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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 gambling.
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No, they weren't personally in presence, but the world-famous stars were notably included in a slide discussion on social and sweepstakes casinos - the questionable websites offering both complimentary casino-style video games and rewarding rewards, such as money, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The websites are simply 2 cogs in the multibillion-dollar market that now finds itself besieged by lawsuits. In the eyes of many gaming corporations, not to discuss suit plaintiffs and state regulators, sweepstakes gambling establishments serve as traditional casinos, only without the oversight, consumer securities and tax laws. So not only can they prevent the high 24-percent federal gaming levy, however sweepstakes operators aren't based on regulative hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the business faces accusations of unlawful sports betting in a New york city suit that claims VGW uses star endorsers to 'develop a veneer of legitimacy' around its product. (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 business running multibillion-dollar prohibited operations out of places like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of video gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a variety of celebs from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom offer any differences in between traditional sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of many sweepstakes casinos discovered online

Ryan Seacrest advises fans to play at Chumba Casino, where lots of - however not all - games are totally free

Drake has an offer with social sweeps casino, Stake, that he routinely promotes on social networks

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Instead, advertisements usually focus around the social aspect of the casinos, while omitting the capacity for real sports betting losses.

Others lure clients with of prizes. One such operator, Stake, ran a social networks ad flaunting Drake's cars and trucks, planes and estates before pivoting to video of the rap artist playing online casino-style games.

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

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

The discrepancy in between gambling sites and social or sweepstakes casinos is a bit intricate, but operators of the latter insist they're not involved with the former.

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA information, most of the gamers on social-sweepstakes gambling establishments are sports betting totally free.

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

Social gambling establishments provide clients a chance to play casino-style games with friends. Players have the choice to buy valueless currency frequently referred to as 'gold coins,' which can not be exchanged for real money, however can be used to open various functions within the video games.

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

And therein lies the capacity for monetary 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 purchase more coins in pursuit of money and other things of value.

The Philadelphia 76ers' Paul George is seen promoting a Worldwide Poker event

Social sweeps gambling establishment Stake ran an advertisement revealing off Drake's cars and trucks, aircrafts and estates

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

Traditional online casinos are prohibited in all but 7 states, which has actually assisted to sustain the popularity of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, allow clients to send mail-in ask for totally free sweeps coins, offered the players follow painfully particular instructions. What's more, gamers are frequently rewarded with sweeps coins just for registering, therefore providing them a factor to try their hands at any variety of gambling establishment games for a possibility to win - or lose - real cash.

So why are sweepstakes sites allowed to operate in 48 states, while online casinos are prohibited in all but 7?

According to the stakeholders, their item is the free casino-style gaming, and the real-stakes competition is just a method 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 rewards. Consumers never have to spend for an opportunity to win rewards. That absence of a purchase requirement - or" factor to consider" - is a vital distinction between social sweeps and traditional online gaming websites like casinos.'

Think about the way that McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to gamble, however rather they're buying hamburgers and fries that provide them the chance to win financially rewarding rewards, such as a $1 million jackpot.

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

'Sweepstakes are an enduring method for promoting all kinds of daily organizations in the United States, whatever from burgers to publication memberships to coffee and home improvement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are regularly utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many gambling market insiders, that argument does not cut it.

For starters, gaming lawyer Daniel Wallach points out, McDonald's Monopoly game does not run forever. Rather, it has a distinct start and end, therefore recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote genuine products like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [casinos] possess none of the characteristics frequently connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes casinos use" casino-like" payouts, normally 80 percent or more of earnings, whereas the common payout portion for a temporary promotional sweepstakes is a minor share of the income made by the business [normally less than one percent]'

Wallach is fast to compare the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, providing customers the chance to play casino-style games for real rewards. Much of those brick-and-mortar facilities have actually given that been shuttered over accusations of prohibited gambling.

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

Now, Wallach argues, social sweeps casinos should deal with comparable scrutiny.

'These differences are not arbitrary,' Wallach said of social sweeps casinos. 'They have actually repeatedly been cited by courts and state attorney generals as key consider figuring out that a sweepstakes promotion was in reality a guise for unlawful gaming.'

Among the gambling establishment market's leading trade companies, the American Gaming Association, is now pushing lawmakers to examine sweepstakes operators and, in some cases, enact new legislation on the issue.

'Consumers are being denied of defenses and states are giving up significant tax and earnings opportunities as this sports betting changes that carried out through controlled channels,' read a well-circulated AGA memo.

And after that there are the complainants who have sued social gambling establishments in more than a lots states.

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

Michael Phelps has actually 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 claim to have lost well over $1,000 to VGW, which is explained in the filing as an 'illegal gambling business. '

Apple and Google have actually also been named as accuseds in suits for hosting the sweepstakes sites. But unlike VGW, neither tech company responded to DailyMail.com's demand for comment.

'We usually don't comment on matters before the courts,' a VGW representative told DailyMail.com via e-mail. 'However, we note that this claim has only just been filed with the court and VGW has not been officially served.

'We have full self-confidence in our compliance with all laws and policies where we run, and remain confident about the future,' the spokesperson continued. 'We continue to use our free-to-play video games throughout the majority of North America, as we have for more than a decade, creating not just great games, user experiences and home entertainment, however likewise ensuring this is done securely, properly and at the greatest level of requirements.

'More broadly, we 'd restate that class actions and other litigations and arbitrations are reasonably common across the online social games industry (and the US more broadly), and our basic practice is that we plan to vigorously defend any claim which may be brought versus us.'

The concerns between conventional online gambling and sweepstakes gambling establishments could prove troublesome for some star endorsers.

Towns, a star center with the Knicks, and the 76ers' George both back 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 unlawful sports betting 'sweeps' sites while at the very same time the leagues want to predict a strong stance against prohibited gaming - particularly when attempting to tamp down the occasional gambling scandal,' Glaser informed DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter received a life time restriction from the NBA over claims he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes casinos.

In addition to VGW, Apple and Google are being demanded hosting supposedly illegal gambling sites

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

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

Neither an NBA spokesman nor the players' agents reacted to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to react to DailyMail.com e-mails.

Asked if their celebrity endorsers have an obligation to discuss to clients the distinctions and resemblances in between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that requires to be done.

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the spokesperson stated. 'Some of our values are" our players precede" 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 differently.

'Celebrities who lend their names to shady prohibited gaming websites are, at a minimum, putting their reputations at danger along with courting civil and class actions by consumers who declare harm,' Glaser stated. 'There is also some danger that state regulators and state lawyers general rope star endorsers into enforcement efforts for facilitating illegal sports betting.'

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