The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on illegal gaming.
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No, they weren't personally in participation, but the world-famous celebrities were notably consisted of in a slide discussion on social and sweepstakes casinos - the questionable websites offering both totally free casino-style games and lucrative prizes, such as cash, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The sites are just 2 cogs in the multibillion-dollar market that now discovers itself besieged by suits. In the eyes of many gaming corporations, not to discuss lawsuit plaintiffs and state regulators, sweepstakes gambling establishments act as standard gambling establishments, just without the oversight, consumer defenses and tax laws. So not only can they avoid the high 24-percent federal gambling 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 profits last year alone. Now the company faces allegations of unlawful gaming in a New york city suit that claims VGW uses celebrity endorsers to 'create a veneer of authenticity' around its item. (See VGW's statement below)

'I'm not sure" if you do not trust us, you can trust Paris Hilton" is a winning message for business running multibillion-dollar unlawful 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 consist of a variety of celebs 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 standard gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among many sweepstakes casinos found online

Ryan Seacrest urges fans to play at Chumba Casino, where numerous - but not all - games are totally free

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

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Instead, advertisements usually center around the social aspect of the casinos, while omitting the potential for real gaming losses.

Others tempt customers with promises of prizes. One such operator, Stake, ran a social media ad flaunting Drake's cars and trucks, aircrafts and mansions before rotating to video footage of the rap artist playing online casino-style video games.

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

Another caption explained: 'Because I never ever provided up.'

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

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), described 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 casinos are sports betting complimentary.

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

Social casinos offer consumers a possibility to play casino-style video games with friends. Players have the choice to purchase valueless currency often referred to as 'gold coins,' which can not be exchanged for real cash, but can be used to unlock various functions within the video games.

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

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

The Philadelphia 76ers' Paul George is seen promoting a Global Poker event

Social sweeps gambling establishment Stake ran an advertisement displaying Drake's automobiles, airplanes 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 helped to fuel the popularity of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes websites, which do not require normally require recognition. However, websites like Chumba will request IDs from gamers attempting to withdraw any funds.
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Many sites, like the crypto-compatible Stake, permit clients to send mail-in requests for totally free sweeps coins, offered the gamers follow painfully particular instructions. What's more, players are typically rewarded with sweeps coins just for registering, therefore providing a factor to attempt their hands at any variety of casino games for a possibility to win - or lose - real money.

So why are sweepstakes websites allowed to operate in 48 states, while online casinos are prohibited in all however 7?

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

'Social sweepstakes games are just a form of online entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is needed to dip into social gambling establishments with sweepstakes prizes. Consumers never ever have to spend for a chance to win prizes. That absence of a purchase requirement - or" factor to consider" - is a crucial difference between social sweeps and conventional online gaming sites like gambling establishments.'

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

And without a purchase requirement, or 'factor to consider', the video game itself does not meet the definition of gambling in the US.

'Sweepstakes are an enduring technique for promoting all type of daily services in the United States, everything from hamburgers to magazine memberships to coffee and home enhancement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are frequently used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For starters, gaming lawyer Daniel Wallach points out, McDonald's Monopoly game does not run forever. Rather, it has a distinct beginning and end, therefore recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote genuine items like fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're normally not tied to casino-style video games of chance,' Wallach informed DailyMail.com. 'They're just money free gifts.

'The sweepstakes [casinos] have none of the qualities frequently associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos use" casino-like" payments, generally 80 percent or more of revenues, whereas the normal payout percentage for a short-term promotional sweepstakes is an insignificant share of the revenue made by the company [typically less than one percent]'
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Wallach is fast to compare the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, providing consumers the possibility to play casino-style games for genuine prizes. Many of those brick-and-mortar establishments have actually because been shuttered over accusations of illegal gambling.

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

Now, Wallach argues, social sweeps gambling establishments should face similar analysis.

'These differences are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have repeatedly been mentioned by courts and state lawyer generals as crucial aspects in figuring out that a sweepstakes promo was in reality a guise for unlawful sports betting.'
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One of the gambling establishment industry's leading trade organizations, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, sometimes, enact new legislation on the concern.

'Consumers are being denied of defenses and states are forgoing substantial tax and income opportunities as this sports betting changes that performed through controlled channels,' read a well-circulated AGA memo.

And then 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 misbehavior, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action suit, stating the was made to avoid legal expenses and continued litigation.

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

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

Apple and Google have actually likewise been called as defendants in suits for hosting the sweepstakes websites. But unlike VGW, neither tech company responded to DailyMail.com's request for comment.

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

'We have full confidence in our compliance with all laws and guidelines where we run, and remain confident about the future,' the representative continued. 'We continue to offer our free-to-play games across the majority of North America, as we have for more than a years, producing not just fantastic games, user experiences and home entertainment, however also guaranteeing this is done securely, properly and at the highest level of requirements.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are fairly typical throughout the online social games industry (and the US more broadly), and our standard practice is that we plan to strongly protect any claim which may be brought versus us.'

The problems in between standard online gambling and sweepstakes casinos could prove bothersome for some star endorsers.

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

'It's paradoxical that professional athletes are hawking illegal sports betting 'sweeps' sites while at the exact same time the leagues desire to project a strong position versus unlawful gambling - especially when trying to tamp down the occasional gambling scandal,' Glaser told DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter received a lifetime ban from the NBA over claims he conspired with bettors. 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 allegedly illegal sports betting sites

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

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

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 ignored to react to DailyMail.com emails.
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Asked if their celebrity endorsers have a responsibility to explain to clients the distinctions and resemblances between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that needs to be done.

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

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

'Celebrities who lend their names to shady illegal sports betting websites are, at a minimum, putting their credibilities at threat as well as courting civil and class actions by consumers who allege harm,' Glaser said. 'There is also some danger that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for helping with prohibited gambling.'

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