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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 unlawful sports betting.
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No, they weren't personally in presence, but the world-famous celebs were conspicuously consisted of in a slide presentation on social and sweepstakes casinos - the questionable sites providing both free casino-style games and financially rewarding prizes, such as cash, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone 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 websites are just 2 cogs in the multibillion-dollar industry that now discovers itself besieged by lawsuits. In the eyes of numerous gaming corporations, not to mention claim complainants and state regulators, sweepstakes casinos serve as traditional gambling establishments, just without the oversight, customer defenses and tax laws. So not only can they avoid the steep 24-percent federal gaming levy, but sweepstakes operators aren't based on regulatory difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings last year alone. Now the business faces allegations of illegal gambling in a New york city claim that declares VGW utilizes celebrity endorsers to 'create a veneer of authenticity' around its product. (See VGW's declaration listed below)

'I'm not exactly sure" if you do not trust us, you can rely on Paris Hilton" is a winning message for business operating multibillion-dollar unlawful operations out of locations 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 consist of a series of celebs from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions in between traditional gambling and sweepstakes play.

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

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

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

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Instead, advertisements normally center around the social element of the casinos, while omitting the potential for real sports betting losses.
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Others tempt customers with guarantees of prizes. One such operator, Stake, ran a social media ad flaunting Drake's automobiles, airplanes and mansions before rotating to footage of the rap artist playing online casino-style games.

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

Another caption explained: 'Because I never quit.'

The discrepancy in between gambling websites and social or sweepstakes gambling establishments is a bit complex, but operators of the latter insist they're not involved with the former.

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

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

Social gambling establishments provide clients an opportunity to play casino-style games with friends. Players have the choice to buy worthless currency typically referred to as 'gold coins,' which can not be exchanged genuine cash, but can be used to unlock different features within the games.

But within the world of social gambling establishments exists sweepstakes video gaming, allowing customers to get other currency known as 'sweeps coins' that can be exchanged for money 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 player told the Washington Post he lost more than $100,000 on sweepstakes casinos in the past year after continuing to purchase more coins in pursuit of cash and other things of worth.

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

Social sweeps casino Stake ran an advertisement flaunting 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 gambling establishments are prohibited in all however 7 states, which has assisted to fuel the appeal of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes websites, which don't need typically need identification. However, websites like Chumba will request IDs from players attempting to withdraw any funds.

Many websites, like the crypto-compatible Stake, allow customers to submit mail-in requests for free sweeps coins, provided the gamers follow painfully specific directions. What's more, players are typically rewarded with sweeps coins simply for signing up, consequently providing them a factor to try their hands at any number of casino video games for a possibility to win - or lose - genuine money.

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

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

'Social sweepstakes video games are merely a kind of online home entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is required to play at social gambling establishments with sweepstakes rewards. Consumers never have to spend for a chance to win rewards. That lack of a purchase requirement - or" consideration" - is a crucial distinction between social sweeps and traditional online gaming websites like casinos.'

Think about the way that McDonald's uses its yearly Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're buying hamburgers and fries that provide them the opportunity to win financially rewarding prizes, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the video game itself does not meet the meaning of gaming in the US.
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'Sweepstakes are a long-standing approach for promoting all kinds of daily organizations in the United States, everything from hamburgers to magazine subscriptions to coffee and home enhancement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are regularly utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting industry experts, that argument doesn't cut it.

For beginners, gaming lawyer Daniel Wallach explains, McDonald's Monopoly game doesn't run forever. Rather, it has a well-defined start and end, consequently recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote genuine items like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [gambling establishments] possess none of the attributes typically related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments provide" casino-like" payments, generally 80 percent or more of revenues, whereas the common payment percentage for a short-lived marketing sweepstakes is a minor share of the income earned by the company [generally less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the internet coffee shops that sprang up in Florida, providing customers the possibility to play casino-style games for genuine rewards. A number of those brick-and-mortar facilities have since been shuttered over allegations of illegal gaming.

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

Now, Wallach argues, gambling establishments should deal with similar examination.

'These differences are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been cited by courts and state attorney general of the United States as crucial elements in figuring out that a sweepstakes promotion was in fact a guise for unlawful gambling.'

Among the gambling establishment market's leading trade companies, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, sometimes, enact brand-new legislation on the concern.

'Consumers are being deprived of defenses and states are passing up considerable tax and revenue opportunities as this gambling changes that conducted through managed channels,' checked out a well-circulated AGA memo.

And then there are the plaintiffs who have sued 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 admitting any misbehavior, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action suit, stating the settlement was made to prevent legal costs and continued lawsuits.

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

In the most current lawsuit, which is largely comparable 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 described in the filing as an 'illegal gambling enterprise. '

Apple and Google have likewise been named as defendants in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com's ask for remark.

'We usually do not talk about matters before the courts,' a VGW spokesperson informed DailyMail.com by means of e-mail. 'However, we note that this claim has only simply been submitted with the court and VGW has actually not been formally served.

'We have full confidence in our compliance with all laws and regulations where we run, and stay positive about the future,' the spokesperson continued. 'We continue to use our free-to-play games across many of The United States and Canada, as we have for more than a decade, creating not just terrific games, user experiences and entertainment, however likewise guaranteeing this is done safely, properly and at the greatest level of standards.

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

The problems in between traditional online gaming and sweepstakes gambling establishments might show troublesome for some celeb endorsers.
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Towns, a star center with the Knicks, and the 76ers' George both endorse VGW's Global Poker brand while the NBA is partnered with traditional video gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking illegal sports betting wagering 'sweeps' websites while at the same time the leagues wish to predict a strong stance against illegal gaming - particularly when trying to tamp down the occasional gaming scandal,' Glaser informed DailyMail.com.
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It was simply eight months ago that Toronto Raptors forward Jontay Porter got a life time ban from the NBA over claims he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes casinos.

Along with VGW, Apple and Google are being taken legal action against for hosting allegedly illegal gambling websites

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

'I 'd anticipate that a league crackdown on professional athletes backing sweepstakes sites refers when, not if,' Glaser added.

Neither an NBA spokesperson nor the players' agents reacted to DailyMail.com's requests for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also ignored to react to DailyMail.com e-mails.

Asked if their celeb endorsers have an obligation to discuss to customers the distinctions and resemblances in between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that requires to be done.

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the representative stated. 'Some of our worths are" our players come first" 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.

'Celebrities who provide their names to shady illegal gambling websites are, at a minimum, putting their track records at risk as well as courting civil and class actions by customers who allege harm,' Glaser said. 'There is likewise some risk that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for helping with illegal sports betting.'

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