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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 illegal gaming.
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No, they weren't personally in participation, but the world-famous stars were conspicuously included in a slide discussion on social and sweepstakes casinos - the questionable websites offering both complimentary casino-style games and lucrative prizes, such as cash, 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 simply 2 cogs in the multibillion-dollar market that now finds itself besieged by lawsuits. In the eyes of lots of video gaming corporations, not to point out lawsuit plaintiffs and state regulators, sweepstakes casinos function as traditional casinos, only without the oversight, consumer protections and tax laws. So not only can they prevent the high 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulatory difficulties like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits last year alone. Now the company faces accusations of prohibited sports betting in a New york city suit that declares VGW utilizes celeb endorsers to 'develop a veneer of authenticity' around its item. (See VGW's statement below)

'I'm unsure" if you don't trust us, you can rely on Paris Hilton" is a winning message for companies running multibillion-dollar unlawful operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of video gaming corporation Light & Wonder, told DailyMail.com.

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

Paris Hilton is seen plugging Wow Vegas, among lots of sweepstakes casinos found online

Ryan Seacrest prompts fans to play at Chumba Casino, where many - however not all - games are complimentary

Drake has a handle social sweeps gambling establishment, Stake, that he routinely promotes on social networks

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Instead, ads typically center around the social aspect of the gambling establishments, while leaving out the capacity for real sports betting losses.
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Others tempt clients with pledges of rewards. One such operator, Stake, ran a social media advertisement revealing off Drake's automobiles, airplanes and estates before rotating to video footage of the rap artist playing online casino-style games.

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

Another caption discussed: 'Because I never quit.'

The discrepancy in 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 representative for a market trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, the majority of the players on social-sweepstakes gambling establishments are playing for free.

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

Social gambling establishments provide clients a chance to play casino-style games with buddies. Players have the option to buy valueless currency often referred to as 'gold coins,' which can not be exchanged genuine cash, but can be used to unlock various functions within the games.

But within the world of social gambling establishments exists sweepstakes gaming, permitting clients to get other currency referred to as 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the capacity for monetary losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York. One player told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the past year after continuing to purchase more coins in pursuit of money and other things of value.

The Philadelphia 76ers' Paul George is seen promoting an International Poker occasion
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Social sweeps casino Stake ran an advertisement 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 gambling establishments are banned in all however seven states, which has actually assisted to sustain the appeal of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, permit clients to submit mail-in ask for totally free sweeps coins, provided the gamers follow painfully particular instructions. What's more, gamers are typically rewarded with sweeps coins simply for registering, thereby providing a reason to try their hands at any number of casino video games for a possibility to win - or lose - genuine money.

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

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

'Social sweepstakes video games are just a type of online entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is required to dip into social casinos with sweepstakes prizes. Consumers never have to pay for a chance to win rewards. That lack of a purchase requirement - or" consideration" - is an important difference in between social sweeps and traditional online gaming websites like casinos.'

Think of 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 provide them the possibility to win rewarding prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the video game itself does not meet the definition of gaming in the US.

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

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

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

'They do not last forever and they're typically not tied to casino-style video games of possibility,' Wallach told DailyMail.com. 'They're just money free gifts.

'The sweepstakes [casinos] have none of the attributes typically related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments provide" casino-like" payments, typically 80 percent or more of earnings, whereas the common payment percentage for a momentary promotional sweepstakes is a minor share of the profits earned by the company [normally less than one percent]'

Wallach is fast to liken the online social sweeps casinos to the internet cafes that sprang up in Florida, offering consumers the opportunity to play casino-style video games for genuine prizes. A lot of those brick-and-mortar facilities have because been shuttered over accusations of unlawful gambling.

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

Now, Wallach argues, social sweeps casinos ought to deal with similar analysis.

'These differences are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been cited by courts and state attorney generals as essential factors in determining that a sweepstakes promo remained in fact a guise for unlawful gambling.'

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

'Consumers are being deprived of defenses and states are forgoing considerable tax and earnings chances as this gaming changes that carried out through controlled channels,' read a well-circulated AGA memo.

And then there are the plaintiffs who have actually taken legal action against 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 wrongdoing, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action suit, saying the settlement was made to avoid legal costs and continued litigation.

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

In the most recent claim, which is mostly comparable to its predecessors, New York state locals Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is explained in the filing as an 'illegal gambling enterprise. '
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Apple and Google have likewise been called as defendants in suits for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for remark.

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

'We have complete self-confidence in our compliance with all laws and regulations where we operate, and stay confident about the future,' the spokesperson continued. 'We continue to provide our free-to-play games throughout the majority of The United States and Canada, as we have for more than a decade, creating not only fantastic video games, user experiences and entertainment, however likewise ensuring this is done safely, properly and at the highest level of standards.

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

The issues in between standard online sports betting 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 name while the NBA is partnered with standard gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking prohibited sports betting 'sweeps' sites while at the same time the leagues wish to predict a strong position versus unlawful gaming - specifically when trying to tamp down the occasional gaming scandal,' Glaser told DailyMail.com.

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

Along with VGW, Apple and Google are being demanded hosting supposedly illegal gambling websites
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Regardless, Glaser sees sweepstakes casinos as a significant issue for leagues such as the NBA.

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

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

Asked if their star endorsers have an obligation to discuss to clients the differences and resemblances between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that requires to be done.

'We have full self-confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the representative stated. 'Some of our values are" our gamers come first" 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 in a different way.

'Celebrities who provide their names to dubious unlawful gaming websites are, at a minimum, putting their track records at danger along with courting civil and class actions by customers who declare damage,' Glaser stated. 'There is also some danger that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for assisting in prohibited gambling.'

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