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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 sports betting.
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No, they weren't personally in presence, but the world-famous celebrities were notably consisted of in a slide presentation on social and sweepstakes gambling establishments - the questionable sites offering both totally free casino-style video games and profitable prizes, such as money, gift 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 websites are just two cogs in the multibillion-dollar market that now finds itself besieged by claims. In the eyes of many video gaming corporations, not to discuss claim complainants and state regulators, sweepstakes casinos act as traditional casinos, only without the oversight, customer securities and tax laws. So not only can they avoid the high 24-percent federal gaming levy, but sweepstakes operators aren't based on regulative difficulties like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the business deals with accusations of illegal gambling in a New york city claim that claims VGW uses star endorsers to 'create a veneer of legitimacy' around its product. (See VGW's declaration listed below)

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

Sweepstakes endorsers consist of a variety of celebs from sports betting 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 differences between standard sports betting and sweepstakes play.

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

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

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

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

Others tempt customers with promises of rewards. One such operator, Stake, ran a social media ad revealing off Drake's automobiles, planes and mansions before pivoting to video footage of the rapper playing online casino-style games.

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

Another caption explained: 'Because I never quit.'

The discrepancy between gambling sites and social or sweepstakes gambling establishments is a bit complex, 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 information, most of the gamers on social-sweepstakes gambling establishments are playing for complimentary.

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

Social casinos provide consumers a possibility to play casino-style video games with good friends. Players have the choice to buy valueless currency frequently referred to as 'gold coins,' which can not be exchanged genuine cash, however can be utilized to unlock numerous functions within the games.

But within the world of social casinos exists sweepstakes video gaming, enabling clients to obtain other currency understood 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 complainants in Florida, Georgia, New Jersey and New York. One player told the Washington Post he lost more than $100,000 on sweepstakes casinos in the past year after continuing to buy more coins in pursuit of money and other things of value.

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

Social sweeps casino Stake ran an advertisement revealing off Drake's automobiles, aircrafts and estates

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 however seven states, which has assisted to fuel the popularity of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, enable clients to send mail-in ask for free sweeps coins, provided the players follow painfully specific directions. What's more, players are typically rewarded with sweeps coins simply for signing up, thus providing a factor to attempt their hands at any number of casino games for a possibility to win - or lose - genuine money.

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

According to the stakeholders, their product is the totally free casino-style gaming, and the real-stakes competitors is just a means of promoting their bread and butter.

'Social sweepstakes video games are just a form 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 ever have to spend for an opportunity to win prizes. That absence of a purchase requirement - or" consideration" - is a crucial distinction between social sweeps and traditional online gambling sites like gambling establishments.'

Think about the method 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 use them the opportunity to win profitable prizes, such as a $1 million prize.

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

'Sweepstakes are an enduring method for promoting all type of daily companies in the United States, everything from hamburgers to magazine memberships to coffee and home enhancement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are routinely used 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 insiders, that argument does not cut it.

For starters, gaming lawyer Daniel Wallach explains, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a distinct start and end, consequently recommending the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being used to promote real items like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [casinos] possess none of the qualities frequently associated with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments offer" casino-like" payouts, generally 80 percent or more of profits, whereas the normal payout portion for a momentary advertising sweepstakes is an unimportant share of the revenue made by the business [typically less than one percent]'

Wallach is fast to compare the online social sweeps gambling establishments to the internet coffee shops that sprang up in Florida, using clients the chance to play casino-style video games for real prizes. Much of those brick-and-mortar establishments have actually because been shuttered over claims of unlawful gaming.

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

Now, Wallach argues, social sweeps gambling establishments need to face comparable scrutiny.

'These differences are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have repeatedly been pointed out by courts and state attorney general of the United States as key consider figuring out that a sweepstakes promotion was in reality a guise for prohibited gaming.'

Among the casino market's leading trade organizations, the American Gaming Association, is now pressing legislators to examine sweepstakes operators and, in many cases, enact brand-new legislation on the issue.

'Consumers are being denied of defenses and states are forgoing significant tax and revenue opportunities as this gaming changes that carried out through managed channels,' read a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action lawsuit, saying the settlement was made to prevent legal expenses and continued litigation.

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

In the newest lawsuit, which is mostly similar to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'unlawful gaming business. '

Apple and Google have also been named as defendants in claims for hosting the sweepstakes sites. But unlike VGW, neither tech business responded to DailyMail.com's ask for comment.

'We generally don't talk about matters before the courts,' a VGW representative told DailyMail.com via email. '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 full confidence in our compliance with all laws and policies where we run, and remain positive about the future,' the spokesperson continued. 'We continue to use our free-to-play video games throughout the majority of North America, as we have for more than a years, developing not just fantastic video games, user experiences and home entertainment, however also guaranteeing this is done securely, responsibly and at the highest level of requirements.

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

The concerns between standard online gambling and sweepstakes gambling establishments 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 paradoxical that professional athletes are hawking illegal sports betting 'sweeps' websites while at the same time the leagues want to predict a strong stance versus unlawful sports betting - specifically when attempting to tamp down the occasional gaming scandal,' Glaser informed DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter received a lifetime restriction from the NBA over accusations he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes gambling establishments.

Together with VGW, Apple and Google are being taken legal action against for hosting allegedly unlawful sports betting sites
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Regardless, Glaser sees sweepstakes gambling establishments as a significant issue for leagues such as the NBA.

'I 'd anticipate that a league crackdown on athletes backing sweepstakes websites refers when, not if,' Glaser included.

Neither an NBA spokesperson nor the players' agents reacted to DailyMail.com's ask 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 responsibility to describe to consumers the distinctions and resemblances 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 values are" our gamers come initially" and" we do what's right", and we put our worths at the core of whatever we do.'

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

'Celebrities who lend their names to dubious illegal sports betting sites are, at a minimum, putting their track records at danger in addition to courting civil and class actions by customers who harm,' Glaser stated. 'There is likewise some danger that state regulators and state chief law officers rope star endorsers into enforcement efforts for assisting in prohibited sports betting.'

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