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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 gambling.
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No, they weren't personally in presence, however the world-famous stars were notably included in a slide presentation on social and sweepstakes gambling establishments - the questionable websites offering both totally free casino-style games and rewarding prizes, such as money, present cards or cryptocurrency. In one ad, 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.

The sites are just 2 cogs in the multibillion-dollar market that now discovers itself besieged by claims. In the eyes of many gaming corporations, not to mention lawsuit plaintiffs and state regulators, sweepstakes gambling establishments serve as standard gambling establishments, only without the oversight, customer protections and tax laws. So not only can they prevent the steep 24-percent federal sports betting levy, however sweepstakes operators aren't subject to regulative hurdles like anti-money laundering and responsible-gaming defenses.

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

'I'm uncertain" if you don't trust us, you can trust Paris Hilton" is a winning message for business operating multibillion-dollar prohibited 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 include a variety of stars from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom provide any distinctions in between standard sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of numerous sweepstakes gambling establishments discovered online

Ryan Seacrest urges fans to dip into Chumba Casino, where numerous - however not all - video games are totally free

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

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Instead, ads typically focus around the social element of the gambling establishments, while leaving out the capacity for real sports betting losses.

Others lure clients with pledges of prizes. One such operator, Stake, ran a social media advertisement revealing off Drake's vehicles, planes and estates before pivoting to footage of the rapper playing online casino-style games.

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

Another caption discussed: 'Because I never ever provided up.'

The disparity in between gaming websites and social or sweepstakes casinos is a bit intricate, however operators of the latter insist they're not included with the former.

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

'Most social sweeps consumers never purchase,' the SPGA representative informed DailyMail.com. 'The minority of consumers who make purchases do so in amounts far smaller than the typical deposit or bet size at real-money online sports betting websites.'

Social casinos provide consumers a possibility to play casino-style games with friends. Players have the choice to buy worthless currency often described as 'gold coins,' which can not be exchanged genuine money, but can be utilized to unlock various features within the video games.

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

And therein lies the potential for financial losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York City. One gamer informed the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the previous year after continuing to purchase more coins in pursuit of money and other things of worth.

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

Social sweeps casino Stake ran an advertisement flaunting Drake's vehicles, 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 banned in all but 7 states, which has assisted to fuel the appeal of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, allow customers to send mail-in requests for totally free sweeps coins, offered the gamers follow painfully particular guidelines. What's more, gamers are typically rewarded with sweeps coins just for signing up, therefore giving them a factor to try their hands at any variety of casino video games for an opportunity to win - or lose - real cash.

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

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

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

Consider the manner in which McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're buying hamburgers and french fries that use them the opportunity to win financially rewarding rewards, such as a $1 million jackpot.

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

'Sweepstakes are an enduring technique for promoting all type of daily organizations in the United States, everything from burgers to magazine subscriptions to coffee and home improvement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are regularly utilized 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 industry experts, that argument does not cut it.

For starters, video gaming attorney Daniel Wallach mentions, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a distinct beginning and end, thus recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote real items like french fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [casinos] have none of the attributes frequently connected with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos offer" casino-like" payouts, typically 80 percent or more of earnings, whereas the typical payout percentage for a momentary advertising sweepstakes is a trivial share of the earnings made by the company [usually less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the internet cafes that emerged in Florida, using clients the possibility to play casino-style video games for real rewards. A number of those brick-and-mortar establishments have considering that been shuttered over accusations of prohibited gaming.

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

Now, Wallach argues, gambling establishments need to deal with similar examination.

'These distinctions are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have consistently been cited by courts and state attorney general of the United States as crucial consider figuring out that a sweepstakes promotion was in fact a guise for unlawful gaming.'

Among the casino industry'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 issue.

'Consumers are being denied of defenses and states are giving up considerable tax and revenue opportunities as this gambling replaces that carried out through regulated channels,' checked out a well-circulated AGA memo.

And after that 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 four separate cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action claim, stating the settlement was made to avoid legal expenses and continued litigation.

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

In the most current suit, which is largely comparable to its predecessors, New York state residents Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is explained in the filing as an 'unlawful gambling enterprise. '

Apple and Google have actually likewise been called as offenders in suits for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com's request for remark.

'We normally don't comment on matters before the courts,' a VGW spokesperson informed DailyMail.com through email. 'However, we note that this claim has only simply been filed with the court and VGW has actually not been formally served.

'We have full self-confidence in our compliance with all laws and regulations where we operate, and remain confident about the future,' the representative continued. 'We continue to offer our free-to-play video games across most of The United States and Canada, as we have for more than a years, developing not just great video games, user experiences and home entertainment, but also guaranteeing this is done safely, properly and at the highest level of standards.

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

The concerns in between traditional online gaming and sweepstakes casinos could show problematic 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 traditional video gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking illegal sports betting 'sweeps' sites while at the same time the leagues want to forecast a strong position against illegal sports betting - specifically when attempting to tamp down the occasional gambling scandal,' Glaser informed DailyMail.com.

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

Together with VGW, Apple and Google are being taken legal action against for hosting apparently illegal gambling websites
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Regardless, Glaser sees sweepstakes casinos 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' representatives responded to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise neglected to react to DailyMail.com e-mails.

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

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our organization practices more broadly,' the spokesperson stated. 'Some of our values are" our players precede" and" we do what's right", and we put our values at the core of whatever we do.'

Glaser, an outspoken opponent of sweepstakes sites, sees things differently.
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'Celebrities who lend their names to shady illegal gambling websites are, at a minimum, putting their reputations at risk as well as courting civil and class actions by consumers who declare damage,' Glaser said. 'There is also some danger that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for facilitating illegal gambling.'

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