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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 prohibited gambling.
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No, they weren't personally in presence, but the world-famous celebs were conspicuously included in a slide discussion on social and sweepstakes casinos - the questionable sites providing both totally free casino-style games and financially rewarding prizes, such as cash, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody 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 suits. In the eyes of lots of gaming corporations, not to discuss claim plaintiffs and state regulators, sweepstakes gambling establishments function as traditional casinos, only without the oversight, consumer defenses and tax laws. So not only can they prevent the steep 24-percent federal sports betting levy, but sweepstakes operators aren't based on regulatory difficulties 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 allegations of unlawful gaming in a New York suit that claims VGW uses celebrity endorsers to 'create a veneer of legitimacy' around its item. (See VGW's statement below)

'I'm not exactly sure" if you do not trust us, you can trust Paris Hilton" is a winning message for business running multibillion-dollar illegal operations out of places like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers include a series 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 offer any distinctions between conventional gambling and sweepstakes play.

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

Ryan Seacrest prompts fans to dip into Chumba Casino, where lots of - but not all - games are free

Drake has a deal with social sweeps gambling establishment, Stake, that he routinely promotes on social media

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Instead, ads usually focus around the social aspect of the gambling establishments, while omitting the potential for real sports betting losses.

Others tempt clients with pledges of rewards. One such operator, Stake, ran a social networks advertisement flaunting Drake's vehicles, aircrafts and mansions before rotating to footage 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 gave up.'

The inconsistency in between sports betting websites and social or sweepstakes casinos is a bit complicated, however operators of the latter insist they're not included with the former.

A spokesperson for a market trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, the majority of the gamers on social-sweepstakes gambling establishments are playing for free.

'Most social sweeps consumers never ever buy,' the SPGA representative informed DailyMail.com. 'The minority of clients who make purchases do so in quantities far smaller than the normal deposit or bet size at real-money online gaming websites.'

Social gambling establishments use consumers a chance to play casino-style video games with pals. Players have the option to purchase valueless currency typically referred to as 'gold coins,' which can not be exchanged for real cash, however can be used to unlock various within the video games.

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

And therein lies the potential for financial losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York City. One player 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 worth.

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

Social sweeps casino Stake ran an advertisement showing off Drake's automobiles, planes and mansions

Karl-Anthony Towns of the New York City 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 sustain the popularity of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, enable clients to send mail-in requests for complimentary sweeps coins, offered the players follow painfully particular directions. What's more, gamers are typically rewarded with sweeps coins merely for registering, consequently providing a factor to try their hands at any number of gambling establishment video games for a chance to win - or lose - real cash.

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

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

'Social sweepstakes games are simply a type of online home entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is needed to dip into social gambling establishments with sweepstakes rewards. Consumers never ever have to pay for a chance to win prizes. That lack of a purchase requirement - or" factor to consider" - is a crucial distinction in between social sweeps and traditional online gaming 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 bet, however rather they're purchasing hamburgers and fries that use them the possibility to win profitable rewards, such as a $1 million prize.

And without a purchase requirement, or 'factor to consider', the game itself doesn't fulfill the meaning of gambling in the US.

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

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

For beginners, video gaming attorney Daniel Wallach explains, 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 primary product. Instead, the sweepstakes is being used to promote genuine products like french fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're normally not connected to casino-style video games of possibility,' Wallach told DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [gambling establishments] possess none of the qualities typically connected with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos use" casino-like" payouts, typically 80 percent or more of earnings, whereas the typical payout percentage for a momentary promotional sweepstakes is a trivial share of the revenue earned by the company [typically less than one percent]'

Wallach is quick to compare the online social sweeps casinos to the internet cafes that sprang up in Florida, offering consumers the chance to play casino-style video games for genuine prizes. Many of those brick-and-mortar establishments have actually considering that been shuttered over accusations of illegal gaming.

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

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

'These distinctions are not approximate,' Wallach stated of social sweeps casinos. 'They have consistently been pointed out by courts and state lawyer generals as crucial consider figuring out that a sweepstakes promotion was in fact a guise for illegal sports betting.'

One of the gambling establishment market's leading trade companies, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, in many cases, enact new legislation on the problem.

'Consumers are being deprived of defenses and states are giving up substantial tax and revenue chances as this gaming changes that carried out through regulated channels,' checked out a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action claim, saying the settlement was made to avoid legal costs and continued lawsuits.

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

In the most recent lawsuit, which is mostly similar to its predecessors, New york city state locals Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited gambling enterprise. '

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

'We normally don't discuss matters before the courts,' a VGW spokesperson informed DailyMail.com via e-mail. 'However, we note that this claim has only just been submitted with the court and VGW has not been formally served.

'We have full self-confidence in our compliance with all laws and guidelines where we run, and remain positive about the future,' the representative continued. 'We continue to use our free-to-play video games throughout many of North America, as we have for more than a decade, developing not only excellent video games, user experiences and home entertainment, however also guaranteeing this is done safely, properly and at the highest level of standards.

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

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

'It's paradoxical that expert athletes are hawking unlawful sports betting 'sweeps' websites while at the exact same time the leagues want to project a strong stance versus prohibited sports betting - particularly when trying to tamp down the occasional sports betting scandal,' Glaser informed DailyMail.com.

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

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

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

'I 'd expect that a league crackdown on professional athletes endorsing sweepstakes sites 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 ignored to respond to DailyMail.com e-mails.

Asked if their celeb endorsers have a responsibility to describe to clients the differences and resemblances between iGaming and sweepstakes casinos, VGW insisted there is nothing more that requires to be done.

'We have full self-confidence in our influencer and ambassadorial collaborations, and our organization practices more broadly,' the representative said. 'A few of our values are" our players come first" and" we do what's right", and we put our worths at the core of whatever we do.'

Glaser, an outspoken challenger of sweepstakes websites, sees things differently.

'Celebrities who lend their names to shady prohibited sports betting sites are, at a minimum, putting their track records at danger in addition to courting civil and class actions by consumers who allege harm,' Glaser said. 'There is likewise some threat that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for assisting in unlawful gaming.'

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