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The 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, but the world-famous celebrities were conspicuously consisted of in a slide discussion on social and sweepstakes gambling establishments - the questionable websites providing both complimentary casino-style games and financially rewarding rewards, such as cash, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The websites are simply two cogs in the multibillion-dollar industry that now finds itself besieged by suits. In the eyes of numerous gaming corporations, not to mention claim plaintiffs and state regulators, sweepstakes gambling establishments serve as standard gambling establishments, just without the oversight, customer protections and tax laws. So not just can they avoid the high 24-percent federal sports betting levy, however sweepstakes operators aren't based on regulative obstacles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the business deals with accusations of unlawful gaming in a New York suit that claims VGW utilizes celeb endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's declaration listed below)

'I'm unsure" if you do not trust us, you can trust Paris Hilton" is a winning message for business operating multibillion-dollar illegal 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 include a variety of stars from gambling lovers 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 gambling and sweepstakes play.

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

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

Drake has a handle social sweeps casino, Stake, that he regularly promotes on social media

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Instead, ads normally center around the social element of the casinos, while leaving out the capacity for actual gambling losses.

Others tempt customers with guarantees of prizes. One such operator, Stake, ran a social networks ad displaying Drake's automobiles, airplanes and mansions before rotating to video footage of the rapper playing online casino-style games.

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

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

The disparity between gambling sites and social or sweepstakes gambling establishments is a bit intricate, but 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 casinos and sportsbooks. Furthermore, according to SPGA data, most of the players on social-sweepstakes gambling establishments are sports betting complimentary.

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

Social casinos provide clients a chance to play casino-style video games with buddies. Players have the option to purchase valueless currency often referred to as 'gold coins,' which can not be exchanged genuine money, however can be used to unlock various features within the video games.

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

And therein lies the potential for financial losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York City. One player told 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 value.

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

Social sweeps casino Stake ran an ad showing off 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 gambling establishments are banned in all however 7 states, which has actually assisted to sustain the popularity of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, allow customers to send mail-in ask for totally free sweeps coins, supplied the gamers follow painfully specific directions. What's more, players are typically rewarded with sweeps coins merely for signing up, thereby giving them a reason to try their hands at any variety of gambling establishment video games for an opportunity to win - or lose - genuine cash.

So why are sweepstakes sites enabled to run in 48 states, while online casinos are prohibited in all but 7?

According to the stakeholders, their product is the free casino-style gaming, and the real-stakes competition is merely a method of promoting their bread and butter.

'Social sweepstakes video games are merely a kind of online home entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is needed to dip into social casinos with sweepstakes prizes. Consumers never have to pay for an opportunity to win rewards. That absence of a purchase requirement - or" factor to consider" - is a crucial distinction between social sweeps and standard online gambling sites like casinos.'

Consider the way that McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and fries that use them the opportunity to win profitable rewards, such as a $1 million jackpot.

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

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

But to numerous gambling industry experts, that argument doesn't cut it.

For starters, gaming lawyer Daniel Wallach mentions, McDonald's Monopoly game does not run indefinitely. Rather, it has a well-defined beginning and end, thus suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote genuine products like french fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're usually not connected to casino-style video games of chance,' Wallach informed DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [casinos] have none of the qualities commonly associated with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments offer" casino-like" payments, typically 80 percent or more of incomes, whereas the typical payment portion for a short-term promotional sweepstakes is an unimportant share of the revenue made by the business [normally less than one percent]'

Wallach is quick to compare the online social sweeps casinos to the web cafes that sprang up in Florida, offering clients the chance to play casino-style video games for real prizes. A lot of those brick-and-mortar facilities have considering that been shuttered over allegations of prohibited sports betting.

DJ Khaled is amongst numerous celeb spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps gambling establishments need to deal with similar scrutiny.

'These distinctions are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have actually consistently been pointed out by courts and state attorney general of the United States as key factors in figuring out that a sweepstakes promo remained in truth a guise for illegal gaming.'

Among the gambling establishment industry's leading trade companies, the American Gaming Association, is now pushing lawmakers to examine sweepstakes operators and, in many cases, enact new legislation on the issue.

'Consumers are being denied of protections and states are giving up considerable tax and revenue chances as this gaming changes that conducted through regulated channels,' checked out a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in 4 separate cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action lawsuit, stating the settlement was made to avoid legal expenses and continued litigation.

Michael Phelps has signed a handle the VGW Group, which owns Global Poker
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In the most recent lawsuit, which is mostly similar to its predecessors, New york city state citizens Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited gaming business. '

Apple and Google have actually likewise been named as offenders in suits for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for remark.

'We typically do not comment on matters before the courts,' a VGW representative informed DailyMail.com by means of email. 'However, we note that this claim has only simply been submitted with the court and VGW has actually not been formally served.
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'We have full self-confidence in our compliance with all laws and regulations where we operate, and remain confident about the future,' the spokesperson continued. 'We continue to use our free-to-play video games across the majority of North America, as we have for more than a years, creating not just excellent video games, user experiences and entertainment, however also ensuring this is done securely, responsibly and at the highest level of standards.

'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are fairly common throughout the online social video games industry (and the US more broadly), and our standard practice is that we mean to vigorously protect any claim which may be brought versus us.'

The concerns between standard online sports betting and sweepstakes casinos might prove troublesome for some star endorsers.
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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 conventional gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking illegal sports betting wagering 'sweeps' sites while at the exact same time the leagues wish to project a strong stance versus unlawful gambling - specifically when attempting to tamp down the periodic sports betting scandal,' Glaser told DailyMail.com.

It was just 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 casinos.

Together with VGW, Apple and Google are being taken legal action against for hosting allegedly illegal sports betting sites

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

'I 'd anticipate that a league crackdown on professional athletes backing sweepstakes sites refers when, not if,' Glaser added.

Neither an NBA representative nor the gamers' representatives reacted to DailyMail.com's demands for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also disregarded to react to DailyMail.com emails.

Asked if their celeb endorsers have an obligation to explain to consumers the distinctions and similarities between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is absolutely nothing more that requires to be done.

'We have full confidence in our influencer and ambassadorial collaborations, and our business practices more broadly,' the spokesperson stated. 'Some of our worths are" our gamers come initially" 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 provide their names to shady illegal sports betting websites are, at a minimum, putting their credibilities at danger along with courting civil and class actions by consumers who declare harm,' Glaser stated. 'There is likewise some danger that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for facilitating illegal gambling.'

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