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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.

No, they weren't personally in attendance, however the world-famous stars were conspicuously consisted of in a slide presentation on social and sweepstakes gambling establishments - the questionable websites using both totally free casino-style games and rewarding rewards, such as cash, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet free,' 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 finds itself besieged by lawsuits. In the eyes of lots of video gaming corporations, not to discuss suit complainants and state regulators, sweepstakes gambling establishments function as standard casinos, only without the oversight, consumer protections and tax laws. So not only can they avoid the steep 24-percent federal sports betting levy, however sweepstakes operators aren't based on regulatory obstacles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits last year alone. Now the company deals with allegations of illegal gambling in a New York claim that claims VGW uses star endorsers to 'create a veneer of legitimacy' around its item. (See VGW's statement listed below)

'I'm not exactly sure" if you don't trust us, you can trust Paris Hilton" is a winning message for companies operating multibillion-dollar illegal operations out of locations 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 series of celebs from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom offer any differences in between standard gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among numerous sweepstakes gambling establishments discovered online

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

Drake has a deal with social sweeps gambling establishment, Stake, that he frequently touts on social media

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

Others tempt customers with promises of prizes. One such operator, Stake, ran a social networks advertisement displaying Drake's vehicles, airplanes and estates before pivoting to footage of the rap artist playing online casino-style video games.

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

Another caption explained: 'Because I never quit.'

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

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 data, many of the gamers on social-sweepstakes casinos are sports betting complimentary.

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

Social gambling establishments offer consumers a chance to play casino-style video games with friends. Players have the choice to buy worthless currency typically described as 'gold coins,' which can not be exchanged genuine cash, however can be utilized to unlock various functions within the games.

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

And therein lies the capacity for financial losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York. One gamer told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the past year after continuing to buy more coins in pursuit of money and other things of value.

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

Social sweeps casino Stake ran an advertisement flaunting Drake's automobiles, aircrafts 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 banned in all but 7 states, which has helped to sustain the popularity of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes sites, which do not need typically need recognition. However, websites like Chumba will ask for IDs from gamers attempting to withdraw any funds.

Many websites, like the crypto-compatible Stake, allow clients to send mail-in ask for totally free sweeps coins, offered the players follow painfully particular instructions. What's more, players are typically rewarded with sweeps coins just for registering, therefore providing them a reason to try their hands at any number of casino 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 but 7?

According to the stakeholders, their item is the free casino-style video gaming, and the real-stakes competitors is just a method of promoting their bread and butter.

'Social sweepstakes video games are just a type of online home entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is needed to play at social gambling establishments with sweepstakes prizes. Consumers never have to spend for an opportunity to win rewards. That absence of a purchase requirement - or" factor to consider" - is a crucial distinction in between social sweeps and standard online gaming sites like casinos.'

Think of the way that McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and french fries that provide them the possibility to win financially rewarding rewards, such as a $1 million jackpot.

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

'Sweepstakes are an enduring method for promoting all sort of daily organizations in the United States, everything from burgers to publication memberships to coffee and home enhancement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are regularly utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many sports betting market insiders, that argument does not cut it.

For beginners, video gaming attorney Daniel Wallach points out, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a distinct beginning and end, consequently suggesting the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being utilized to promote genuine products like french fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [gambling establishments] possess none of the characteristics frequently connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes casinos provide" casino-like" payments, generally 80 percent or more of revenues, whereas the normal payment percentage for a short-term marketing sweepstakes is a trivial share of the income earned by the company [normally less than one percent]'

Wallach is fast to liken the online social sweeps casinos to the web coffee shops that sprang up in Florida, using consumers the opportunity to play casino-style games for genuine rewards. Much of those brick-and-mortar establishments have considering that been shuttered over allegations of prohibited gambling.

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

Now, Wallach argues, social sweeps gambling establishments must deal with similar analysis.

'These differences are not arbitrary,' Wallach stated of social sweeps casinos. 'They have repeatedly been pointed out by courts and state chief law officer as crucial aspects in identifying that a sweepstakes promotion remained in truth a guise for prohibited gaming.'

Among the casino industry's leading trade companies, the American Gaming Association, is now pushing legislators to examine sweepstakes operators and, in some cases, enact brand-new legislation on the problem.

'Consumers are being denied of securities and states are passing up considerable tax and revenue chances as this gaming replaces that performed through regulated channels,' read a well-circulated AGA memo.

And after that there are the complainants who have sued social gambling establishments in more than a lots 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 consented to pay $11.75 million in one class-action claim, saying the settlement was made to avoid legal costs and continued litigation.

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

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

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

'We typically do not comment on matters before the courts,' a VGW spokesperson told DailyMail.com by means of email. 'However, we note that this claim has only just been submitted with the court and VGW has 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 spokesperson continued. 'We continue to provide our free-to-play games throughout many of North America, as we have for more than a decade, developing not just fantastic video games, user experiences and entertainment, but likewise guaranteeing this is done securely, responsibly and at the greatest level of standards.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are fairly typical across the online social video games industry (and the US more broadly), and our basic practice is that we intend to intensely protect any claim which may be brought versus us.'

The concerns in between standard online sports betting 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 traditional video gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking prohibited sports betting 'sweeps' sites while at the exact same time the leagues desire to project a strong position against prohibited gambling - particularly when attempting 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 lifetime restriction from the NBA over accusations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes gambling establishments.

Along with VGW, Apple and Google are being demanded hosting supposedly illegal sports betting websites

Regardless, Glaser sees sweepstakes gambling establishments as a major problem for leagues such as the NBA.

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

Neither an NBA representative 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 react to DailyMail.com e-mails.

Asked if their celeb endorsers have a duty to discuss to consumers the distinctions and similarities between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that needs to be done.

'We have full confidence in our influencer and ambassadorial partnerships, and our more broadly,' the spokesperson stated. 'Some of our values are" our gamers come first" and" we do what's right", and we put our values at the core of everything we do.'

Glaser, an outspoken opponent of sweepstakes sites, sees things in a different way.

'Celebrities who lend their names to dubious unlawful gaming sites are, at a minimum, putting their reputations at threat as well as courting civil and class actions by customers who allege harm,' Glaser stated. 'There is also some threat that state regulators and state chief law officers rope celeb endorsers into enforcement efforts for facilitating prohibited gambling.'

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