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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 gaming.
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No, they weren't personally in presence, however the world-famous stars were notably included in a slide discussion on social and sweepstakes casinos - the questionable sites providing both free casino-style video games and rewarding prizes, such as money, gift cards or cryptocurrency. In one advertisement, 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 sites are just two cogs in the multibillion-dollar industry that now discovers itself besieged by lawsuits. In the eyes of numerous video gaming corporations, not to point out suit complainants and state regulators, sweepstakes casinos act as traditional gambling establishments, just without the oversight, customer securities and tax laws. So not just can they prevent the steep 24-percent federal gambling levy, however sweepstakes operators aren't based on regulative hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings last year alone. Now the company faces accusations of unlawful gambling in a New York suit that claims VGW uses celeb endorsers to 'create a veneer of authenticity' around its product. (See VGW's statement 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 running multibillion-dollar prohibited operations out of places like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers include a series of celebs 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 standard sports betting and sweepstakes play.

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

Ryan Seacrest urges fans to dip into Chumba Casino, where numerous - however not all - video games are complimentary

Drake has an offer with social sweeps casino, Stake, that he frequently promotes on social networks

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Instead, advertisements typically center around the social element of the casinos, while omitting the potential for real sports betting losses.

Others lure consumers with promises of rewards. One such operator, Stake, ran a social media ad flaunting Drake's vehicles, airplanes and mansions before rotating to video of the rapper playing online casino-style video games.

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

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

The disparity 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 previous.

A spokesperson for an industry 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 casinos are sports betting free.

'Most social sweeps consumers never ever make a purchase,' the SPGA representative told DailyMail.com. 'The minority of clients who make purchases do so in quantities far smaller sized than the normal deposit or bet size at real-money online gambling sites.'
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Social gambling establishments offer consumers a chance to play casino-style video games with pals. Players have the alternative to purchase valueless currency typically referred to as 'gold coins,' which can not be exchanged genuine cash, however can be used to unlock different functions within the games.

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

And therein lies the potential for financial losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York. One gamer informed 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 value.

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

Social sweeps gambling establishment Stake ran an advertisement showing off Drake's vehicles, aircrafts and estates

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

Traditional online casinos are banned in all but 7 states, which has helped to sustain the appeal of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, enable consumers to send mail-in requests for free sweeps coins, supplied the players follow painfully specific guidelines. What's more, gamers are typically rewarded with sweeps coins just for signing up, consequently offering them a factor to try their hands at any number of gambling establishment video games for a chance to win - or lose - genuine cash.

So why are sweepstakes sites 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 gaming, and the real-stakes competitors is merely a means of promoting their support.

'Social sweepstakes video games are merely a form of online entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is needed to dip into social casinos with sweepstakes rewards. Consumers never need to spend for a chance to win prizes. That absence of a purchase requirement - or" consideration" - is an important distinction between social sweeps and conventional online sports betting sites like casinos.'

Consider the manner in which McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and fries that offer them the chance to win profitable prizes, such as a $1 million prize.

And without a purchase requirement, or 'factor to consider', the game itself doesn't meet the meaning of gambling in the US.

'Sweepstakes are an enduring approach for promoting all kinds of everyday companies in the United States, whatever from hamburgers to publication subscriptions to coffee and home enhancement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are frequently used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For starters, video gaming attorney Daniel Wallach explains, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a distinct start and end, consequently suggesting the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being used to promote real items like fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're generally not tied to casino-style video games of chance,' Wallach informed DailyMail.com. 'They're just money giveaways.

'The sweepstakes [gambling establishments] possess none of the characteristics frequently related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes casinos provide" casino-like" payments, typically 80 percent or more of profits, whereas the normal payout percentage for a short-term marketing sweepstakes is a trivial share of the income made by the company [usually less than one percent]'
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Wallach is quick to compare the online social sweeps casinos to the internet coffee shops that sprang up in Florida, using customers the opportunity to play casino-style games for real prizes. Many of those brick-and-mortar facilities have actually since been shuttered over claims of illegal sports betting.

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

Now, Wallach argues, social sweeps casinos must face similar scrutiny.

'These distinctions are not arbitrary,' Wallach said of social sweeps casinos. 'They have repeatedly been pointed out by courts and state chief law officer as essential consider figuring out that a sweepstakes promotion remained in fact a guise for prohibited gambling.'

Among the gambling establishment industry's leading trade organizations, the American Gaming Association, is now pressing legislators to examine sweepstakes operators and, in many cases, enact new legislation on the concern.
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'Consumers are being deprived of defenses and states are forgoing substantial tax and revenue opportunities as this gaming changes that conducted through controlled channels,' read a well-circulated AGA memo.

And after that there are the complainants who have actually sued social gambling establishments in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in four different cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action claim, saying the settlement was made to prevent legal expenses and continued litigation.

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

In the current suit, which is mostly comparable to its predecessors, New york city state citizens 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 gambling business. '

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

'We usually do not comment on matters before the courts,' a VGW representative informed DailyMail.com through email. 'However, we keep in mind that this claim has only just been filed with the court and VGW has not been formally served.

'We have complete confidence in our compliance with all laws and policies where we run, and stay positive about the future,' the spokesperson continued. 'We continue to use our free-to-play games across the majority of The United States and Canada, as we have for more than a years, producing not just fantastic video games, user experiences and home entertainment, however also guaranteeing this is done securely, responsibly and at the highest level of standards.

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

The concerns in between standard online sports betting and sweepstakes gambling establishments might show troublesome for some celebrity 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 illegal sports betting 'sweeps' sites while at the exact same time the leagues wish to predict a strong stance against illegal sports betting - particularly when attempting to tamp down the periodic gaming scandal,' Glaser told DailyMail.com.

It was just 8 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.

In addition to VGW, Apple and Google are being demanded hosting supposedly illegal gambling sites

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

'I 'd expect that a league crackdown on professional athletes endorsing sweepstakes websites is a matter of when, not if,' Glaser added.

Neither an NBA representative nor the gamers' agents responded to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise ignored to react to DailyMail.com emails.

Asked if their celebrity endorsers have a duty to explain to consumers the differences and similarities between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that needs to be done.

'We have full confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the representative said. 'A few of our worths are" our gamers come initially" and" we do what's right", and we put our worths 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 shady unlawful sports betting websites are, at a minimum, putting their reputations at danger in addition to courting civil and class actions by consumers who declare damage,' Glaser said. 'There is likewise some risk that state regulators and state attorneys general rope celeb endorsers into enforcement efforts for helping with prohibited sports betting.'

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