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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 prohibited sports betting.
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No, they weren't personally in attendance, however the world-famous celebs were conspicuously consisted of in a slide presentation on social and sweepstakes casinos - the questionable websites providing both totally free casino-style 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 anyone 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 suits. In the eyes of many video gaming corporations, not to point out lawsuit plaintiffs and state regulators, sweepstakes gambling establishments act as standard gambling establishments, just without the oversight, consumer protections and tax laws. So not just can they avoid the high 24-percent federal gambling levy, however sweepstakes operators aren't based on regulative obstacles 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 faces allegations of illegal gambling in a New york city lawsuit that claims VGW utilizes celeb endorsers to 'produce a veneer of legitimacy' around its item. (See VGW's statement listed below)

'I'm uncertain" if you do not trust us, you can trust Paris Hilton" is a winning message for companies operating multibillion-dollar prohibited 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 consist of a series of stars from sports betting 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 distinctions between standard gaming and sweepstakes play.

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

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

Drake has an offer with social sweeps gambling establishment, Stake, that he frequently touts on social networks

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Instead, ads generally center around the social aspect of the casinos, while omitting the capacity for actual gambling losses.

Others lure customers with pledges of prizes. One such operator, Stake, ran a social networks ad showing off Drake's vehicles, aircrafts and estates before pivoting to video of the rapper playing online casino-style games.

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

Another caption explained: 'Because I never quit.'

The discrepancy between gaming sites and social or is a bit intricate, but 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), described its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA data, many of the gamers on social-sweepstakes gambling establishments are sports betting free.

'Most social sweeps clients never ever make a purchase,' the SPGA representative told DailyMail.com. 'The minority of customers who make purchases do so in quantities far smaller than the typical deposit or wager size at real-money online gaming websites.'

Social casinos use customers a possibility to play casino-style video games with buddies. Players have the option to buy worthless currency typically described as 'gold coins,' which can not be exchanged for real money, however can be used to unlock numerous functions within the video games.

But within the world of social casinos exists sweepstakes video gaming, enabling consumers to acquire other currency understood as 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the potential for monetary losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York City. One gamer told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the previous 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

Social sweeps gambling establishment Stake ran an ad showing off Drake's cars, aircrafts and mansions

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

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

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

Many sites, like the crypto-compatible Stake, enable customers to send mail-in ask for totally free sweeps coins, provided the gamers follow painfully particular guidelines. What's more, gamers are frequently rewarded with sweeps coins simply for signing up, thereby providing a reason to try their hands at any variety of gambling establishment games for an opportunity to win - or lose - real cash.

So why are sweepstakes websites permitted to run in 48 states, while online gambling establishments are banned in all but 7?

According to the stakeholders, their item is the totally free casino-style gaming, and the real-stakes competition is simply a way of promoting their bread and butter.

'Social sweepstakes video games are just a kind of online entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is required to dip into social casinos with sweepstakes rewards. Consumers never ever have to pay for a chance to win rewards. That lack of a purchase requirement - or" factor to consider" - is a crucial difference between social sweeps and traditional online sports betting websites like casinos.'

Think of the way that McDonald's utilizes its annual Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're buying hamburgers and fries that use them the possibility to win profitable prizes, such as a $1 million prize.

And without a purchase requirement, or 'factor to consider', the video game itself doesn't meet the meaning of sports betting in the US.

'Sweepstakes are a long-standing method for promoting all type of daily organizations in the United States, everything from burgers to magazine memberships to coffee and home improvement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are regularly used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'
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But to many sports betting industry insiders, that argument doesn't cut it.

For starters, video gaming attorney Daniel Wallach mentions, McDonald's Monopoly video game does not run indefinitely. Rather, it has a well-defined start and end, thus recommending the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being utilized to promote genuine items like fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're usually not tied to casino-style games of chance,' Wallach told DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [casinos] have none of the characteristics typically related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments offer" casino-like" payouts, typically 80 percent or more of revenues, whereas the common payment percentage for a momentary advertising sweepstakes is a minor share of the earnings made by the business [normally less than one percent]'
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Wallach fasts to compare the online social sweeps gambling establishments to the web coffee shops that sprang up in Florida, offering customers the chance to play casino-style video games for genuine rewards. Many of those brick-and-mortar establishments have given that been shuttered over claims of illegal gaming.

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

Now, Wallach argues, social sweeps casinos must face similar analysis.

'These differences are not approximate,' Wallach said of social sweeps gambling establishments. 'They have consistently been mentioned by courts and state attorney general of the United States as key elements in figuring out that a sweepstakes promo was in fact a guise for prohibited gambling.'

Among the casino industry's leading trade companies, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, in many cases, enact new legislation on the concern.

'Consumers are being denied of protections and states are passing up significant tax and income opportunities as this gaming changes that conducted through controlled channels,' checked out a well-circulated AGA memo.

And after that there are the plaintiffs who have taken legal action against social casinos in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 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 claim, saying the settlement was made to prevent legal costs and continued litigation.

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

In the most current lawsuit, which is mostly similar to its predecessors, New York state residents Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'unlawful gambling business. '

Apple and Google have likewise been named as defendants in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech business 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 keep in mind that this claim has only just been filed with the court and VGW has actually not been formally served.

'We have complete self-confidence in our compliance with all laws and guidelines where we operate, and stay positive about the future,' the spokesperson continued. 'We continue to offer our free-to-play video games throughout many of The United States and Canada, as we have for more than a decade, creating not only excellent video games, user experiences and entertainment, but also ensuring this is done securely, properly and at the highest level of standards.

'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are reasonably typical across the online social games industry (and the US more broadly), and our standard practice is that we plan to intensely safeguard any claim which might be brought versus us.'

The concerns in between conventional online gambling and sweepstakes casinos might show troublesome 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 conventional video gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking prohibited sports betting wagering 'sweeps' sites while at the exact same time the leagues desire to project a strong stance against prohibited gambling - particularly when attempting to tamp down the occasional gaming scandal,' Glaser told DailyMail.com.

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

Together with VGW, Apple and Google are being demanded hosting allegedly unlawful gambling sites

Regardless, Glaser sees sweepstakes gambling establishments 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 spokesperson nor the gamers' agents reacted to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also overlooked to respond to DailyMail.com e-mails.

Asked if their celeb endorsers have a responsibility to describe to consumers the distinctions and similarities in between iGaming and sweepstakes casinos, VGW firmly 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. 'Some of our worths are" our gamers precede" and" we do what's right", and we put our values at the core of whatever we do.'

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

'Celebrities who lend their names to shady illegal gaming sites are, at a minimum, putting their track records at threat along with courting civil and class actions by customers who allege damage,' Glaser stated. 'There is likewise some danger that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for helping with prohibited sports betting.'

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