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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 unlawful sports betting.
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No, they weren't personally in presence, but the world-famous celebs were conspicuously included in a slide presentation on social and sweepstakes gambling establishments - the controversial websites providing both totally free casino-style games and rewarding rewards, such as money, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The websites are simply 2 cogs in the multibillion-dollar industry that now discovers itself besieged by lawsuits. In the eyes of lots of video gaming corporations, not to point out lawsuit complainants and state regulators, sweepstakes casinos function as standard casinos, only without the oversight, customer protections and tax laws. So not just can they avoid the steep 24-percent federal sports betting levy, however sweepstakes operators aren't based on regulatory difficulties like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings last year alone. Now the company deals with accusations of illegal gaming in a New York claim that claims VGW utilizes celebrity endorsers to 'produce a veneer of authenticity' around its product. (See VGW's statement 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 illegal operations out of places like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers consist of a variety of celebs from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions between traditional gaming and sweepstakes play.

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

Ryan Seacrest urges fans to play at Chumba Casino, where numerous - but not all - games are complimentary

Drake has an offer with social sweeps casino, Stake, that he routinely promotes on social networks

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Instead, advertisements normally focus around the social aspect of the gambling establishments, while leaving out the capacity for actual sports betting losses.

Others tempt consumers with guarantees of rewards. One such operator, Stake, ran a social networks advertisement revealing off Drake's cars, aircrafts and mansions before rotating to video of the rapper playing online casino-style video games.

'Daddy, why do we have so much money?' read the very first caption on the screen.

Another caption explained: 'Because I never quit.'

The disparity between sports betting websites and social or sweepstakes gambling establishments is a bit complicated, but 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), explained 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 gambling establishments are sports betting complimentary.

'Most social sweeps customers never ever purchase,' the SPGA representative 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 sports betting sites.'

Social gambling establishments offer clients a possibility to play casino-style video games with buddies. Players have the alternative to buy worthless currency typically referred to as 'gold coins,' which can not be exchanged for genuine money, but can be utilized to unlock numerous features within the games.

But within the world of social gambling establishments exists sweepstakes gaming, permitting consumers to obtain other currency called 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the capacity for monetary losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York City. One gamer told 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 occasion

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake's cars, airplanes 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 but 7 states, which has actually helped to fuel the appeal of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, permit customers to submit mail-in demands for complimentary sweeps coins, provided the players follow painfully specific guidelines. What's more, players are often rewarded with sweeps coins merely for registering, thus providing a factor to try their hands at any variety of gambling establishment video games for a possibility to win - or lose - real money.

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 totally free casino-style video gaming, and the real-stakes competitors is just a way of promoting their support.

'Social sweepstakes games are merely a type of online home entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is required to play at social gambling establishments with sweepstakes rewards. Consumers never ever have to pay for an opportunity to win rewards. That absence of a purchase requirement - or" consideration" - is an essential distinction in between social sweeps and standard online gambling websites like casinos.'

Think about the method that McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and fries that offer them the chance to win profitable prizes, such as a $1 million prize.
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And without a purchase requirement, or 'consideration', the video game itself does not meet the definition of sports betting in the US.

'Sweepstakes are a long-standing approach for promoting all sort of everyday companies in the United States, whatever from burgers to publication memberships to coffee and home improvement stores,' the SPGA spokesperson 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 many sports betting industry insiders, that argument does not cut it.

For beginners, video gaming attorney Daniel Wallach mentions, McDonald's Monopoly game does not run indefinitely. Rather, it has a distinct beginning and end, therefore suggesting the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being used to promote genuine items like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [casinos] have none of the attributes commonly connected with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments use" casino-like" payouts, normally 80 percent or more of incomes, whereas the common payment percentage for a momentary marketing sweepstakes is an unimportant share of the profits made by the business [typically less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the internet coffee shops that emerged in Florida, using consumers the chance to play casino-style games for genuine prizes. Many of those brick-and-mortar facilities have since been shuttered over allegations of prohibited sports betting.

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

Now, Wallach argues, social sweeps casinos must deal with comparable scrutiny.

'These distinctions are not approximate,' Wallach said of social sweeps casinos. 'They have actually consistently been pointed out by courts and state chief law officer as essential elements in figuring out that a sweepstakes promo was in truth a guise for unlawful gaming.'

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

'Consumers are being denied of defenses and states are giving up considerable tax and income opportunities as this sports betting changes that conducted through controlled 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 gambling establishment operators paid a combined $14.2 million in four different cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action claim, saying the settlement was made to avoid legal expenses and continued lawsuits.

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

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

Apple and Google have also been called as accuseds in claims for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's demand for comment.

'We normally do not comment on matters before the courts,' a VGW representative told .com through email. 'However, we keep in mind that this claim has actually only simply been filed with the court and VGW has not been officially served.

'We have complete self-confidence in our compliance with all laws and regulations where we run, and remain confident about the future,' the spokesperson continued. 'We continue to provide our free-to-play games across many of The United States and Canada, as we have for more than a decade, producing not only terrific video games, user experiences and entertainment, however also ensuring this is done securely, responsibly and at the greatest level of standards.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are fairly common throughout the online social games market (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 problems in between traditional online gambling and sweepstakes gambling establishments could show bothersome for some celeb 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 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 gambling - specifically when attempting to tamp down the periodic gambling scandal,' Glaser informed DailyMail.com.

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

Together with VGW, Apple and Google are being demanded hosting presumably illegal gambling sites

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

'I 'd expect that a league crackdown on athletes backing sweepstakes websites refers when, not if,' Glaser included.
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Neither an NBA representative nor the players' representatives reacted to DailyMail.com's requests for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also overlooked to react to DailyMail.com emails.

Asked if their celebrity endorsers have an obligation to explain to consumers the distinctions and similarities in between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that needs to be done.

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our service practices more broadly,' the representative said. 'A few of our worths are" our gamers precede" 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 lend their names to shady unlawful sports betting websites are, at a minimum, putting their reputations at danger along with courting civil and class actions by consumers who declare harm,' Glaser said. 'There is also some danger that state regulators and state chief law officers rope star endorsers into enforcement efforts for assisting in unlawful sports betting.'

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