The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on unlawful gambling.
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No, they weren't personally in participation, but the world-famous celebrities were conspicuously consisted of in a slide presentation on social and sweepstakes gambling establishments - the controversial sites using both totally free casino-style video games and profitable prizes, such as money, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The sites are simply 2 cogs in the multibillion-dollar market that now finds itself besieged by claims. In the eyes of lots of gaming corporations, not to mention claim complainants and state regulators, sweepstakes gambling establishments serve as traditional gambling establishments, just without the oversight, consumer securities and tax laws. So not only can they prevent the steep 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulatory obstacles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the company deals with allegations of illegal gaming in a New york city suit that declares VGW utilizes celebrity endorsers to 'create a veneer of legitimacy' around its item. (See VGW's statement listed below)

'I'm uncertain" if you don't trust us, you can trust Paris Hilton" is a winning message for companies operating multibillion-dollar illegal operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a series of stars from gambling lovers 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 in between standard gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of many sweepstakes gambling establishments found online

Ryan Seacrest prompts fans to play at Chumba Casino, where lots of - but not all - video games are free

Drake has a deal with social sweeps casino, Stake, that he frequently touts on social media

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Instead, advertisements typically center around the social element of the gambling establishments, while leaving out the potential for real gaming losses.

Others lure consumers with pledges of rewards. One such operator, Stake, ran a social networks ad flaunting Drake's vehicles, airplanes and estates before pivoting to video of the rap artist playing online casino-style games.

'Daddy, why do we have so much cash?' check out the very first caption on the screen.

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

The discrepancy between sports betting sites and social or sweepstakes gambling establishments is a bit complex, however operators of the latter insist they're not included with the former.

A spokesperson 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 complimentary.

'Most social sweeps clients never buy,' the SPGA spokesperson informed DailyMail.com. 'The minority of customers who make purchases do so in quantities far smaller sized than the common deposit or wager size at real-money online sports betting websites.'

Social casinos use clients a chance to play casino-style games with friends. Players have the choice to purchase worthless currency typically referred to as 'gold coins,' which can not be exchanged genuine money, but can be used to unlock various functions within the video games.

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

And therein lies the potential for financial losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York City. 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 worth.

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

Social sweeps gambling establishment Stake ran an advertisement displaying Drake's cars and trucks, planes and mansions
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Karl-Anthony Towns of the New York Knicks is another NBA star plugging VGW's Global Poker

Traditional online casinos are prohibited in all but 7 states, which has actually helped to sustain the appeal of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, allow consumers to demands for complimentary sweeps coins, offered the gamers follow painfully specific guidelines. What's more, gamers are frequently rewarded with sweeps coins merely for registering, consequently providing a factor to attempt their hands at any number of casino video games for an opportunity to win - or lose - genuine cash.

So why are sweepstakes websites allowed to operate in 48 states, while online gambling establishments are banned in all but 7?

According to the stakeholders, their product is the totally free casino-style video gaming, and the real-stakes competitors is simply a means of promoting their support.
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'Social sweepstakes video games are simply a kind of online home entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is required to dip into social gambling establishments with sweepstakes prizes. Consumers never ever need to spend for an opportunity to win prizes. That lack of a purchase requirement - or" factor to consider" - is a vital distinction between social sweeps and conventional online gambling websites like casinos.'

Think about the manner in which McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and french fries that offer them the chance to win profitable prizes, such as a $1 million prize.
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And without a purchase requirement, or 'consideration', the game itself does not meet the meaning of sports betting in the US.

'Sweepstakes are an enduring approach for promoting all kinds of daily companies in the United States, everything from hamburgers to magazine subscriptions to coffee and home improvement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are regularly utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For beginners, video gaming attorney Daniel Wallach points out, McDonald's Monopoly game doesn't run forever. Rather, it has a distinct beginning and end, thus recommending the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being used to promote real items like french fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're usually not tied to casino-style games of opportunity,' Wallach informed DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [casinos] have none of the characteristics commonly connected with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments use" casino-like" payouts, generally 80 percent or more of revenues, whereas the normal payment portion for a short-term marketing sweepstakes is an unimportant share of the earnings made by the business [usually less than one percent]'

Wallach is quick to compare the online social sweeps casinos to the internet coffee shops that sprang up in Florida, providing customers the opportunity to play casino-style video games for real rewards. Much of those brick-and-mortar facilities have considering that been shuttered over accusations of unlawful gambling.

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

Now, Wallach argues, social sweeps gambling establishments ought to deal with similar analysis.

'These distinctions are not arbitrary,' Wallach stated of social sweeps casinos. 'They have actually consistently been mentioned by courts and state attorney general of the United States as key consider figuring out that a sweepstakes promotion was in fact a guise for illegal sports betting.'

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

'Consumers are being deprived of securities and states are passing up considerable tax and income chances as this gaming replaces that performed through managed channels,' checked out a well-circulated AGA memo.
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And after that there are the plaintiffs who have actually taken legal action against 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 misbehavior, according to the Washington Post. Meanwhile VGW consented 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 an offer with the VGW Group, which owns Global Poker

In the latest claim, which is largely comparable to its predecessors, New York state citizens Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited sports betting business. '

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

'We normally do not discuss matters before the courts,' a VGW spokesperson told DailyMail.com by means of e-mail. 'However, we keep in mind that this claim has only just been submitted with the court and VGW has actually not been formally served.

'We have complete self-confidence in our compliance with all laws and regulations where we operate, and stay confident about the future,' the spokesperson continued. 'We continue to offer our free-to-play games across most of North America, as we have for more than a years, producing not only great video games, user experiences and home entertainment, however likewise ensuring this is done safely, properly and at the highest level of requirements.

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

The issues in between traditional online gaming and sweepstakes casinos could prove bothersome for some celeb endorsers.

Towns, a star center with the Knicks, and the 76ers' George both endorse 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 unlawful sports betting 'sweeps' websites while at the very same time the leagues desire to predict a strong stance versus prohibited sports betting - especially when attempting to tamp down the periodic sports betting scandal,' Glaser told DailyMail.com.

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

Along with VGW, Apple and Google are being demanded hosting allegedly illegal gambling sites

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

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

Neither an NBA spokesman nor the players' representatives reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also ignored to respond to DailyMail.com emails.

Asked if their celebrity endorsers have an obligation to describe to clients the distinctions and similarities between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that needs to be done.

'We have full self-confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the representative stated. 'A few of our values are" our players come first" and" we do what's right", and we put our worths at the core of everything we do.'

Glaser, an outspoken challenger of sweepstakes websites, sees things in a different way.

'Celebrities who provide their names to dubious unlawful sports betting sites are, at a minimum, putting their track records at risk along with courting civil and class actions by consumers who allege damage,' Glaser said. 'There is also some danger that state regulators and state chief law officers rope celeb endorsers into enforcement efforts for facilitating illegal gaming.'

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