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The smiling faces of Paris Hilton and Ryan Seacrest made surprise looks before the Louisiana Senate for Friday's hearing on prohibited sports betting.

No, they weren't personally in presence, however the world-famous celebrities were notably included in a slide discussion on social and sweepstakes gambling establishments - the questionable sites providing both complimentary casino-style video games and financially rewarding prizes, such as cash, present 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 two cogs in the multibillion-dollar market that now finds itself besieged by lawsuits. In the eyes of many gaming corporations, not to mention claim plaintiffs and state regulators, sweepstakes gambling establishments serve as traditional casinos, only without the oversight, customer defenses and tax laws. So not just can they avoid the high 24-percent federal gambling levy, but sweepstakes operators aren't based on regulatory difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the business faces accusations of unlawful sports betting in a New york city claim that declares VGW uses celebrity endorsers to 'develop a veneer of legitimacy' around its item. (See VGW's statement below)

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

Sweepstakes endorsers consist of a variety of stars from sports betting lovers 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 conventional gambling and sweepstakes play.

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

Ryan Seacrest advises fans to dip into Chumba Casino, where lots of - but not all - video games are complimentary

Drake has an offer with social sweeps gambling establishment, Stake, that he regularly promotes on social media

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Instead, advertisements generally center around the social element of the casinos, while leaving out the capacity for actual sports betting losses.

Others lure clients with guarantees of rewards. One such operator, Stake, ran a social media ad showing off Drake's vehicles, airplanes and mansions before pivoting to video footage 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 explained: 'Because I never quit.'

The inconsistency in between sports betting sites and social or sweepstakes casinos is a bit intricate, however operators of the latter insist they're not included with the previous.

A spokesperson for a market trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, the majority of the gamers on social-sweepstakes casinos are sports betting free.

'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 typical deposit or bet size at real-money online gaming websites.'

Social casinos provide clients a chance to play casino-style games with friends. Players have the choice to purchase valueless currency frequently referred to as 'gold coins,' which can not be exchanged for genuine money, however can be used to open various features within the games.

But within the world of social casinos exists sweepstakes video gaming, permitting consumers to acquire other currency called 'sweeps coins' that can be exchanged for cash or other prizes.

And therein lies the capacity for financial 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 purchase more coins in pursuit of cash and other things of value.

The Philadelphia 76ers' Paul George is seen promoting a Global Poker occasion

Social sweeps gambling establishment Stake ran an ad displaying Drake's cars and trucks, aircrafts and mansions

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

Traditional online casinos are prohibited in all however seven states, which has actually assisted to sustain the appeal of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, enable consumers to submit mail-in requests for free sweeps coins, offered the players follow painfully particular guidelines. What's more, gamers are typically rewarded with sweeps coins just for registering, consequently providing a reason to try their hands at any number of gambling establishment video games for a possibility to win - or lose - genuine money.

So why are sweepstakes sites enabled to operate in 48 states, while online gambling establishments are prohibited in all but 7?
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According to the stakeholders, their item is the free casino-style video gaming, and the real-stakes competitors is merely a method of promoting their support.

'Social sweepstakes games are just a kind of online entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is required to play at social casinos with sweepstakes prizes. Consumers never have to spend for a chance to win rewards. That absence of a purchase requirement - or" consideration" - is an essential difference between social sweeps and conventional online gaming sites like casinos.'

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

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

'Sweepstakes are a long-standing approach for promoting all type of daily services in the United States, everything from burgers to publication subscriptions to coffee and home enhancement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are routinely utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of gambling industry insiders, that argument doesn't cut it.

For beginners, gaming lawyer Daniel Wallach explains, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a well-defined start and end, thus recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote genuine items like french fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're typically not tied to casino-style video games of chance,' Wallach informed DailyMail.com. 'They're simply money free gifts.

'The sweepstakes [casinos] possess none of the attributes commonly connected with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments provide" casino-like" payments, typically 80 percent or more of earnings, whereas the normal payment portion for a temporary advertising sweepstakes is a minor share of the profits made by the company [typically less than one percent]'

Wallach is fast to compare the online social sweeps casinos to the web coffee shops that sprang up in Florida, providing clients the chance to play casino-style video games for genuine rewards. A number of those brick-and-mortar establishments have actually given that been shuttered over accusations of illegal gambling.

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

Now, Wallach argues, social sweeps gambling establishments must face similar analysis.

'These differences are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have actually consistently been cited by courts and state chief law officer as crucial consider identifying that a sweepstakes promotion was in reality a guise for illegal gambling.'

One of the gambling establishment market's leading trade companies, the American Gaming Association, is now pressing lawmakers to investigate sweepstakes operators and, in many cases, enact brand-new legislation on the problem.

'Consumers are being deprived of securities and states are giving up significant tax and revenue opportunities as this gaming replaces that carried out through controlled channels,' checked out a well-circulated AGA memo.

And after that there are the plaintiffs who have actually 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 admitting any misbehavior, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, saying the settlement was made to prevent legal costs and continued litigation.

Michael Phelps has signed an offer with the VGW Group, which owns Global Poker

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

Apple and Google have actually also been named as accuseds in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech company responded to DailyMail.com's request for comment.

'We generally do not discuss matters before the courts,' a VGW spokesperson informed DailyMail.com through email. 'However, we keep in mind that this claim has only simply 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 stay positive about the future,' the representative continued. 'We continue to use our free-to-play video games across the majority of The United States and Canada, as we have for more than a decade, developing not just excellent games, user experiences and entertainment, but also ensuring this is done safely, properly and at the greatest level of standards.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are relatively typical across the online social games industry (and the US more broadly), and our basic practice is that we mean to strongly safeguard any claim which may be brought versus us.'

The concerns between conventional online gambling and sweepstakes gambling establishments might show troublesome 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 standard video gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking illegal sports betting 'sweeps' sites while at the exact same time the leagues desire to predict a strong position against prohibited sports betting - particularly when trying to tamp down the occasional gaming scandal,' Glaser told DailyMail.com.

It was simply eight months ago that Toronto Raptors forward Jontay Porter received a lifetime ban from the NBA over allegations he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes gambling establishments.

In addition to VGW, Apple and Google are being taken legal action against for hosting presumably illegal gambling sites

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

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

Neither an NBA representative nor the players' agents reacted to DailyMail.com's requests for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also overlooked to respond to DailyMail.com e-mails.

Asked if their celeb endorsers have a duty to describe to consumers the differences and similarities in between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that needs to be done.

'We have full in our influencer and ambassadorial partnerships, and our company practices more broadly,' the representative stated. 'A few of our worths are" our gamers precede" and" we do what's right", and we put our worths at the core of everything we do.'

Glaser, an outspoken challenger of sweepstakes sites, sees things in a different way.

'Celebrities who provide their names to shady unlawful gaming websites are, at a minimum, putting their track records at danger in addition to courting civil and class actions by customers who allege harm,' Glaser said. 'There is also some danger that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for facilitating prohibited gaming.'

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