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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 sports betting.
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No, they weren't personally in attendance, but the world-famous celebrities were conspicuously consisted of in a slide discussion on social and sweepstakes gambling establishments - the questionable websites providing both free casino-style games and lucrative rewards, such as money, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for totally free,' 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 discovers itself besieged by claims. In the eyes of many gaming corporations, not to mention suit complainants and state regulators, sweepstakes casinos function as standard casinos, only without the oversight, customer defenses and tax laws. So not only can they avoid the high 24-percent federal gambling levy, however sweepstakes operators aren't subject to regulative hurdles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income last year alone. Now the company deals with allegations of unlawful sports betting in a New York lawsuit that declares VGW uses celeb endorsers to 'produce a veneer of authenticity' around its product. (See VGW's statement listed below)

'I'm unsure" if you don't trust us, you can rely on Paris Hilton" is a winning message for companies 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 include a variety of stars from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom use any differences between traditional gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of lots of sweepstakes casinos found online

Ryan Seacrest urges fans to play at Chumba Casino, where numerous - but not all - games are complimentary

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

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Instead, advertisements normally center around the social element of the casinos, while leaving out the capacity for actual gaming losses.

Others lure consumers with guarantees of prizes. One such operator, Stake, ran a social media advertisement displaying Drake's vehicles, planes and estates before rotating to video of the rapper playing online casino-style video games.

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

Another caption discussed: 'Because I never offered up.'

The inconsistency between sports betting websites and social or sweepstakes casinos is a bit intricate, but operators of the latter insist they're not involved with the previous.

A spokesperson for a market 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, the majority of the players on social-sweepstakes gambling establishments are sports betting free.

'Most social sweeps consumers never ever buy,' the SPGA spokesperson told DailyMail.com. 'The minority of consumers who make purchases do so in quantities far smaller sized than the or wager size at real-money online gaming sites.'

Social casinos offer consumers an opportunity to play casino-style games with good friends. Players have the choice to purchase valueless currency typically referred to as 'gold coins,' which can not be exchanged genuine cash, but can be used to unlock numerous features within the video games.

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

And therein lies the capacity for financial losses, like the ones declared by plaintiffs 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 past year after continuing to buy more coins in pursuit of cash and other things of value.

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

Social sweeps gambling establishment Stake ran an advertisement showing off 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 banned in all but 7 states, which has actually assisted to fuel the appeal of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes websites, which do not require typically need identification. However, websites like Chumba will request IDs from players attempting to withdraw any funds.

Many sites, like the crypto-compatible Stake, permit customers to submit mail-in requests for complimentary sweeps coins, supplied the gamers follow painfully particular guidelines. What's more, gamers are typically rewarded with sweeps coins merely for signing up, thus providing them a factor to attempt their hands at any variety of gambling establishment games for a chance to win - or lose - genuine cash.

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

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

'Social sweepstakes video games are simply a kind of online entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is required to play at social casinos with sweepstakes rewards. Consumers never have to pay for a chance to win prizes. That absence of a purchase requirement - or" factor to consider" - is an essential distinction in between social sweeps and traditional online sports betting websites like gambling establishments.'

Consider the manner in which McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and french fries that provide them the chance to win lucrative rewards, such as a $1 million jackpot.

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

'Sweepstakes are a long-standing method for promoting all kinds of daily services in the United States, whatever from burgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are routinely used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many gambling industry experts, that argument doesn't cut it.

For beginners, video gaming attorney Daniel Wallach mentions, McDonald's Monopoly game does not run forever. Rather, it has a distinct start and end, thereby suggesting the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being used to promote real items like fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're typically not tied to casino-style video games of possibility,' Wallach told DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [gambling establishments] possess none of the qualities typically associated with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments offer" casino-like" payouts, usually 80 percent or more of earnings, whereas the typical payout percentage for a temporary promotional sweepstakes is an insignificant share of the profits made by the business [usually less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, offering customers the possibility to play casino-style video games for genuine rewards. Much of those brick-and-mortar facilities have given that been shuttered over claims of prohibited gambling.

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

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

'These differences are not approximate,' Wallach said of social sweeps gambling establishments. 'They have actually repeatedly been pointed out by courts and state lawyer generals as essential aspects in identifying that a sweepstakes promotion was in reality a guise for prohibited gaming.'
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One of the casino market's leading trade organizations, the American Gaming Association, is now pressing lawmakers to investigate sweepstakes operators and, in some cases, enact brand-new legislation on the problem.

'Consumers are being denied of protections and states are forgoing considerable tax and income opportunities as this sports betting changes that conducted through regulated channels,' checked out a well-circulated AGA memo.

And then there are the plaintiffs who have actually sued 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 lawsuit, saying the settlement was made to prevent legal expenses and continued lawsuits.

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

In the current suit, which is mainly comparable 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 explained in the filing as an 'unlawful gambling enterprise. '

Apple and Google have actually likewise been named as accuseds in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's request for comment.

'We generally don't talk about matters before the courts,' a VGW representative told DailyMail.com via e-mail. 'However, we keep in mind that this claim has only just been filed with the court and VGW has actually not been formally served.

'We have full confidence in our compliance with all laws and policies where we operate, and remain confident about the future,' the representative continued. 'We continue to offer our free-to-play video games across the majority of North America, as we have for more than a decade, producing not just terrific video games, user experiences and home entertainment, however also ensuring this is done securely, responsibly and at the greatest level of requirements.

'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are relatively typical across the online social games industry (and the US more broadly), and our basic practice is that we plan to strongly defend any claim which might be brought against us.'

The concerns in between standard online gambling and sweepstakes gambling establishments could show troublesome for some celebrity 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 conventional video gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking prohibited sports betting 'sweeps' websites while at the same time the leagues wish to predict a strong position versus unlawful gambling - specifically when attempting to tamp down the periodic sports betting scandal,' Glaser informed DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter received a lifetime 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 gambling establishments.

In addition to VGW, Apple and Google are being demanded hosting apparently prohibited gambling sites

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

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

Neither an NBA spokesperson nor the players' representatives reacted to DailyMail.com's requests for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also overlooked to respond to DailyMail.com emails.

Asked if their celeb endorsers have a responsibility to describe to clients the differences and similarities between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that needs to be done.

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

Glaser, an outspoken challenger of sweepstakes sites, sees things in a different way.
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'Celebrities who lend their names to shady illegal gaming websites are, at a minimum, putting their track records at threat as well as courting civil and class actions by consumers who allege damage,' Glaser said. 'There is also some threat that state regulators and state attorneys general rope celeb endorsers into enforcement efforts for assisting in unlawful gambling.'

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