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The smiling faces of Paris Hilton and Ryan Seacrest made before the Louisiana Senate for Friday's hearing on prohibited gaming.

No, they weren't personally in presence, but the world-famous celebs were conspicuously consisted of in a slide presentation on social and sweepstakes gambling establishments - the controversial sites offering both complimentary casino-style video games and financially rewarding rewards, such as money, present cards or cryptocurrency. In one ad, 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 websites are just two cogs in the multibillion-dollar market that now discovers itself besieged by lawsuits. In the eyes of numerous video gaming corporations, not to mention lawsuit plaintiffs and state regulators, sweepstakes casinos act as standard casinos, just without the oversight, customer protections and tax laws. So not only can they avoid the steep 24-percent federal gaming levy, but sweepstakes operators aren't based on regulative obstacles like anti-money laundering and responsible-gaming defenses.

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 city lawsuit that claims VGW uses celebrity endorsers to 'develop a veneer of legitimacy' around its product. (See VGW's statement 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 unlawful operations out of locations 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 series of celebrities from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom offer any differences between standard gambling and sweepstakes play.

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 lots of - however not all - games are totally free

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

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

Others tempt clients with guarantees of rewards. One such operator, Stake, ran a social networks advertisement showing off Drake's cars, planes and estates before pivoting to video of the rap artist playing online casino-style video games.

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

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

The disparity in between gaming sites and social or sweepstakes casinos is a bit complicated, however 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 competitors with online casinos and sportsbooks. Furthermore, according to SPGA data, most of the players on social-sweepstakes casinos are playing for totally free.
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'Most social sweeps consumers never make a purchase,' the SPGA representative informed DailyMail.com. 'The minority of clients who make purchases do so in amounts far smaller sized than the common deposit or wager size at real-money online sports betting sites.'

Social casinos use customers a chance to play casino-style video games with buddies. Players have the choice to purchase valueless currency typically described as 'gold coins,' which can not be exchanged for genuine cash, however can be utilized to open numerous functions within the games.

But within the world of social gambling establishments exists sweepstakes gaming, permitting consumers to acquire other currency called 'sweeps coins' that can be exchanged for money 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 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 cash and other things of worth.

The Philadelphia 76ers' Paul George is seen promoting a Global Poker event

Social sweeps casino Stake ran an advertisement flaunting Drake's vehicles, aircrafts and estates

Karl-Anthony Towns of the New York City Knicks is another NBA star plugging VGW's Global Poker

Traditional online casinos are prohibited in all but 7 states, which has actually assisted to fuel the popularity of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes sites, which don't need normally require recognition. However, sites like Chumba will request for IDs from players attempting to withdraw any funds.

Many websites, like the crypto-compatible Stake, allow clients to send mail-in demands for free sweeps coins, offered the gamers follow painfully specific directions. What's more, gamers are typically rewarded with sweeps coins simply for signing up, thus providing a reason to try their hands at any number of casino video games for an opportunity 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 item is the complimentary casino-style video gaming, and the real-stakes competition is just a method of promoting their bread and butter.

'Social sweepstakes video games are just a type of online entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is needed to dip into social casinos with sweepstakes rewards. Consumers never ever have to spend 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 gambling establishments.'

Think of the way that McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to bet, but rather they're buying hamburgers and french fries that use them the opportunity to win financially rewarding rewards, such as a $1 million jackpot.

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

'Sweepstakes are an enduring approach for promoting all sort of daily services in the United States, everything from burgers to publication subscriptions to coffee and home improvement stores,' the SPGA representative told 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 many sports betting market experts, that argument doesn't cut it.

For beginners, gaming lawyer Daniel Wallach mentions, McDonald's Monopoly video game does not run indefinitely. Rather, it has a distinct start and end, consequently recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote genuine items like fries, shakes, and the Filet-O-Fish.
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'They do not last permanently and they're usually not tied to casino-style video games of possibility,' Wallach informed DailyMail.com. 'They're simply money free gifts.

'The sweepstakes [gambling establishments] have none of the characteristics commonly associated with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments offer" casino-like" payments, generally 80 percent or more of revenues, whereas the normal payment portion for a temporary marketing sweepstakes is an unimportant share of the revenue made by the business [normally less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the web cafes that sprang up in Florida, offering customers the chance to play casino-style games for real rewards. Much of those brick-and-mortar facilities have because been shuttered over claims of illegal gaming.

DJ Khaled is amongst numerous celebrity spokespeople for VGW's Global Poker brand name
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Now, Wallach argues, social sweeps gambling establishments need to deal with comparable scrutiny.

'These distinctions are not approximate,' Wallach said of social sweeps gambling establishments. 'They have actually repeatedly been mentioned by courts and state attorney general of the United States as crucial aspects in identifying that a sweepstakes promo was in fact a guise for prohibited gambling.'

Among the gambling establishment market's leading trade organizations, the American Gaming Association, is now pressing legislators to investigate sweepstakes operators and, sometimes, enact brand-new legislation on the issue.

'Consumers are being denied of protections and states are forgoing substantial tax and profits opportunities as this gaming replaces that conducted through controlled channels,' checked out a well-circulated AGA memo.

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

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

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

In the most current suit, which is mostly similar to its predecessors, New york city state citizens Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'illegal gaming business. '

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

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

'We have complete self-confidence in our compliance with all laws and policies where we operate, and remain positive about the future,' the representative continued. 'We continue to use our free-to-play video games across the majority of North America, as we have for more than a decade, creating not only terrific games, user experiences and entertainment, however likewise ensuring this is done securely, responsibly and at the highest level of standards.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are reasonably common throughout the online social games market (and the US more broadly), and our standard practice is that we mean to strongly defend any claim which might be brought against us.'

The problems between standard online gambling and sweepstakes gambling establishments could prove problematic for some star 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 gaming titans like FanDuel and DraftKings.

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

It was just eight months ago that Toronto Raptors forward Jontay Porter got a life time ban 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 supposedly prohibited gambling websites

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

'I 'd expect that a league crackdown on professional athletes backing sweepstakes sites refers 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 also ignored to react to DailyMail.com e-mails.
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Asked if their celeb endorsers have a responsibility to explain to customers the differences and similarities in between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that requires to be done.

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

Glaser, an outspoken challenger of sweepstakes websites, sees things differently.
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'Celebrities who lend their names to shady unlawful gaming sites are, at a minimum, putting their track records at threat as well as courting civil and class actions by customers who allege harm,' Glaser stated. 'There is also some threat that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for facilitating unlawful gaming.'

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