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 presence, however the world-famous celebs were notably consisted of in a slide presentation on social and sweepstakes casinos - the questionable sites using both totally free casino-style video games and financially rewarding prizes, such as cash, gift 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 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 mention claim complainants and state regulators, sweepstakes casinos function as traditional casinos, just without the oversight, customer defenses and tax laws. So not just can they avoid the steep 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulatory difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the company deals with allegations of prohibited sports betting in a New york city suit that declares VGW utilizes celeb endorsers to 'produce 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 business running multibillion-dollar unlawful operations out of places like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of video gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers include a variety of celebrities from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom use any differences between traditional sports betting and sweepstakes play.

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

Ryan Seacrest advises fans to dip into Chumba Casino, where numerous - but not all - video games are complimentary

Drake has a deal with social sweeps gambling establishment, Stake, that he regularly promotes on social networks

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Instead, ads normally center around the social aspect of the casinos, while omitting the capacity for real gaming losses.

Others lure clients with guarantees of prizes. One such operator, Stake, ran a social networks advertisement displaying Drake's cars and trucks, airplanes and mansions before rotating to footage of the rapper playing online casino-style video games.

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

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

The discrepancy between gambling sites and social or sweepstakes gambling establishments is a bit intricate, 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), described its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA information, many of the gamers on social-sweepstakes casinos 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 amounts far smaller than the normal deposit or bet size at real-money online gambling websites.'

Social gambling establishments use consumers a possibility to play casino-style video games with good friends. Players have the alternative to purchase valueless currency frequently referred to as 'gold coins,' which can not be exchanged for real money, but can be used to unlock various features within the video games.

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

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

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

Social sweeps casino Stake ran an advertisement revealing off Drake's cars and trucks, 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 banned in all but seven states, which has assisted to fuel the appeal of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, enable consumers to send mail-in ask for totally free sweeps coins, offered the players follow painfully particular directions. What's more, players are often rewarded with sweeps coins just for signing up, consequently providing them a reason to try their hands at any variety of casino video games for a chance to win - or lose - real cash.

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

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

'Social sweepstakes games are simply a kind of online home entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is required to dip into social gambling establishments with sweepstakes prizes. Consumers never have to spend for a chance to win prizes. That absence of a purchase requirement - or" factor to consider" - is an important difference between social sweeps and standard online gaming websites like casinos.'

Consider the method that McDonald's utilizes its annual Monopoly game to promote its food: Customers aren't paying to bet, but rather they're buying hamburgers and fries that provide them the chance to win profitable prizes, such as a $1 million prize.

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

'Sweepstakes are a long-standing technique for promoting all sort of everyday services in the United States, whatever from burgers to publication memberships to coffee and home enhancement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are routinely used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For starters, video 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 used to promote genuine items like french fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're usually not connected to casino-style video games of possibility,' Wallach informed DailyMail.com. 'They're just money giveaways.

'The sweepstakes [casinos] have none of the characteristics commonly associated with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes casinos offer" casino-like" payments, generally 80 percent or more of profits, whereas the normal payout percentage for a momentary promotional sweepstakes is a trivial share of the revenue made by the company [usually less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the web cafes that emerged in Florida, using clients the possibility to play casino-style games for genuine rewards. Much of those brick-and-mortar establishments have because been shuttered over claims of illegal gambling.

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

Now, Wallach argues, social sweeps gambling establishments should face comparable scrutiny.

'These distinctions are not approximate,' Wallach said of social sweeps casinos. 'They have repeatedly been pointed out by courts and state lawyer generals as crucial in determining that a sweepstakes promo remained in truth a guise for prohibited sports betting.'

One of the casino industry's leading trade organizations, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, in many cases, enact new legislation on the concern.

'Consumers are being deprived of defenses and states are giving up considerable tax and profits opportunities as this gambling replaces that conducted through controlled channels,' read a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, stating 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 comparable to its predecessors, New york city state homeowners Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is described in the filing as an 'illegal gaming business. '

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

'We usually don't discuss matters before the courts,' a VGW representative told DailyMail.com by means of email. 'However, we keep in mind that this claim has only just been filed with the court and VGW has not been formally served.

'We have complete self-confidence in our compliance with all laws and guidelines where we operate, and remain positive about the future,' the spokesperson continued. 'We continue to use our free-to-play video games across many of The United States and Canada, as we have for more than a decade, developing not just great video games, user experiences and home entertainment, however also ensuring this is done securely, responsibly and at the greatest level of standards.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are fairly common throughout the online social video games industry (and the US more broadly), and our basic practice is that we intend to vigorously safeguard any claim which might be brought against us.'

The problems in between traditional online gaming and sweepstakes gambling establishments could show 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 ironic that expert athletes are hawking prohibited sports betting 'sweeps' websites while at the same time the leagues wish to predict a strong position against illegal gambling - specifically when trying to tamp down the periodic sports betting scandal,' Glaser informed DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter received a lifetime ban from the NBA over accusations he conspired with bettors. 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 taken legal action against for hosting apparently unlawful sports betting sites

Regardless, Glaser sees sweepstakes casinos as a major issue 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 responded to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise overlooked to react to DailyMail.com emails.

Asked if their celebrity endorsers have an obligation to describe to consumers the differences and similarities in between iGaming and sweepstakes casinos, VGW insisted there is nothing more that needs to be done.

'We have full self-confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the representative said. 'Some of our values are" our gamers 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 sites, sees things differently.

'Celebrities who provide their names to shady unlawful gaming websites are, at a minimum, putting their reputations at risk along with courting civil and class actions by customers who declare harm,' Glaser said. 'There is likewise some risk that state regulators and state lawyers basic rope celebrity endorsers into enforcement efforts for facilitating unlawful gaming.'

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