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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 attendance, but the world-famous celebs were notably included in a slide presentation on social and sweepstakes gambling establishments - the questionable sites using both totally free casino-style games and rewarding rewards, such as money, gift 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 2 cogs in the multibillion-dollar industry that now discovers itself besieged by claims. In the eyes of many gaming corporations, not to discuss suit complainants and state regulators, sweepstakes gambling establishments function as standard casinos, only without the oversight, consumer defenses and tax laws. So not only can they prevent the high 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulatory difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the business deals with allegations of prohibited sports betting in a New York suit that utilizes celeb endorsers to 'produce a veneer of legitimacy' around its item. (See VGW's statement listed below)

'I'm uncertain" if you don't trust us, you can trust Paris Hilton" is a winning message for business operating multibillion-dollar unlawful operations out of places 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 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 between traditional gaming and sweepstakes play.

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

Ryan Seacrest advises fans to play at Chumba Casino, where numerous - however not all - games are complimentary

Drake has a handle social sweeps casino, Stake, that he routinely promotes on social media

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Instead, ads typically center around the social element of the casinos, while omitting the capacity for actual sports betting losses.

Others tempt clients with guarantees of rewards. One such operator, Stake, ran a social networks ad flaunting Drake's cars and trucks, airplanes and mansions before pivoting to video of the rapper playing online casino-style video games.

'Daddy, why do we have so much money?' read the 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 complex, however 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 information, most of the players on social-sweepstakes gambling establishments are playing for complimentary.
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'Most social sweeps customers never buy,' the SPGA representative 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 sports betting sites.'

Social casinos use consumers a chance to play casino-style games with pals. Players have the choice to purchase valueless currency often referred to as 'gold coins,' which can not be exchanged genuine money, however can be utilized to unlock various features within the video games.

But within the world of social gambling establishments exists sweepstakes gaming, allowing clients to acquire other currency called 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the capacity for monetary losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York. One gamer 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 cash and other things of value.

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

Social sweeps gambling establishment Stake ran an advertisement showing 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 banned in all but seven 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 require normally need identification. However, websites like Chumba will ask for IDs from gamers trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, allow clients to submit mail-in ask for totally free sweeps coins, provided the gamers follow painfully specific directions. What's more, gamers are frequently rewarded with sweeps coins simply for signing up, thereby providing a factor to attempt their hands at any variety of gambling establishment games for an opportunity to win - or lose - genuine cash.

So why are sweepstakes sites allowed to run in 48 states, while online casinos are banned in all however 7?

According to the stakeholders, their item is the complimentary casino-style video gaming, and the real-stakes competition is merely a way of promoting their support.

'Social sweepstakes video games are just a form of online home entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is required to play at social gambling establishments with sweepstakes rewards. Consumers never ever need to pay for an opportunity to win rewards. That absence of a purchase requirement - or" consideration" - is a vital distinction in between social sweeps and conventional online sports betting websites like casinos.'

Consider the manner in which McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and french fries that offer them the chance to win profitable rewards, such as a $1 million jackpot.

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

'Sweepstakes are an enduring technique for promoting all kinds of everyday organizations in the United States, everything from hamburgers to magazine memberships to coffee and home enhancement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos 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 gambling industry insiders, that argument does not cut it.

For starters, gaming lawyer Daniel Wallach points out, McDonald's Monopoly game does not run indefinitely. Rather, it has a distinct beginning and end, consequently recommending the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being utilized to promote real products like french fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're generally not tied to casino-style video games of possibility,' Wallach informed DailyMail.com. 'They're simply money free gifts.

'The sweepstakes [gambling establishments] have none of the qualities frequently related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments offer" casino-like" payouts, normally 80 percent or more of revenues, whereas the typical payment portion for a short-lived marketing sweepstakes is a minor share of the income made by the company [usually less than one percent]'

Wallach is quick to compare the online social sweeps casinos to the web coffee shops that emerged in Florida, using consumers the possibility to play casino-style games for real prizes. Many of those brick-and-mortar facilities have since been shuttered over allegations of illegal gambling.

DJ Khaled is amongst a number of star spokespeople for VGW's Global Poker brand

Now, Wallach argues, social sweeps casinos ought to face similar examination.

'These differences are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have consistently been mentioned by courts and state lawyer generals as key aspects in identifying that a sweepstakes promo was in fact a guise for unlawful gaming.'

One of the gambling establishment industry's leading trade organizations, the American Gaming Association, is now pushing lawmakers to examine sweepstakes operators and, in many cases, enact new legislation on the issue.

'Consumers are being deprived of protections and states are forgoing significant tax and earnings opportunities as this gaming changes that carried out through regulated channels,' checked out a well-circulated AGA memo.

And then there are the plaintiffs who have taken legal action against social gambling establishments in more than a dozen states.

Sweepstakes casino operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, stating the settlement was made to avoid legal costs and continued lawsuits.

Michael Phelps has signed an offer with the VGW Group, which owns Global Poker

In the newest suit, which is mainly comparable to its predecessors, New York state locals Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is described in the filing as an 'illegal sports betting business. '
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Apple and Google have also been called as offenders in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's demand for remark.

'We generally don't talk about matters before the courts,' a VGW spokesperson informed DailyMail.com via e-mail. 'However, we note that this claim has actually only just been filed with the court and VGW has not been officially served.

'We have complete 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 use our free-to-play games throughout the majority of The United States and Canada, as we have for more than a decade, creating not just fantastic video games, user experiences and entertainment, but also guaranteeing this is done securely, responsibly and at the highest level of standards.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are relatively typical throughout the online social video games industry (and the US more broadly), and our standard practice is that we mean to vigorously defend any claim which may be brought versus us.'

The concerns between conventional online sports betting 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 name while the NBA is partnered with conventional gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking illegal sports betting wagering 'sweeps' websites while at the exact same time the leagues wish to project a strong stance versus illegal gaming - especially when trying to tamp down the occasional sports betting scandal,' Glaser told DailyMail.com.

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

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

Regardless, Glaser sees sweepstakes gambling establishments as a significant issue for leagues such as the NBA.

'I 'd anticipate that a league crackdown on professional athletes endorsing sweepstakes sites is a matter of when, not if,' Glaser included.

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

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

'We have full confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the spokesperson said. 'Some of our values are" our players come initially" 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 in a different way.
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'Celebrities who lend their names to dubious prohibited gaming sites are, at a minimum, putting their credibilities at risk as well as courting civil and class actions by customers who allege harm,' Glaser said. 'There is also some threat that state regulators and state chief law officers rope celeb endorsers into enforcement efforts for assisting in unlawful sports betting.'

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