino-style games for genuine prizes. A lot of those brick-and-mortar facilities have considering that been shuttered over allegations of prohibited sports betting.

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

Now, Wallach argues, social sweeps casinos need to face comparable examination.

'These differences are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have repeatedly been mentioned by courts and state attorney general of the United States as key consider identifying that a sweepstakes promo was in truth a guise for prohibited gaming.'

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

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

And then there are the complainants who have taken legal action against social casinos in more than a dozen states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action suit, stating the settlement was made to avoid legal costs and continued lawsuits.

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

In the current suit, which is mainly comparable to its predecessors, New York state citizens Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is described in the filing as an 'illegal gambling business. '

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

'We generally do not discuss matters before the courts,' a VGW representative informed DailyMail.com by means of 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 complete self-confidence in our compliance with all laws and policies where we run, and remain positive about the future,' the representative continued. 'We continue to use our free-to-play games across the majority of The United States and Canada, as we have for more than a decade, developing not only excellent games, user experiences and entertainment, however also guaranteeing this is done securely, properly and at the highest level of standards.

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

The problems between conventional online gaming and sweepstakes casinos might 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 standard video gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking prohibited sports betting wagering 'sweeps' websites while at the same time the leagues desire to project a strong position versus prohibited sports betting - especially when attempting to tamp down the periodic gambling scandal,' Glaser informed DailyMail.com.

It was simply eight 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.

Together with VGW, Apple and Google are being sued for hosting allegedly unlawful gambling websites

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

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

Neither an NBA spokesperson nor the players' representatives responded to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also overlooked to react to DailyMail.com emails.

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

'We have full confidence in our influencer and ambassadorial collaborations, and our service practices more broadly,' the representative stated. 'A few of our values 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.
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'Celebrities who lend their names to shady prohibited gaming sites are, at a minimum, putting their reputations at risk along with courting civil and class actions by consumers who allege harm,' Glaser stated. 'There is likewise some risk that state regulators and state lawyers basic rope celeb endorsers into enforcement efforts for helping with prohibited sports betting.'

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