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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 illegal sports betting.
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No, they weren't personally in attendance, however the world-famous celebrities were notably included in a slide discussion on social and sweepstakes gambling establishments - the controversial sites providing both complimentary casino-style video games and lucrative rewards, such as money, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The websites are simply 2 cogs in the multibillion-dollar industry that now discovers itself besieged by lawsuits. In the eyes of numerous video gaming corporations, not to discuss suit plaintiffs and state regulators, sweepstakes casinos act as conventional gambling establishments, only without the oversight, consumer defenses and tax laws. So not just can they prevent the high 24-percent federal gaming 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 in 2015 alone. Now the business deals with accusations of unlawful sports betting in a New york city lawsuit that declares VGW utilizes celebrity endorsers to 'create a veneer of legitimacy' around its item. (See VGW's declaration listed below)

'I'm unsure" if you don't trust us, you can trust Paris Hilton" is a winning message for companies running multibillion-dollar illegal operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of video gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers include a variety of celebs from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom provide any differences between conventional sports betting and sweepstakes play.

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

Ryan Seacrest urges fans to play at Chumba Casino, where lots of - however not all - games are complimentary

Drake has a handle social sweeps casino, Stake, that he routinely touts on social media

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Instead, ads usually focus around the social element of the casinos, while leaving out the capacity for actual gambling losses.

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

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

Another caption discussed: 'Because I never gave up.'

The discrepancy between sports betting 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 competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, most of the gamers on social-sweepstakes gambling establishments are playing for complimentary.

'Most social sweeps clients never buy,' the SPGA spokesperson told DailyMail.com. 'The minority of clients who make purchases do so in amounts far smaller sized than the normal deposit or bet size at real-money online gaming sites.'

Social gambling establishments use customers a possibility to play casino-style video games with buddies. Players have the choice to buy worthless currency often described as 'gold coins,' which can not be exchanged genuine cash, but can be utilized to unlock various features within the video games.

But within the world of social gambling establishments exists sweepstakes video gaming, allowing customers to acquire other currency called 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the potential for monetary losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York. One gamer told 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 value.

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

Social sweeps casino Stake ran an advertisement flaunting Drake's vehicles, planes and mansions

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

Traditional online casinos are prohibited in all however 7 states, which has actually helped to sustain the popularity of sweepstakes gambling establishments.
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Anyone over the age of 18 can access the sweepstakes websites, which don't require typically need identification. However, sites like Chumba will request for IDs from players attempting to withdraw any funds.

Many websites, like the crypto-compatible Stake, permit clients to send mail-in requests for free sweeps coins, supplied the gamers follow painfully particular guidelines. What's more, players are often rewarded with sweeps coins merely for signing up, thereby providing them a reason to attempt their hands at any variety of gambling establishment video games for an opportunity to win - or lose - real cash.

So why are sweepstakes websites allowed to run in 48 states, while online gambling establishments are prohibited in all but 7?

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

'Social sweepstakes games are simply a type of online home entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is required to play at social casinos with sweepstakes prizes. Consumers never have to pay for a chance to win rewards. That lack of a purchase requirement - or" consideration" - is an important distinction between social sweeps and conventional online sports betting sites like gambling establishments.'

Think about the way that McDonald's uses its annual Monopoly video 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 lucrative rewards, such as a $1 million prize.

And without a purchase requirement, or 'factor to consider', the video game itself doesn't fulfill the meaning of sports betting in the US.

'Sweepstakes are an enduring method for promoting all kinds of daily services in the United States, whatever from burgers to publication memberships to coffee and home enhancement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are frequently utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For beginners, gaming attorney Daniel Wallach points out, McDonald's Monopoly game does not run indefinitely. Rather, it has a well-defined start and end, consequently suggesting the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being utilized to promote real products like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [casinos] have none of the characteristics frequently associated with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos offer" casino-like" payouts, usually 80 percent or more of earnings, whereas the normal payout portion for a temporary marketing sweepstakes is an insignificant share of the revenue earned by the business [usually less than one percent]'

Wallach is quick to compare the online social sweeps gambling establishments to the web cafes that emerged in Florida, using customers the opportunity to play casino-style video games for genuine rewards. Much of those brick-and-mortar facilities have actually since been shuttered over allegations of illegal gambling.

DJ Khaled is among several star spokespeople for VGW's Global Poker brand

Now, Wallach argues, social sweeps casinos must deal with similar scrutiny.

'These distinctions are not arbitrary,' Wallach said of social sweeps casinos. 'They have repeatedly been mentioned by courts and state chief law officer as key consider identifying that a sweepstakes promotion remained in truth a guise for unlawful gaming.'
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Among the casino industry's leading trade companies, the American Gaming Association, is now pressing legislators to examine sweepstakes operators and, in some cases, enact brand-new legislation on the problem.

'Consumers are being denied of defenses and states are giving up considerable tax and income chances as this gambling changes that performed through regulated channels,' checked out a well-circulated AGA memo.

And then there are the complainants who have taken legal action against social casinos in more than a dozen states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action lawsuit, saying 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 recent claim, which is largely similar to its predecessors, New York state citizens 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 'unlawful sports betting business. '

Apple and Google have actually also been named as accuseds in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for comment.

'We usually don't discuss matters before the courts,' a VGW representative told DailyMail.com via email. 'However, we keep in mind that this claim has actually only simply been submitted with the court and VGW has actually not been officially served.

'We have complete self-confidence in our compliance with all laws and regulations where we operate, and remain positive about the future,' the spokesperson continued. 'We continue to use our free-to-play games throughout many of The United States and Canada, as we have for more than a decade, creating not just terrific video games, user experiences and entertainment, however likewise guaranteeing this is done securely, responsibly and at the highest level of requirements.

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

The problems in between traditional online sports betting and sweepstakes casinos could prove bothersome for some celeb endorsers.

Towns, a star center with the Knicks, and the 76ers' George both endorse VGW's Global Poker brand while the NBA is partnered with conventional 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 wish to predict a strong position against unlawful gaming - specifically when attempting to tamp down the occasional sports betting scandal,' Glaser informed DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter got a from the NBA over allegations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes gambling establishments.

Together with VGW, Apple and Google are being demanded hosting apparently unlawful gambling websites

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 backing sweepstakes websites is a matter of when, not if,' Glaser added.

Neither an NBA spokesman 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 overlooked to react to DailyMail.com e-mails.

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

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our company 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 everything we do.'

Glaser, an outspoken challenger of sweepstakes websites, sees things differently.
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'Celebrities who lend their names to dubious unlawful sports betting websites are, at a minimum, putting their credibilities at threat in addition to courting civil and class actions by customers who allege harm,' Glaser said. 'There is likewise some danger that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for assisting in unlawful gaming.'

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