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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 unlawful sports betting.

No, they weren't personally in presence, however the world-famous celebs were conspicuously included in a slide discussion on social and sweepstakes casinos - the controversial sites using both free casino-style video games and financially rewarding rewards, such as cash, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are simply 2 cogs in the multibillion-dollar market that now discovers itself besieged by lawsuits. In the eyes of lots of video gaming corporations, not to discuss claim complainants and state regulators, sweepstakes casinos act as traditional casinos, just without the oversight, consumer protections and tax laws. So not just can they avoid the high 24-percent federal gambling levy, however sweepstakes operators aren't based on regulative difficulties like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the business faces allegations of unlawful sports betting in a New York claim that declares VGW uses celeb endorsers to 'produce a veneer of legitimacy' around its item. (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 business running multibillion-dollar illegal operations out of places like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of video gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers include a range 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 provide any distinctions between traditional gambling and sweepstakes play.

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

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

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

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Instead, ads normally focus around the social aspect of the casinos, while leaving out the capacity for actual gambling losses.

Others tempt consumers with promises of rewards. One such operator, Stake, ran a social media ad flaunting Drake's automobiles, planes and mansions before rotating to video of the rapper playing online casino-style video games.

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

Another caption described: 'Because I never ever quit.'

The disparity in between sports betting websites and social or sweepstakes casinos is a bit intricate, but operators of the latter insist they're not included with the former.
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A representative for an industry trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, most of the players on social-sweepstakes gambling establishments are playing for 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 sized than the typical deposit or bet size at real-money online gaming sites.'

Social casinos provide clients a possibility to play casino-style video games with pals. Players have the choice to buy valueless currency typically referred to as 'gold coins,' which can not be exchanged for real cash, however can be used to open numerous features within the video games.

But within the world of social gambling establishments exists sweepstakes video gaming, permitting clients to obtain other currency understood as 'sweeps coins' that can be exchanged for cash or other rewards.

And therein lies the potential for monetary losses, like the ones declared 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 previous year after continuing to purchase more coins in pursuit of money and other things of worth.

The Philadelphia 76ers' Paul George is seen promoting an International Poker event

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake's cars, airplanes and estates

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

Traditional online gambling establishments are banned in all however 7 states, which has assisted to fuel the popularity of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, allow clients to submit mail-in ask for free sweeps coins, provided the gamers follow painfully particular instructions. What's more, gamers are frequently rewarded with sweeps coins simply for signing up, thus providing them a reason to attempt their hands at any variety of casino games for an opportunity to win - or lose - real money.

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

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

'Social sweepstakes video games are just a form of online entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is needed to dip into social casinos with sweepstakes rewards. Consumers never ever need to pay for a chance to win rewards. That absence of a purchase requirement - or" factor to consider" - is a crucial distinction between social sweeps and conventional online gambling websites like casinos.'

Think of the way that McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to gamble, but rather they're buying hamburgers and fries that offer them the possibility to win rewarding rewards, such as a $1 million prize.
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And without a purchase requirement, or 'consideration', the game itself doesn't meet the meaning of gaming in the US.

'Sweepstakes are an enduring approach for promoting all kinds of daily services in the United States, everything from burgers to publication memberships to coffee and home improvement shops,' the SPGA representative informed DailyMail.com. 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 gambling industry experts, that argument does not cut it.

For beginners, gaming lawyer Daniel Wallach explains, McDonald's Monopoly game does not run forever. Rather, it has a distinct start and end, therefore recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote genuine items like french fries, shakes, and the Filet-O-Fish.
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'They don't last forever and they're typically 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 characteristics frequently related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments use" casino-like" payouts, typically 80 percent or more of revenues, whereas the normal payment portion for a short-term marketing sweepstakes is a trivial share of the revenue earned by the business [usually less than one percent]'

Wallach is quick to compare the online social sweeps gambling establishments to the internet cafes that emerged in Florida, using clients the possibility to play casino-style video games for real prizes. Many of those brick-and-mortar establishments have since been shuttered over claims of unlawful sports betting.

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

Now, Wallach argues, social sweeps gambling establishments must deal with similar analysis.
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'These differences are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been cited by courts and state chief law officer as key elements in determining that a sweepstakes promo was in truth a guise for illegal gaming.'

Among the casino market's leading trade organizations, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, in some cases, enact brand-new legislation on the issue.

'Consumers are being denied of securities and states are forgoing significant tax and profits chances as this gaming changes that conducted through controlled channels,' checked out a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in four separate cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action lawsuit, saying the settlement was made to avoid legal costs and continued litigation.

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

In the latest suit, which is mainly similar to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited gambling business. '
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Apple and Google have actually likewise been named as offenders in claims for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's ask for comment.

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

'We have complete confidence in our compliance with all laws and regulations where we operate, and remain positive about the future,' the spokesperson continued. 'We continue to offer our free-to-play games throughout the majority of North America, as we have for more than a years, creating not just excellent video games, user experiences and entertainment, however likewise ensuring this is done securely, responsibly and at the greatest level of requirements.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are fairly typical throughout the online social video games market (and the US more broadly), and our basic practice is that we mean to intensely defend any claim which might be brought versus us.'

The issues 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 endorse VGW's Global Poker brand name while the NBA is partnered with standard video gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking unlawful sports betting wagering 'sweeps' websites while at the same time the leagues want to forecast a strong position against illegal gaming - particularly when attempting to tamp down the occasional gambling scandal,' Glaser informed DailyMail.com.
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It was simply eight months ago that Toronto Raptors forward Jontay Porter received a life time 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 gambling establishments.

Together with VGW, Apple and Google are being sued for hosting apparently prohibited gambling sites

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

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

Neither an NBA representative nor the players' agents responded to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to react to DailyMail.com emails.

Asked if their celeb endorsers have a responsibility to explain to consumers the differences and similarities 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 stated. 'A few of our values are" our gamers precede" 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 gaming sites are, at a minimum, putting their track records at risk as well as courting civil and class actions by consumers who allege harm,' Glaser said. 'There is likewise some threat that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for facilitating illegal sports betting.'

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