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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 gaming.
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No, they weren't personally in participation, however the world-famous celebs were conspicuously consisted of in a slide presentation on social and sweepstakes casinos - the questionable websites offering both free casino-style video games and financially rewarding rewards, such as cash, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The sites are just two cogs in the multibillion-dollar industry that now finds itself besieged by lawsuits. In the eyes of numerous gaming corporations, not to discuss claim plaintiffs and state regulators, sweepstakes casinos function as standard casinos, just without the oversight, customer protections and tax laws. So not just can they prevent the steep 24-percent federal gambling 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 earnings in 2015 alone. Now the company deals with accusations of unlawful sports betting in a New York suit that declares VGW uses celeb endorsers to a veneer of authenticity' around its item. (See VGW's declaration listed below)

'I'm not sure" if you don't trust us, you can rely on Paris Hilton" is a winning message for companies running multibillion-dollar unlawful operations out of places like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a variety of celebs from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom use any differences between conventional gaming and sweepstakes play.

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

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

Drake has a handle social sweeps gambling establishment, Stake, that he frequently touts on social media

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Instead, advertisements usually focus around the social aspect of the casinos, while omitting the capacity for actual gambling losses.

Others tempt customers with pledges of prizes. One such operator, Stake, ran a social networks ad showing off Drake's cars, aircrafts and estates before rotating to video of the rap artist playing online casino-style games.

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

Another caption described: 'Because I never quit.'

The inconsistency between gambling sites and social or sweepstakes casinos is a bit intricate, however operators of the latter insist they're not included with the former.

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

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

Social gambling establishments use clients a possibility to play casino-style games with friends. Players have the alternative to buy valueless currency often referred to as 'gold coins,' which can not be exchanged genuine money, but can be used to unlock different functions within the games.

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

And therein lies the capacity 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 casinos 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 an International Poker occasion

Social sweeps casino Stake ran an advertisement flaunting Drake's automobiles, airplanes and mansions

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

Traditional online gambling establishments are prohibited in all however 7 states, which has helped to sustain the appeal of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, enable clients to submit mail-in requests for complimentary sweeps coins, offered the players follow painfully specific directions. What's more, gamers are typically rewarded with sweeps coins merely for signing up, thus offering them a reason to attempt their hands at any variety of gambling establishment video games for an opportunity to win - or lose - real money.
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So why are sweepstakes websites permitted to run in 48 states, while online casinos are prohibited in all but 7?

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

'Social sweepstakes games are just a kind of online home entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is required to dip into social casinos with sweepstakes prizes. Consumers never ever need to pay for a chance to win prizes. That lack of a purchase requirement - or" consideration" - is a crucial difference in between social sweeps and conventional online gaming sites like gambling establishments.'

Think about the manner in which McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to bet, but rather they're buying hamburgers and french fries that offer them the opportunity to win lucrative rewards, such as a $1 million prize.

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

'Sweepstakes are a long-standing technique for promoting all type of daily services in the United States, whatever from hamburgers to magazine memberships to coffee and home enhancement shops,' the SPGA spokesperson 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 industry experts, that argument does not cut it.

For beginners, video gaming lawyer Daniel Wallach points out, McDonald's Monopoly video game does not run indefinitely. Rather, it has a well-defined beginning and end, therefore suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote real products like fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're generally not connected to casino-style video games of possibility,' Wallach informed DailyMail.com. 'They're just cash free gifts.

'The sweepstakes [gambling establishments] possess none of the characteristics commonly connected with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments use" casino-like" payments, normally 80 percent or more of earnings, whereas the common payment portion for a short-term marketing sweepstakes is a minor share of the profits earned by the company [normally less than one percent]'

Wallach is fast to liken the online social sweeps casinos to the web coffee shops that emerged in Florida, using consumers the possibility to play casino-style games for real prizes. A number of those brick-and-mortar facilities have actually given that been shuttered over allegations of illegal gaming.

DJ Khaled is among a number of star spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps gambling establishments must deal with similar scrutiny.

'These differences are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been mentioned by courts and state chief law officer as key consider determining that a sweepstakes promo remained in fact a guise for prohibited sports betting.'

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

'Consumers are being deprived of protections and states are passing up considerable tax and income opportunities as this gambling changes that performed through regulated channels,' checked out a well-circulated AGA memo.

And after that there are the complainants who have sued social gambling establishments in more than a lots states.

Sweepstakes casino operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, 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 current lawsuit, which is largely similar to its predecessors, New York state locals Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is described in the filing as an 'unlawful gambling business. '

Apple and Google have also been named as defendants in claims for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's demand for remark.

'We normally do not talk about matters before the courts,' a VGW spokesperson informed DailyMail.com by means of email. 'However, we note that this claim has actually only simply been submitted with the court and VGW has not been formally served.

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

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

The issues between traditional online gambling and sweepstakes casinos might show bothersome for some celeb 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 conventional gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking illegal sports betting 'sweeps' sites while at the exact same time the leagues want to project a strong stance versus prohibited gaming - specifically when attempting to tamp down the occasional sports betting scandal,' Glaser told DailyMail.com.
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It was just eight months ago that Toronto Raptors forward Jontay Porter got a lifetime restriction from the NBA over allegations he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes casinos.

Together with VGW, Apple and Google are being sued for hosting allegedly unlawful sports betting sites

Regardless, Glaser sees sweepstakes casinos as a major concern for leagues such as the NBA.
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'I 'd expect that a league crackdown on professional athletes endorsing sweepstakes websites refers when, not if,' Glaser added.

Neither an NBA spokesperson nor the players' agents reacted to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to react to DailyMail.com e-mails.

Asked if their celeb endorsers have a duty to discuss to clients the distinctions and resemblances between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the representative stated. 'A few of our values are" our players come initially" and" we do what's right", and we put our worths at the core of whatever we do.'

Glaser, an outspoken opponent of sweepstakes sites, sees things in a different way.
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'Celebrities who provide their names to shady illegal gaming websites are, at a minimum, putting their track records at risk as well as courting civil and class actions by consumers who declare damage,' Glaser stated. 'There is also some threat that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for helping with illegal sports betting.'

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