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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 sports betting.

No, they weren't personally in attendance, but the world-famous celebrities were notably included in a slide discussion on social and sweepstakes casinos - the questionable websites using 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 anybody can 'bet complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are simply 2 cogs in the multibillion-dollar industry that now discovers itself besieged by lawsuits. In the eyes of numerous video gaming corporations, not to mention claim complainants and state regulators, sweepstakes casinos serve as standard gambling establishments, only without the oversight, customer defenses and tax laws. So not just can they prevent the steep 24-percent federal sports betting levy, but sweepstakes operators aren't subject to regulatory obstacles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the business deals with accusations of unlawful gambling in a New york city suit that claims VGW utilizes celeb endorsers to 'create a veneer of authenticity' around its item. (See VGW's statement listed below)
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'I'm not exactly sure" if you don't trust us, you can trust Paris Hilton" is a winning message for companies 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, told DailyMail.com.

Sweepstakes endorsers include a variety of stars 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 distinctions in between conventional gambling and sweepstakes play.

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

Ryan Seacrest prompts fans to dip into Chumba Casino, where many - but not all - video games are totally free

Drake has a deal with social sweeps casino, Stake, that he routinely promotes on social networks

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Instead, ads typically focus around the social element of the casinos, while omitting the capacity for actual gambling losses.

Others lure consumers with promises of rewards. One such operator, Stake, ran a social networks ad displaying Drake's cars and trucks, aircrafts and estates before rotating to footage of the rapper playing online casino-style games.

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

Another caption described: 'Because I never provided up.'

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

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA data, most of the players on social-sweepstakes gambling establishments are sports betting complimentary.
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'Most social sweeps customers never ever buy,' the SPGA spokesperson informed DailyMail.com. 'The minority of clients who make purchases do so in quantities far smaller sized than the common deposit or wager size at real-money online sports betting websites.'

Social casinos provide clients an opportunity to play casino-style video games with good friends. Players have the choice to buy worthless currency often described as 'gold coins,' which can not be exchanged genuine cash, but can be utilized to unlock different features within the games.

But within the world of social casinos exists sweepstakes video gaming, enabling customers to get 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. One player informed 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 money and other things of worth.

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

Social sweeps casino Stake ran an ad flaunting Drake's cars, aircrafts 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 prohibited in all but 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 do not require typically need recognition. However, sites like Chumba will request for IDs from gamers attempting to withdraw any funds.

Many websites, like the crypto-compatible Stake, permit clients to submit mail-in ask for complimentary sweeps coins, offered the gamers follow painfully specific directions. What's more, players are often rewarded with sweeps coins simply for registering, thereby offering them a reason to attempt their hands at any variety of gambling establishment video games for a chance to win - or lose - genuine money.

So why are sweepstakes sites enabled to operate 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 competitors is merely a means of promoting their support.

'Social sweepstakes video games are merely a kind of online entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is needed to play at social gambling establishments with sweepstakes prizes. Consumers never need to pay for an opportunity to win prizes. That absence of a purchase requirement - or" consideration" - is a crucial difference between social sweeps and standard online sports betting sites like casinos.'

Consider the manner in which McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and fries that use them the opportunity to win profitable prizes, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the game itself does not meet the meaning of gaming in the US.

'Sweepstakes are a long-standing method for promoting all kinds of daily businesses in the United States, whatever from burgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are frequently used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous sports betting industry insiders, that argument does not cut it.
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For beginners, video gaming lawyer Daniel Wallach explains, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a distinct beginning and end, thereby recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote genuine items like french fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [casinos] possess none of the characteristics frequently related to McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos provide" casino-like" payments, generally 80 percent or more of incomes, whereas the typical payment percentage for a momentary promotional sweepstakes is an unimportant share of the revenue made by the business [normally less than one percent]'

Wallach is fast to compare the online social sweeps casinos to the web cafes that sprang up in Florida, offering consumers the possibility to play casino-style video games for real rewards. Many of those brick-and-mortar establishments have actually considering that been shuttered over claims of unlawful gaming.

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

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

'These differences are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have actually consistently been mentioned by courts and state lawyer generals as crucial consider figuring out that a sweepstakes promotion was in reality a guise for illegal gaming.'
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One of the gambling establishment industry's leading trade companies, the American Gaming Association, is now pressing legislators to investigate sweepstakes operators and, in many cases, enact new legislation on the concern.

'Consumers are being deprived of securities and states are forgoing substantial tax and earnings chances as this gaming replaces that carried out through controlled channels,' read a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in four different cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action lawsuit, stating the settlement was made to prevent legal expenses and continued lawsuits.
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Michael Phelps has actually signed an offer with the VGW Group, which owns Global Poker

In the latest suit, which is mainly similar to its predecessors, New york city state locals Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is explained in the filing as an 'illegal gaming . '

Apple and Google have likewise been named as accuseds in suits for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's request for remark.

'We usually don't comment on matters before the courts,' a VGW representative informed DailyMail.com via email. 'However, we keep in mind that this claim has only simply been submitted with the court and VGW has actually not been officially served.
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'We have full self-confidence in our compliance with all laws and policies where we operate, and stay positive about the future,' the spokesperson continued. 'We continue to offer our free-to-play games across most of North America, as we have for more than a years, producing not just fantastic video games, user experiences and home entertainment, but likewise ensuring this is done securely, properly and at the greatest level of requirements.

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

The concerns between standard online gaming and sweepstakes gambling establishments could prove troublesome for some celebrity endorsers.

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

'It's ironic that expert athletes are hawking unlawful sports betting 'sweeps' sites while at the very same time the leagues wish to forecast a strong position versus prohibited gaming - specifically when attempting to tamp down the occasional gambling scandal,' Glaser told DailyMail.com.

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

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

Regardless, Glaser sees sweepstakes casinos as a major concern for leagues such as the NBA.

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

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

Asked if their celeb endorsers have a duty to explain to clients the differences and similarities in between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that needs to be done.

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

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

'Celebrities who provide their names to shady prohibited gambling websites are, at a minimum, putting their credibilities at danger in addition to courting civil and class actions by customers who declare damage,' Glaser stated. 'There is also some risk that state regulators and state attorneys general rope celeb endorsers into enforcement efforts for helping with illegal gaming.'

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