The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on prohibited sports betting.
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No, they weren't personally in attendance, but the world-famous celebrities were notably consisted of in a slide presentation on social and sweepstakes casinos - the questionable sites using both free casino-style video games and rewarding rewards, such as money, 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 simply two cogs in the multibillion-dollar industry that now discovers itself besieged by suits. In the eyes of lots of gaming corporations, not to discuss suit plaintiffs and state regulators, sweepstakes casinos function as standard gambling establishments, just without the oversight, consumer defenses 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 income in 2015 alone. Now the business faces accusations of unlawful sports betting in a New york city claim that claims VGW utilizes star endorsers to 'create a veneer of legitimacy' around its item. (See VGW's statement below)

'I'm not exactly sure" 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 speaker, Howard Glaser of video gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers consist of a range of celebrities from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions in between traditional gaming and sweepstakes play.

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

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

Drake has a deal with social sweeps casino, Stake, that he regularly promotes on social media

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Instead, ads usually center around the social element of the casinos, while leaving out the capacity for actual gambling losses.

Others lure clients with guarantees of rewards. One such operator, Stake, ran a social media ad displaying Drake's automobiles, airplanes and estates before pivoting to footage of the rap artist playing online casino-style games.

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

Another caption described: 'Because I never quit.'

The disparity between gaming websites and social or sweepstakes gambling establishments is a bit complicated, but operators of the latter insist they're not included with the previous.

A spokesperson for a market trade group, the Social and Promotional Gaming (SPGA), discussed its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA data, many of the players on social-sweepstakes gambling establishments are playing for free.

'Most social sweeps consumers never buy,' the SPGA representative told DailyMail.com. 'The minority of customers who make purchases do so in amounts far smaller sized than the typical deposit or wager size at real-money online gambling sites.'

Social casinos use customers a chance to play casino-style games with pals. Players have the alternative to buy worthless currency frequently described as 'gold coins,' which can not be exchanged for genuine cash, but can be used to open different features within the video games.

But within the world of social casinos exists sweepstakes video gaming, enabling clients to get other currency referred to as 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the potential for financial losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York. One gamer told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the past year after continuing to buy more coins in pursuit of money and other things of value.

The Philadelphia 76ers' Paul George is seen promoting an International Poker event
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Social sweeps gambling establishment Stake ran an ad displaying 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 gambling establishments are banned in all however seven states, which has assisted to fuel the appeal of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, allow customers to submit mail-in demands for free sweeps coins, offered the players follow painfully specific guidelines. What's more, players are typically rewarded with sweeps coins merely for signing up, thereby providing a factor to attempt their hands at any variety of casino games for a possibility to win - or lose - real cash.

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

According to the stakeholders, their product is the free casino-style video gaming, and the real-stakes competition is simply a method of promoting their bread and butter.

'Social sweepstakes games are simply a type of online entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is required to dip into social gambling establishments with sweepstakes prizes. Consumers never ever have to spend for a chance to win rewards. That lack of a purchase requirement - or" factor to consider" - is a crucial difference between social sweeps and conventional online gaming sites like casinos.'

Consider the way that McDonald's uses its yearly Monopoly video game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and fries that provide them the chance to win lucrative prizes, such as a $1 million jackpot.

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

'Sweepstakes are a long-standing technique for promoting all sort of daily businesses in the United States, whatever from burgers to publication subscriptions to coffee and home improvement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are regularly used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting industry insiders, that argument doesn't cut it.

For starters, gaming attorney Daniel Wallach mentions, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a distinct start and end, thus suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote genuine products like french fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're typically not connected to casino-style games of opportunity,' Wallach told DailyMail.com. 'They're simply money free gifts.

'The sweepstakes [gambling establishments] possess none of the qualities frequently connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments provide" casino-like" payments, normally 80 percent or more of earnings, whereas the common payment portion for a temporary advertising sweepstakes is a trivial share of the revenue made by the business [generally less than one percent]'

Wallach is quick to compare the online social sweeps casinos to the web coffee shops that sprang up in Florida, providing consumers the chance to play casino-style video games for genuine prizes. Much of those brick-and-mortar establishments have because been shuttered over allegations of illegal sports betting.

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

Now, Wallach argues, social sweeps casinos need to face comparable scrutiny.

'These differences are not arbitrary,' Wallach stated of social sweeps casinos. 'They have consistently been cited by courts and state attorney general of the United States as key consider determining that a sweepstakes promotion was in truth a guise for prohibited gaming.'

One of the casino market's leading trade organizations, the American Gaming Association, is now pushing lawmakers to examine sweepstakes operators and, sometimes, enact new legislation on the concern.

'Consumers are being denied of defenses and states are forgoing considerable tax and profits chances as this gaming replaces that conducted through regulated channels,' read a well-circulated AGA memo.

And then there are the complainants who have actually taken legal action against social gambling establishments 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 misdeed, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action suit, stating the settlement was made to prevent legal expenses and continued litigation.

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

In the most recent claim, which is mostly comparable to its predecessors, New York state homeowners 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 'illegal gaming enterprise. '

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

'We generally do not talk about matters before the courts,' a VGW representative 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 complete confidence in our compliance with all laws and guidelines where we operate, and stay positive about the future,' the spokesperson continued. 'We continue to use our free-to-play games throughout most of North America, as we have for more than a decade, producing not just terrific games, user experiences and home entertainment, but likewise ensuring this is done safely, responsibly and at the highest level of standards.

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

The problems between standard online gambling and sweepstakes casinos could show problematic 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 standard gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking illegal sports betting 'sweeps' websites while at the very same time the leagues want to project a strong position against illegal gaming - particularly when trying to tamp down the occasional gaming scandal,' Glaser told DailyMail.com.

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

In addition to VGW, Apple and Google are being demanded hosting apparently unlawful sports betting sites

Regardless, Glaser sees sweepstakes casinos 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 included.

Neither an NBA spokesperson nor the gamers' agents responded to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also overlooked to react to DailyMail.com emails.

Asked if their star endorsers have an obligation to discuss to consumers the differences and similarities between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that requires to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the representative said. 'A few of our worths are" our gamers come first" 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 lend their names to dubious unlawful sports betting sites are, at a minimum, putting their reputations at threat along with courting civil and class actions by customers who declare harm,' Glaser stated. 'There is also some danger that state regulators and state chief law officers rope star endorsers into enforcement efforts for facilitating unlawful sports betting.'

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