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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 gaming.

No, they weren't personally in presence, however the world-famous celebrities were conspicuously included in a slide presentation on social and sweepstakes gambling establishments - the questionable websites providing both free casino-style games and financially rewarding prizes, such as money, 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.

The sites are simply 2 cogs in the multibillion-dollar market that now discovers itself besieged by claims. In the eyes of many video gaming corporations, not to point out lawsuit plaintiffs and state regulators, sweepstakes gambling establishments serve as conventional gambling establishments, just without the oversight, consumer protections and tax laws. So not just can they prevent the high 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 income in 2015 alone. Now the company faces allegations of illegal gaming in a New York claim that claims VGW utilizes star endorsers to 'create a veneer of legitimacy' around its product. (See VGW's statement below)

'I'm uncertain" if you don't trust us, you can rely on Paris Hilton" is a winning message for business operating 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, informed DailyMail.com.

Sweepstakes endorsers consist of a range of stars from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom provide any distinctions in between traditional gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among numerous sweepstakes gambling establishments found online
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Ryan Seacrest prompts fans to play at Chumba Casino, where lots of - but not all - video games are free

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

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

Others lure customers with guarantees of prizes. One such operator, Stake, ran a social media advertisement revealing off Drake's automobiles, planes and estates before pivoting to footage of the rapper playing online casino-style video games.

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

Another caption explained: 'Because I never ever quit.'

The discrepancy in between gaming websites and social or sweepstakes gambling establishments is a bit intricate, 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), explained its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA information, the majority of the players on social-sweepstakes casinos are sports betting free.

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

Social casinos provide customers an opportunity to play casino-style video games with friends. Players have the alternative to buy worthless currency typically referred to as 'gold coins,' which can not be exchanged genuine money, but can be used to unlock different features within the video games.

But within the world of social gambling establishments exists sweepstakes video gaming, enabling customers to obtain other currency understood as 'sweeps coins' that can be exchanged for cash or other prizes.

And therein lies the capacity for financial losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York City. One gamer told the Washington Post he lost more than $100,000 on sweepstakes casinos in the previous year after continuing to purchase more coins in pursuit of money and other things of worth.

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

Social sweeps casino Stake ran an ad displaying Drake's cars and trucks, airplanes 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 seven states, which has helped to fuel the popularity of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes websites, which don't require usually need identification. However, sites like Chumba will request for IDs from gamers trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, permit consumers to submit mail-in requests for totally free sweeps coins, offered the players follow painfully specific guidelines. What's more, players are frequently rewarded with sweeps coins simply for signing up, consequently providing them a reason to try their hands at any variety of casino games for an opportunity to win - or lose - real cash.

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

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

'Social sweepstakes video games are just a type of online entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is needed to dip into social casinos with sweepstakes rewards. Consumers never have to pay for an opportunity to win prizes. That absence of a purchase requirement - or" consideration" - is an essential distinction in between social sweeps and traditional online sports betting sites like gambling establishments.'

Think about the manner in which McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and french fries that offer them the chance to win rewarding prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the game itself doesn't fulfill the meaning of sports betting in the US.

'Sweepstakes are an enduring technique for promoting all kinds of everyday companies in the United States, everything from burgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are regularly used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous sports betting market insiders, that argument does not cut it.
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For beginners, video gaming attorney Daniel Wallach mentions, McDonald's Monopoly game doesn't run forever. Rather, it has a well-defined beginning and end, consequently suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote real items like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [casinos] have none of the attributes frequently related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments use" casino-like" payouts, typically 80 percent or more of revenues, whereas the typical payment percentage for a short-lived marketing sweepstakes is an insignificant share of the profits made by the business [typically less than one percent]'

Wallach is fast to liken the online social sweeps gambling establishments to the web cafes that emerged in Florida, providing clients the chance to play casino-style games for real rewards. Many of those brick-and-mortar facilities have since been shuttered over claims of illegal sports betting.

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

Now, Wallach argues, social sweeps casinos need to deal with similar analysis.

'These differences are not arbitrary,' Wallach stated of social sweeps casinos. 'They have repeatedly been mentioned by courts and state chief law officer as essential consider figuring out that a sweepstakes promotion remained in truth a guise for illegal gaming.'

Among the casino industry's leading trade organizations, the American Gaming Association, is now pressing legislators to investigate sweepstakes operators and, in many cases, enact brand-new legislation on the issue.

'Consumers are being deprived of securities and states are forgoing considerable 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 actually taken legal action against social casinos in more than a dozen states.

Sweepstakes casino operators paid a combined $14.2 million in 4 separate 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, saying the settlement was made to prevent legal expenses and continued litigation.

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

In the most recent claim, which is mainly comparable to its predecessors, New York state homeowners Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited gaming enterprise. '

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

'We usually don't discuss matters before the courts,' a VGW spokesperson told DailyMail.com by means of email. 'However, we keep in mind that this claim has actually only simply been submitted with the court and VGW has actually not been officially served.

'We have complete confidence in our compliance with all laws and guidelines where we operate, and stay confident about the future,' the representative continued. 'We continue to provide our free-to-play video games throughout the majority of North America, as we have for more than a years, producing not just great games, user experiences and home entertainment, however likewise guaranteeing this is done securely, responsibly and at the highest level of standards.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are relatively common across the online social games industry (and the US more broadly), and our basic practice is that we mean to vigorously protect any claim which may be brought against us.'

The problems between standard online gambling and sweepstakes casinos might prove problematic for some celeb 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 video gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking unlawful sports betting 'sweeps' sites while at the same time the leagues desire to forecast a strong position against prohibited gaming - especially when attempting to tamp down the periodic gaming scandal,' Glaser told DailyMail.com.

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

In addition to VGW, Apple and Google are being demanded hosting presumably unlawful gambling sites

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

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

Neither an NBA spokesperson nor the players' representatives reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise disregarded to respond to DailyMail.com emails.

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

'We have full confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the representative said. 'Some of our worths are" our gamers come initially" and" we do what's right", and we put our values at the core of whatever we do.'

Glaser, an outspoken challenger of sweepstakes sites, sees things differently.
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'Celebrities who provide their names to dubious prohibited sports betting sites are, at a minimum, putting their reputations at risk as well as courting civil and class by consumers who allege damage,' Glaser said. 'There is likewise some threat that state regulators and state lawyers basic rope celebrity endorsers into enforcement efforts for helping with illegal gambling.'

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