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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 gaming.
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No, they weren't personally in participation, however the world-famous stars were conspicuously consisted of in a slide presentation on social and sweepstakes gambling establishments - the questionable websites using both free casino-style video games and profitable prizes, such as cash, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are just two cogs in the multibillion-dollar industry that now discovers itself besieged by claims. In the eyes of lots of gaming corporations, not to point out suit complainants and state regulators, sweepstakes gambling establishments serve as conventional gambling establishments, only without the oversight, consumer securities and tax laws. So not just can they avoid the high 24-percent federal sports betting levy, however sweepstakes operators aren't subject to regulatory obstacles 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 business faces accusations of illegal gambling in a New York suit that declares VGW uses celebrity endorsers to 'create a veneer of authenticity' around its product. (See VGW's declaration below)

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

Sweepstakes endorsers include a range of stars from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions in between standard sports betting and sweepstakes play.

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

Ryan Seacrest advises fans to play at Chumba Casino, where lots of - however not all - video games are complimentary

Drake has an offer with social sweeps gambling establishment, Stake, that he regularly promotes on social networks

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Instead, advertisements normally center around the social aspect of the casinos, while omitting the potential for actual sports betting losses.

Others lure consumers with promises of rewards. One such operator, Stake, ran a social networks advertisement displaying Drake's automobiles, airplanes and estates before rotating to footage of the rapper playing online casino-style games.
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'Daddy, why do we have so much cash?' check out the first caption on the screen.

Another caption described: 'Because I never gave up.'

The inconsistency between gaming sites and social or sweepstakes gambling establishments is a bit complicated, however operators of the latter insist they're not included with the former.

A representative for an industry 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 information, most of the players on social-sweepstakes casinos are sports betting totally free.

'Most social sweeps customers never ever purchase,' the SPGA spokesperson 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 gaming websites.'

Social casinos offer clients a chance to play casino-style video games with pals. Players have the choice to purchase worthless currency often described as 'gold coins,' which can not be exchanged genuine cash, but can be used to open various functions within the games.

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

And therein lies the potential for monetary losses, like the ones claimed 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 casinos in the previous year after continuing to buy more coins in pursuit of cash and other things of value.

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

Social sweeps gambling establishment Stake ran an ad displaying Drake's cars, planes and estates

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 seven states, which has helped to sustain the appeal of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes sites, which do not require normally need recognition. However, websites like Chumba will request for IDs from players trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, allow consumers to submit mail-in ask for totally free sweeps coins, provided the gamers follow painfully particular instructions. What's more, players are frequently rewarded with sweeps coins just for registering, therefore providing a factor to try their hands at any variety of gambling establishment video games for a chance to win - or lose - real money.

So why are sweepstakes sites enabled to operate in 48 states, while online casinos are prohibited in all but 7?

According to the stakeholders, their product is the complimentary casino-style video gaming, and the real-stakes competition is just a way of promoting their support.

'Social sweepstakes video games are simply a form of online entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is needed to play at social gambling establishments with sweepstakes prizes. Consumers never ever have to pay for an opportunity to win prizes. That lack of a purchase requirement - or" factor to consider" - is a vital distinction in between social sweeps and conventional online gambling sites like gambling establishments.'

Think of the method that McDonald's uses its yearly Monopoly video game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and french fries that offer them the chance to win lucrative prizes, such as a $1 million prize.

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

'Sweepstakes are a long-standing technique for promoting all kinds of daily services in the United States, everything from hamburgers to publication subscriptions to coffee and home improvement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are routinely utilized by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous sports betting market insiders, that argument does not cut it.

For starters, video gaming attorney Daniel Wallach mentions, McDonald's Monopoly game does not run indefinitely. Rather, it has a well-defined beginning and end, thus suggesting the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being utilized to promote genuine items like french fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're normally not tied to casino-style video games of chance,' Wallach informed DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [gambling establishments] have none of the attributes commonly connected with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos provide" casino-like" payouts, generally 80 percent or more of revenues, whereas the typical payment percentage for a temporary promotional sweepstakes is a trivial share of the income made by the company [typically less than one percent]'

Wallach is fast to compare the online social sweeps casinos to the internet cafes that sprang up in Florida, offering consumers the chance to play casino-style games for real rewards. A lot of those brick-and-mortar establishments have actually since been shuttered over claims of illegal gambling.

DJ Khaled is among numerous celeb spokespeople for VGW's Global Poker brand name
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Now, Wallach argues, social sweeps gambling establishments need to face comparable scrutiny.

'These differences are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have actually repeatedly been cited by courts and state chief law officer as crucial consider figuring out that a sweepstakes promo was in truth a guise for prohibited gaming.'

Among the gambling establishment market's leading trade companies, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, sometimes, enact new legislation on the problem.

'Consumers are being denied of defenses and states are passing up significant tax and income chances as this gaming changes that performed through controlled channels,' checked out a well-circulated AGA memo.

And then there are the plaintiffs who have actually taken legal action against social casinos in more than a lots states.

Sweepstakes casino operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action suit, 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 latest suit, which is mainly comparable to its predecessors, New York state homeowners Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is described in the filing as an 'prohibited gambling enterprise. '

Apple and Google have likewise been named as offenders 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 discuss matters before the courts,' a VGW representative informed DailyMail.com by means of email. 'However, we note that this claim has only just been submitted with the court and VGW has actually not been formally served.
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'We have full confidence in our compliance with all laws and regulations where we operate, and remain confident about the future,' the spokesperson continued. 'We continue to provide our free-to-play video games across most of North America, as we have for more than a decade, developing not just excellent video games, user experiences and entertainment, however likewise guaranteeing 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 relatively common across the online social video games market (and the US more broadly), and our basic practice is that we mean to strongly defend any claim which may be brought against us.'

The issues in between conventional online sports betting and sweepstakes gambling establishments could show troublesome for some celeb endorsers.

Towns, a star center with the Knicks, and the 76ers' George both back VGW's Global Poker brand name while the NBA is partnered with standard video gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking prohibited sports betting 'sweeps' sites while at the same time the leagues want to predict a strong stance versus prohibited gaming - particularly when trying to tamp down the periodic gaming scandal,' Glaser told DailyMail.com.

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

In addition to VGW, Apple and Google are being taken legal action against for hosting supposedly prohibited sports betting sites
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Regardless, Glaser sees sweepstakes gambling establishments as a major problem for leagues such as the NBA.

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

Neither an NBA representative nor the players' representatives reacted to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise overlooked to react to DailyMail.com .

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

'We have full confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the spokesperson said. 'A few of our worths are" our gamers come initially" and" we do what's right", and we put our values at the core of everything we do.'

Glaser, an outspoken opponent of sweepstakes sites, sees things in a different way.

'Celebrities who lend their names to shady unlawful sports betting websites are, at a minimum, putting their track records at threat along with courting civil and class actions by customers who declare harm,' Glaser said. 'There is likewise some threat that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for assisting in prohibited gaming.'

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