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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 illegal gambling.
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No, they weren't personally in presence, but the world-famous stars were notably included in a slide presentation on social and sweepstakes gambling establishments - the questionable websites offering both complimentary casino-style games and profitable prizes, 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 websites are just two cogs in the multibillion-dollar industry that now finds itself besieged by lawsuits. In the eyes of numerous video gaming corporations, not to mention claim plaintiffs and state regulators, sweepstakes gambling establishments act as standard gambling establishments, only without the oversight, customer securities and tax laws. So not only can they prevent the steep 24-percent federal gaming levy, however sweepstakes operators aren't subject to regulatory hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the business deals with accusations of illegal sports betting in a New York lawsuit that declares VGW utilizes celeb endorsers to 'create a veneer of legitimacy' around its item. (See VGW's declaration below)

'I'm not sure" if you do not trust us, you can rely on Paris Hilton" is a winning message for companies running multibillion-dollar unlawful operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of 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, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom use any differences in between traditional gaming and sweepstakes play.

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

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

Drake has a handle social sweeps casino, Stake, that he regularly touts on social media

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

Others tempt customers with guarantees of prizes. One such operator, Stake, ran a social networks advertisement displaying 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 money?' read the very first caption on the screen.

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

The discrepancy between gambling websites and social or sweepstakes casinos is a bit complex, but operators of the latter insist they're not included with the previous.

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA information, many of the players on social-sweepstakes gambling establishments are playing for complimentary.

'Most social sweeps customers never ever buy,' the SPGA spokesperson informed DailyMail.com. 'The minority of consumers who make purchases do so in amounts far smaller than the or bet size at real-money online sports betting websites.'

Social casinos provide clients a chance to play casino-style video games with friends. Players have the choice to buy valueless currency frequently referred to as 'gold coins,' which can not be exchanged genuine cash, but can be used to open various features within the games.

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

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

The Philadelphia 76ers' Paul George is seen promoting a Worldwide Poker event
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Social sweeps gambling establishment Stake ran an advertisement showing off Drake's vehicles, aircrafts and mansions

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

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

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

Many websites, like the crypto-compatible Stake, allow customers to submit mail-in ask for totally free sweeps coins, provided the gamers follow painfully particular directions. What's more, gamers are often rewarded with sweeps coins simply for signing up, thereby providing a reason to try their hands at any variety of gambling establishment games for a possibility to win - or lose - real money.

So why are sweepstakes websites permitted to run in 48 states, while online casinos are banned in all however 7?

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

'Social sweepstakes video games are just a type 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 need to spend for an opportunity to win prizes. That lack of a purchase requirement - or" consideration" - is an essential difference in between social sweeps and traditional online gambling sites like casinos.'

Think of the method that McDonald's uses its yearly Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're buying hamburgers and fries that provide them the opportunity to win profitable rewards, such as a $1 million prize.

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

'Sweepstakes are an enduring method for promoting all sort of everyday businesses in the United States, whatever from hamburgers to publication subscriptions to coffee and home enhancement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are frequently 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 insiders, that argument does not cut it.

For starters, gaming lawyer Daniel Wallach mentions, McDonald's Monopoly game does not run indefinitely. Rather, it has a distinct beginning and end, consequently recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote real items like fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're usually not connected to casino-style games of possibility,' Wallach informed DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [gambling establishments] have none of the qualities frequently associated with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos provide" casino-like" payouts, typically 80 percent or more of incomes, whereas the normal payout percentage for a temporary marketing sweepstakes is a trivial share of the earnings earned by the company [generally less than one percent]'

Wallach is fast to liken the online social sweeps gambling establishments to the internet coffee shops that emerged in Florida, offering clients the opportunity to play casino-style video games for genuine rewards. Much of those brick-and-mortar facilities have actually since been shuttered over claims of illegal sports betting.

DJ Khaled is amongst a number of celebrity spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps casinos ought to deal with comparable analysis.

'These differences are not approximate,' Wallach said of social sweeps casinos. 'They have actually repeatedly been pointed out by courts and state chief law officer as essential consider identifying that a sweepstakes promo remained in reality a guise for illegal gambling.'

Among the gambling establishment industry's leading trade organizations, the American Gaming Association, is now pushing legislators to examine sweepstakes operators and, sometimes, enact brand-new legislation on the problem.

'Consumers are being denied of securities and states are giving up significant tax and profits opportunities as this sports betting changes that conducted through managed channels,' read a well-circulated AGA memo.

And then there are the complainants who have actually taken legal action against social casinos in more than a dozen states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in four separate cases in Kentucky without admitting any misbehavior, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action suit, saying the settlement was made to avoid legal expenses and continued lawsuits.

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

In the current claim, which is mainly comparable to its predecessors, New York state citizens Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is described in the filing as an 'prohibited gambling enterprise. '

Apple and Google have likewise been called as defendants in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech company responded to DailyMail.com's ask for comment.

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

'We have full self-confidence in our compliance with all laws and regulations where we operate, and remain positive about the future,' the representative continued. 'We continue to offer our free-to-play games throughout the majority of The United States and Canada, as we have for more than a years, developing not just fantastic video games, user experiences and entertainment, but also ensuring this is done safely, properly and at the greatest level of requirements.

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

The issues in between standard online gaming and sweepstakes gambling establishments could prove bothersome for some celeb endorsers.

Towns, a star center with the Knicks, and the 76ers' George both back VGW's Global Poker brand name while the NBA is partnered with standard video gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking unlawful sports betting wagering 'sweeps' websites while at the very same time the leagues want to predict a strong stance versus unlawful gaming - particularly when attempting to tamp down the occasional gaming scandal,' Glaser informed DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter got a life time ban from the NBA over claims he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes gambling establishments.

In addition to VGW, Apple and Google are being sued for hosting apparently illegal sports betting websites

Regardless, Glaser sees sweepstakes casinos as a significant issue for leagues such as the NBA.

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

Neither an NBA representative nor the players' representatives responded to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also disregarded to respond to DailyMail.com emails.

Asked if their star endorsers have a responsibility to explain to customers the differences and resemblances in between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that requires to be done.

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

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

'Celebrities who provide their names to dubious prohibited gambling sites are, at a minimum, putting their track records at risk in addition to courting civil and class actions by customers who declare harm,' Glaser stated. 'There is likewise some threat that state regulators and state lawyers basic rope celeb endorsers into enforcement efforts for helping with unlawful gambling.'

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