The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on illegal sports betting.
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No, they weren't personally in presence, but the world-famous celebrities were conspicuously included in a slide presentation on social and sweepstakes gambling establishments - the controversial websites using both free casino-style video 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 anyone can 'play for totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are just 2 cogs in the multibillion-dollar industry that now discovers itself besieged by lawsuits. In the eyes of lots of gaming corporations, not to discuss suit complainants and state regulators, sweepstakes casinos serve as standard casinos, only without the oversight, consumer defenses and tax laws. So not only can they the high 24-percent federal sports betting levy, but sweepstakes operators aren't based on regulatory hurdles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income last year alone. Now the company faces accusations of unlawful gambling in a New York suit that claims VGW uses celeb endorsers to 'produce a veneer of authenticity' around its item. (See VGW's statement listed below)

'I'm not sure" if you don't trust us, you can trust Paris Hilton" is a winning message for companies operating 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 include a variety 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 use any differences in between traditional gambling and sweepstakes play.

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

Ryan Seacrest prompts fans to play at Chumba Casino, where many - but not all - games are free

Drake has a handle social sweeps casino, Stake, that he frequently promotes on social networks

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Instead, ads usually focus around the social element of the gambling establishments, while omitting the potential for actual gambling losses.

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

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

Another caption discussed: 'Because I never quit.'

The disparity between gambling sites and social or sweepstakes gambling establishments is a bit complicated, but operators of the latter insist they're not included with the previous.

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

'Most social sweeps customers never make a purchase,' the SPGA representative told DailyMail.com. 'The minority of consumers who make purchases do so in quantities far smaller sized than the normal deposit or wager size at real-money online gambling websites.'

Social gambling establishments offer consumers a possibility to play casino-style video games with buddies. Players have the option to buy valueless currency typically referred to as 'gold coins,' which can not be exchanged genuine cash, however can be used to unlock various functions within the games.

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

And therein lies the potential for financial 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 gambling establishments in the previous year after continuing to purchase more coins in pursuit of cash and other things of value.

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

Social sweeps casino Stake ran an ad flaunting Drake's vehicles, planes and estates

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

Traditional online gambling establishments are banned in all however 7 states, which has assisted to fuel the appeal of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes websites, which do not require typically need identification. However, sites like Chumba will request IDs from gamers attempting to withdraw any funds.
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Many websites, like the crypto-compatible Stake, allow customers to send mail-in requests for totally free sweeps coins, supplied the players follow painfully specific guidelines. What's more, players are typically rewarded with sweeps coins simply for signing up, thus providing a reason to attempt their hands at any variety of gambling establishment video games for a chance to win - or lose - genuine cash.

So why are sweepstakes websites enabled to run in 48 states, while online gambling establishments are banned 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 support.

'Social sweepstakes video games are simply a form of online entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is required to dip into social casinos with sweepstakes prizes. Consumers never need to spend for a chance to win prizes. That lack of a purchase requirement - or" consideration" - is a crucial difference between social sweeps and conventional online gambling websites like casinos.'

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

And without a purchase requirement, or 'factor to consider', the game itself does not fulfill the meaning of gaming in the US.

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

But to lots of gambling industry experts, that argument does not cut it.

For beginners, gaming attorney Daniel Wallach mentions, McDonald's Monopoly video game does not run forever. Rather, it has a distinct beginning and end, thereby suggesting the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being used to promote real items like french fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're usually not connected to casino-style video games of possibility,' Wallach told DailyMail.com. 'They're simply money free gifts.

'The sweepstakes [casinos] have none of the characteristics frequently connected with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments use" casino-like" payments, typically 80 percent or more of earnings, whereas the typical payout portion for a temporary promotional sweepstakes is an insignificant share of the income made by the business [typically less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the internet cafes that emerged in Florida, providing consumers the chance to play casino-style games for genuine rewards. Many of those brick-and-mortar establishments have since been shuttered over accusations of illegal sports betting.

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

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

'These differences are not arbitrary,' Wallach stated of social sweeps casinos. 'They have actually consistently been pointed out by courts and state chief law officer as crucial aspects in figuring out that a sweepstakes promo was in reality a guise for illegal gaming.'

One of the casino industry's leading trade organizations, the American Gaming Association, is now pushing legislators to examine sweepstakes operators and, in some cases, enact new legislation on the concern.

'Consumers are being denied of defenses and states are forgoing considerable tax and income opportunities as this sports betting changes that conducted through regulated channels,' checked out a well-circulated AGA memo.

And then there are the plaintiffs who have actually sued social gambling establishments in more than a dozen states.
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Sweepstakes gambling establishment operators paid a combined $14.2 million in four separate cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action suit, saying the settlement was made to prevent legal expenses and continued lawsuits.

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

In the newest lawsuit, which is mostly similar to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is described in the filing as an 'unlawful gaming business. '
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Apple and Google have likewise been called as offenders in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech company responded to DailyMail.com's ask for remark.

'We usually do not talk about matters before the courts,' a VGW representative informed DailyMail.com through email. 'However, we note that this claim has actually only just been submitted with the court and VGW has not been formally served.

'We have complete self-confidence in our compliance with all laws and guidelines where we operate, and remain confident about the future,' the spokesperson continued. 'We continue to provide our free-to-play video games across many of The United States and Canada, as we have for more than a years, developing not only terrific games, user experiences and entertainment, but also guaranteeing this is done safely, properly and at the highest level of requirements.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are relatively common across the online social games market (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 concerns between conventional online gambling and sweepstakes casinos might show problematic for some celebrity endorsers.

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

'It's paradoxical that expert athletes are hawking prohibited sports betting wagering 'sweeps' websites while at the same time the leagues wish to predict a strong position versus illegal sports betting - especially when trying to tamp down the occasional gaming scandal,' Glaser informed DailyMail.com.

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

Along with VGW, Apple and Google are being demanded hosting apparently prohibited sports betting sites

Regardless, Glaser sees sweepstakes gambling establishments as a significant concern for leagues such as the NBA.
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'I 'd anticipate that a league crackdown on professional athletes endorsing sweepstakes sites is a matter of when, not if,' Glaser added.

Neither an NBA spokesman nor the players' agents responded 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 emails.

Asked if their star endorsers have a duty to explain to customers the distinctions and similarities in between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that requires to be done.

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our business practices more broadly,' the spokesperson said. 'A few of our worths 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.
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'Celebrities who provide their names to shady prohibited gambling sites are, at a minimum, putting their track records at danger in addition to courting civil and class actions by consumers who declare harm,' Glaser stated. 'There is also some danger that state regulators and state attorneys general rope celebrity endorsers into enforcement efforts for helping with illegal gambling.'

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