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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 gambling.

No, they weren't personally in participation, but the world-famous celebs were notably consisted of in a slide presentation on social and sweepstakes casinos - the controversial sites using both totally free casino-style games and financially rewarding prizes, such as cash, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet complimentary,' 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 mention claim complainants and state regulators, sweepstakes casinos function as standard casinos, only without the oversight, consumer protections and tax laws. So not only can they avoid the steep 24-percent federal sports betting levy, however sweepstakes operators aren't based on regulatory hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the business faces allegations of prohibited gambling in a New York lawsuit that claims VGW uses celeb endorsers to 'produce a veneer of legitimacy' 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 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, informed DailyMail.com.

Sweepstakes endorsers include a range of celebrities 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 in between conventional sports betting and sweepstakes play.
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Paris Hilton is seen plugging Wow Vegas, one of lots of sweepstakes casinos found online

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

Drake has a deal with social sweeps gambling establishment, Stake, that he regularly promotes on social networks

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Instead, ads typically center around the social element of the gambling establishments, while omitting the potential for real sports betting losses.

Others tempt clients with pledges of prizes. One such operator, Stake, ran a social media ad flaunting Drake's cars, planes and estates before rotating to footage of the rapper playing online casino-style video games.
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'Daddy, why do we have so much cash?' read the first caption on the screen.

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

The inconsistency in between gaming websites and social or sweepstakes casinos is a bit intricate, however operators of the latter insist they're not involved with the previous.

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, most of the gamers on social-sweepstakes casinos are sports betting totally free.

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

Social gambling establishments offer customers a possibility to play casino-style games with pals. Players have the choice to buy valueless currency frequently described as 'gold coins,' which can not be exchanged for real cash, however can be used to open various functions within the games.

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

And therein lies the potential for financial losses, like the ones claimed by complainants 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 previous year after continuing to purchase more coins in pursuit of money and other things of value.

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

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake's automobiles, aircrafts 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 however seven states, which has actually assisted to sustain the appeal of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes sites, which do not need usually require identification. However, websites like Chumba will request IDs from gamers trying to withdraw any funds.
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Many sites, like the crypto-compatible Stake, enable consumers to submit mail-in ask for complimentary sweeps coins, offered the gamers follow painfully specific guidelines. What's more, players are often rewarded with sweeps coins merely for registering, thus providing a reason to try their hands at any number of gambling establishment games for an opportunity to win - or lose - real money.

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

According to the stakeholders, their product is the totally free casino-style video gaming, and the real-stakes competition is merely a means of promoting their support.
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'Social sweepstakes games are just a kind of online home entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is needed to play at social gambling establishments with sweepstakes rewards. Consumers never have to spend for an opportunity to win rewards. That absence of a purchase requirement - or" consideration" - is a crucial difference in between social sweeps and standard online sports betting sites like casinos.'

Think about the method that McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and fries that provide them the chance to win financially rewarding rewards, such as a $1 million prize.

And without a purchase requirement, or 'factor to consider', the video game itself doesn't fulfill the definition of sports betting in the US.

'Sweepstakes are an enduring technique for promoting all kinds of daily businesses in the United States, whatever from burgers to publication memberships to coffee and home enhancement shops,' the SPGA representative 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 many gambling market insiders, that argument does not cut it.

For starters, gaming lawyer Daniel Wallach explains, McDonald's Monopoly game does not run forever. Rather, it has a well-defined start and end, consequently suggesting the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being used to promote genuine products like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [casinos] have none of the characteristics commonly related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments use" casino-like" payments, normally 80 percent or more of revenues, whereas the common payment percentage for a temporary marketing sweepstakes is an insignificant share of the revenue made by the company [typically less than one percent]'

Wallach fasts to compare the online social to the internet coffee shops that sprang up in Florida, offering consumers the chance to play casino-style games for genuine rewards. A lot of those brick-and-mortar establishments have actually because been shuttered over accusations of illegal gaming.

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

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

'These distinctions are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have consistently been mentioned by courts and state attorney generals as key elements in determining that a sweepstakes promotion remained in truth a guise for unlawful gambling.'

Among the casino industry's leading trade companies, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, in many cases, enact new legislation on the concern.

'Consumers are being denied of defenses and states are forgoing significant tax and income chances as this gambling changes that carried out through regulated channels,' checked out a well-circulated AGA memo.

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

Michael Phelps has signed an offer with the VGW Group, which owns Global Poker

In the most current suit, which is mainly comparable to its predecessors, New york city state citizens 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 'prohibited gambling business. '

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

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

'We have complete confidence in our compliance with all laws and policies where we operate, and remain confident about the future,' the spokesperson continued. 'We continue to use our free-to-play video games throughout many of North America, as we have for more than a years, developing not just excellent games, user experiences and home entertainment, however also guaranteeing this is done safely, properly and at the highest level of standards.

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

The problems in between standard online gambling and sweepstakes casinos might show troublesome for some celebrity 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 expert athletes are hawking unlawful sports betting 'sweeps' websites while at the same time the leagues wish to project a strong stance versus prohibited gambling - especially when attempting to tamp down the occasional gaming scandal,' Glaser informed DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter got a lifetime ban from the NBA over allegations he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes casinos.

Together with VGW, Apple and Google are being taken legal action against for hosting supposedly unlawful sports betting websites

Regardless, Glaser sees sweepstakes casinos as a significant concern for leagues such as the NBA.

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

Neither an NBA spokesman nor the gamers' agents responded to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise disregarded to react to DailyMail.com e-mails.

Asked if their celeb endorsers have a responsibility to discuss to consumers the differences and similarities in between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that requires to be done.

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the spokesperson said. 'Some of our values are" our players precede" and" we do what's right", and we put our worths at the core of everything we do.'

Glaser, an outspoken opponent of sweepstakes websites, sees things differently.
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'Celebrities who provide their names to shady unlawful sports betting websites are, at a minimum, putting their credibilities at risk in addition to courting civil and class actions by consumers who allege harm,' Glaser said. 'There is likewise some risk that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for facilitating prohibited gambling.'

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