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The smiling faces of Paris Hilton and Ryan Seacrest made surprise looks before the Louisiana Senate for Friday's hearing on illegal sports betting.
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No, they weren't personally in attendance, but the world-famous celebs were conspicuously consisted of in a slide presentation on social and sweepstakes gambling establishments - the questionable sites providing both totally free casino-style video games and lucrative rewards, such as cash, 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.

The websites are simply two cogs in the multibillion-dollar market that now discovers itself besieged by suits. In the eyes of many gaming corporations, not to point out suit complainants and state regulators, sweepstakes gambling establishments function as traditional gambling establishments, just without the oversight, consumer defenses and tax laws. So not just can they prevent the high 24-percent federal gaming levy, however sweepstakes operators aren't based on regulatory difficulties like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the company faces allegations of illegal gambling in a New york city suit that claims VGW uses star endorsers to 'create a veneer of authenticity' around its item. (See VGW's statement listed below)

'I'm uncertain" if you do not trust us, you can trust Paris Hilton" is a winning message for business running 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, informed DailyMail.com.

Sweepstakes endorsers consist of a range of celebrities from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom provide any differences between standard gambling and sweepstakes play.

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

Ryan Seacrest advises fans to dip into Chumba Casino, where lots of - however not all - video games are free

Drake has a handle social sweeps casino, Stake, that he routinely promotes on social media

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

Others lure clients with pledges of prizes. One such operator, Stake, ran a social networks ad revealing off Drake's cars, airplanes and mansions before pivoting to video of the rapper playing online casino-style video games.

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

Another caption explained: 'Because I never quit.'
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The discrepancy between gambling sites and social or sweepstakes gambling establishments is a bit complex, but operators of the latter insist they're not included with the previous.

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

'Most social sweeps clients never purchase,' the SPGA representative informed DailyMail.com. 'The minority of consumers who make purchases do so in amounts far smaller than the common deposit or wager size at real-money online gambling sites.'

Social casinos use customers an opportunity to play casino-style games with friends. Players have the choice to buy valueless currency typically described as 'gold coins,' which can not be exchanged for real cash, but can be utilized to unlock different features within the video games.

But within the world of social casinos exists sweepstakes gaming, permitting clients to get other currency referred to as 'sweeps coins' that can be exchanged for money or other prizes.
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And therein lies the potential for monetary losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York. One player informed 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 a Worldwide Poker event

Social sweeps casino Stake ran an ad 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 but 7 states, which has actually helped to fuel the popularity of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes sites, which don't require generally require identification. However, websites like Chumba will request IDs from gamers attempting to withdraw any funds.

Many websites, like the crypto-compatible Stake, permit clients to submit mail-in demands for free sweeps coins, supplied the gamers follow painfully specific instructions. What's more, gamers are typically rewarded with sweeps coins simply for registering, thereby providing a factor to attempt their hands at any number of casino games for a possibility to win - or lose - real cash.

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

According to the stakeholders, their item is the complimentary casino-style gaming, and the real-stakes competitors is merely a way of promoting their bread and butter.

'Social sweepstakes games are simply a type of online entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is needed to dip into social casinos with sweepstakes prizes. Consumers never need to pay for an opportunity to win rewards. That absence of a purchase requirement - or" consideration" - is a vital difference in between social sweeps and traditional online sports betting websites like casinos.'

Consider the way that McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're buying hamburgers and fries that provide them the opportunity to win financially rewarding prizes, such as a $1 million prize.

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

'Sweepstakes are a long-standing technique for promoting all kinds of everyday services in the United States, whatever from burgers to magazine subscriptions to coffee and home improvement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are routinely utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling market experts, that argument doesn't cut it.

For starters, gaming lawyer Daniel Wallach mentions, McDonald's Monopoly game doesn't 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 real products like fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're normally not tied to casino-style video games of possibility,' Wallach informed DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [gambling establishments] possess none of the qualities typically connected with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments offer" casino-like" payouts, normally 80 percent or more of earnings, whereas the typical payout percentage for a temporary advertising sweepstakes is an unimportant share of the profits earned by the company [normally less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the web cafes that emerged in Florida, using clients the possibility to play casino-style games for genuine prizes. Many of those brick-and-mortar facilities have considering that been shuttered over accusations of unlawful sports betting.

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

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

'These differences are not arbitrary,' Wallach stated of social sweeps . 'They have consistently been pointed out by courts and state lawyer generals as key elements in determining that a sweepstakes promo remained in truth a guise for prohibited gaming.'

Among the casino industry's leading trade organizations, the American Gaming Association, is now pushing legislators to examine sweepstakes operators and, in some cases, enact brand-new legislation on the concern.
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'Consumers are being denied of protections and states are passing up substantial tax and income opportunities as this sports betting replaces that conducted through controlled channels,' read a well-circulated AGA memo.

And then there are the plaintiffs who have sued social casinos in more than a dozen states.

Sweepstakes casino operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW consented 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 actually signed a handle the VGW Group, which owns Global Poker

In the newest lawsuit, which is largely similar to its predecessors, New york city state locals Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is explained in the filing as an 'unlawful gaming enterprise. '

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

'We normally do not comment on matters before the courts,' a VGW representative informed DailyMail.com via email. 'However, we keep in mind that this claim has actually only just been filed with the court and VGW has not been formally served.

'We have full confidence in our compliance with all laws and guidelines where we operate, and remain confident about the future,' the representative 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 only excellent games, user experiences and home entertainment, but also guaranteeing this is done securely, responsibly and at the highest level of standards.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are fairly common across the online social video games industry (and the US more broadly), and our standard practice is that we intend to vigorously protect any claim which may be brought versus us.'

The problems between standard online gaming and sweepstakes casinos might prove troublesome for some celeb endorsers.

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

'It's paradoxical that professional athletes are hawking illegal sports betting wagering 'sweeps' websites while at the very same time the leagues wish to project a strong position versus illegal gambling - particularly when attempting to tamp down the periodic gaming scandal,' Glaser told DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter received 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 demanded hosting supposedly illegal gambling sites

Regardless, Glaser sees sweepstakes gambling establishments as a significant issue for leagues such as the NBA.

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

Neither an NBA representative nor the players' agents reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise overlooked to react to DailyMail.com emails.
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Asked if their celebrity endorsers have a responsibility to explain to customers the differences and similarities between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the representative stated. 'A few of our values are" our gamers come initially" 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.

'Celebrities who provide their names to shady prohibited gambling sites are, at a minimum, putting their credibilities at threat as well as courting civil and class actions by customers who allege damage,' Glaser stated. 'There is likewise some risk that state regulators and state chief law officers rope celebrity endorsers into enforcement efforts for helping with illegal gambling.'

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