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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 participation, however the world-famous stars were notably included in a slide presentation on social and sweepstakes casinos - the questionable sites providing both free casino-style video 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 sites are just 2 cogs in the multibillion-dollar market that now finds itself besieged by suits. In the eyes of numerous gaming corporations, not to discuss lawsuit complainants and state regulators, sweepstakes casinos function as traditional gambling establishments, just without the oversight, customer securities and tax laws. So not just can they avoid the high 24-percent federal sports betting levy, but sweepstakes operators aren't subject to regulative difficulties like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income last year alone. Now the business deals with allegations of prohibited sports betting in a New York suit that declares VGW uses star endorsers to 'develop a veneer of legitimacy' around its product. (See VGW's declaration listed below)

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

Sweepstakes endorsers consist of a series of celebs from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom use any differences between standard gambling and sweepstakes play.

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

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

Drake has an offer with social sweeps gambling establishment, Stake, that he frequently touts on social media

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Instead, ads usually center around the social element of the casinos, while omitting the potential for real gaming losses.

Others tempt consumers with promises of prizes. One such operator, Stake, ran a social media advertisement displaying Drake's automobiles, aircrafts and mansions before pivoting to video of the rap artist playing online casino-style video games.

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

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

The inconsistency in between sports betting sites and social or sweepstakes casinos is a bit intricate, 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), discussed its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, the majority of the players on social-sweepstakes casinos are playing for free.

'Most social sweeps clients never ever 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 sites.'

Social casinos offer consumers an opportunity to play casino-style games with buddies. Players have the option to buy valueless currency often described as 'gold coins,' which can not be exchanged genuine cash, however can be utilized to unlock various functions within the games.

But within the world of social casinos exists sweepstakes video gaming, permitting consumers to acquire other currency called 'sweeps coins' that can be exchanged for cash or other prizes.

And therein lies the capacity for monetary losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York. One gamer informed 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 money and other things of worth.

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

Social sweeps gambling establishment Stake ran an ad flaunting Drake's automobiles, aircrafts and estates

Karl-Anthony Towns of the New York Knicks is another NBA star plugging VGW's Global Poker
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Traditional online casinos are banned in all however 7 states, which has helped to fuel the popularity of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, allow consumers to send mail-in ask for complimentary sweeps coins, provided the players follow painfully particular directions. What's more, players are frequently rewarded with sweeps coins just for signing up, thus providing them a factor to try their hands at any number of casino games for a possibility to win - or lose - real cash.

So why are sweepstakes sites enabled to run in 48 states, while online gambling establishments are prohibited in all however 7?

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

'Social sweepstakes games are just a type of online entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is needed to play at social gambling establishments with sweepstakes prizes. Consumers never have to pay for an opportunity to win prizes. That absence of a purchase requirement - or" consideration" - is a vital distinction in between social sweeps and conventional online gaming sites like casinos.'

Think about the manner in which McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to bet, but rather they're buying hamburgers and fries that offer them the chance to win profitable prizes, such as a $1 million prize.

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

'Sweepstakes are an enduring approach for promoting all type of daily organizations in the United States, whatever from hamburgers to magazine subscriptions to coffee and home improvement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are regularly used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling industry experts, that argument does not cut it.

For beginners, video gaming lawyer Daniel Wallach explains, McDonald's Monopoly game doesn't run forever. Rather, it has a distinct start and end, thereby suggesting the sweepstakes is not the fast-food giant's primary item. 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 generally not tied to casino-style games of possibility,' Wallach told DailyMail.com. 'They're just money free gifts.

'The sweepstakes [gambling establishments] possess none of the attributes frequently related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos offer" casino-like" payouts, generally 80 percent or more of earnings, whereas the common payment percentage for a short-lived marketing sweepstakes is an insignificant share of the income earned by the business [normally less than one percent]'

Wallach is quick to compare the online social sweeps gambling establishments to the internet coffee shops that emerged in Florida, offering clients the opportunity to play casino-style video games for genuine prizes. Many of those brick-and-mortar facilities have actually given that been shuttered over claims of unlawful gambling.

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

Now, Wallach argues, social sweeps gambling establishments ought to face comparable examination.

'These distinctions are not approximate,' Wallach said of social sweeps casinos. 'They have consistently been mentioned by courts and state lawyer generals as essential factors in identifying that a sweepstakes promotion remained in fact a guise for prohibited gaming.'

One of the gambling establishment industry's leading trade companies, the American Gaming Association, is now pressing legislators to operators and, sometimes, enact new legislation on the problem.

'Consumers are being deprived of defenses and states are giving up significant tax and earnings chances as this gaming replaces that carried out through managed channels,' read a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in 4 separate cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action suit, saying the settlement was made to prevent legal costs and continued litigation.

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

In the newest suit, which is mostly comparable to its predecessors, New York state residents Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is described in the filing as an 'unlawful gambling business. '

Apple and Google have actually likewise been called as accuseds in claims for hosting the sweepstakes sites. But unlike VGW, neither tech business responded to DailyMail.com's request for remark.

'We normally don't talk about matters before the courts,' a VGW spokesperson informed DailyMail.com by means of email. 'However, we keep in mind that this claim has actually only simply been filed with the court and VGW has actually not been officially served.

'We have complete confidence in our compliance with all laws and regulations where we run, and stay positive about the future,' the representative continued. 'We continue to use our free-to-play video games throughout the majority of The United States and Canada, as we have for more than a years, creating not just excellent games, user experiences and entertainment, however also ensuring this is done securely, properly and at the greatest level of requirements.

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

The concerns between standard online sports betting and sweepstakes gambling establishments might show problematic for some celeb 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 video gaming titans like FanDuel and DraftKings.

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

It was simply eight months ago that Toronto Raptors forward Jontay Porter got a lifetime restriction from the NBA over claims he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes casinos.

In addition to VGW, Apple and Google are being demanded hosting apparently illegal sports betting sites

Regardless, Glaser sees sweepstakes casinos as a major issue for leagues such as the NBA.

'I 'd expect that a league crackdown on athletes endorsing sweepstakes websites is a matter of when, not if,' Glaser included.

Neither an NBA spokesman nor the gamers' representatives reacted to DailyMail.com's demands 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 celeb endorsers have a duty to explain to consumers the distinctions and resemblances between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that requires to be done.

'We have complete confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the representative stated. 'A few 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 websites, sees things differently.
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'Celebrities who provide their names to dubious unlawful gambling websites are, at a minimum, putting their credibilities at risk as well as courting civil and class actions by consumers who allege damage,' Glaser said. 'There is also some risk that state regulators and state chief law officers rope celeb endorsers into enforcement efforts for helping with prohibited gambling.'

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