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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 illegal gaming.
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No, they weren't personally in presence, but the world-famous celebrities were conspicuously consisted of in a slide discussion on social and sweepstakes casinos - the controversial sites using both free casino-style games and financially rewarding rewards, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone 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 sites are just two cogs in the multibillion-dollar market that now finds itself besieged by claims. In the eyes of many video gaming corporations, not to discuss suit complainants and state regulators, sweepstakes gambling establishments serve as conventional casinos, just without the oversight, consumer defenses and tax laws. So not only can they prevent the high 24-percent federal gambling levy, but sweepstakes operators aren't subject to regulative difficulties like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings last year alone. Now the business faces accusations of unlawful gaming in a New York suit that claims VGW uses celebrity endorsers to 'produce a veneer of authenticity' around its item. (See VGW's declaration below)

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

Sweepstakes endorsers include a series of celebrities 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 provide any distinctions between standard gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among numerous sweepstakes gambling establishments discovered online
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Ryan Seacrest prompts fans to play at Chumba Casino, where lots of - however not all - video games are totally free

Drake has an offer with social sweeps gambling establishment, Stake, that he frequently touts on social networks

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Instead, ads generally center around the social aspect of the casinos, while omitting the capacity for real gaming losses.

Others tempt consumers with pledges of prizes. One such operator, Stake, ran a social networks advertisement flaunting Drake's vehicles, planes and estates before pivoting to video footage of the rapper playing online casino-style games.

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

Another caption described: 'Because I never quit.'

The inconsistency between sports betting websites and social or sweepstakes gambling establishments is a bit intricate, however 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), explained its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, many of the players on social-sweepstakes gambling establishments are sports betting free.

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

Social gambling establishments use clients a possibility to play casino-style video games with buddies. Players have the alternative to purchase worthless currency often referred to as 'gold coins,' which can not be exchanged genuine money, but can be used to open various functions within the video games.

But within the world of social casinos exists sweepstakes video gaming, permitting customers to obtain other currency known as 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the potential for financial losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York City. One gamer told the Washington Post he lost more than $100,000 on sweepstakes casinos in the past year after continuing to buy 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 gambling establishment Stake ran an advertisement revealing off Drake's vehicles, airplanes and mansions

Karl-Anthony Towns of the New York City Knicks is another NBA star plugging VGW's Global Poker
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Traditional online casinos are prohibited in all but seven states, which has actually assisted 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 request for IDs from players trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, permit customers to submit mail-in ask for free sweeps coins, offered the players follow painfully specific directions. What's more, players are often rewarded with sweeps coins merely for signing up, therefore offering them a reason to attempt their hands at any variety of casino video games for an opportunity to win - or lose - genuine cash.

So why are sweepstakes sites enabled to operate in 48 states, while online casinos are prohibited in all but 7?

According to the stakeholders, their product is the complimentary casino-style gaming, and the real-stakes competitors is simply a method of promoting their bread and butter.

'Social sweepstakes video games are just a type of online entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is required to play at social casinos with sweepstakes rewards. Consumers never ever have to spend for a chance to win rewards. That absence of a purchase requirement - or" factor to consider" - is a vital distinction between social sweeps and standard online sports betting websites like gambling establishments.'

Think about the manner in which McDonald's uses its annual Monopoly game to its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and fries that provide them the opportunity to win financially rewarding prizes, such as a $1 million jackpot.

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 a long-standing approach for promoting all sort of everyday services in the United States, everything from burgers to publication subscriptions to coffee and home enhancement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are regularly utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For beginners, video gaming attorney Daniel Wallach points out, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a well-defined start and end, consequently recommending the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being utilized to promote real items like fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're typically not tied to casino-style video games of chance,' Wallach informed DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [gambling establishments] possess none of the characteristics commonly related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes casinos offer" casino-like" payouts, normally 80 percent or more of incomes, whereas the typical payout portion for a temporary promotional sweepstakes is a minor share of the revenue earned by the company [typically less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the internet coffee shops that sprang up in Florida, providing customers the opportunity to play casino-style video games for real rewards. A lot of those brick-and-mortar facilities have actually since been shuttered over accusations of unlawful sports betting.

DJ Khaled is among numerous celebrity spokespeople for VGW's Global Poker brand

Now, Wallach argues, social sweeps gambling establishments need to deal with comparable examination.

'These distinctions are not arbitrary,' Wallach stated of social sweeps casinos. 'They have consistently been cited by courts and state attorney general of the United States as crucial elements in determining that a sweepstakes promotion was in fact a guise for prohibited gambling.'

Among the gambling establishment industry's leading trade companies, the American Gaming Association, is now pressing legislators to examine sweepstakes operators and, in some cases, enact new legislation on the issue.

'Consumers are being deprived of securities and states are forgoing significant tax and profits opportunities as this gambling replaces that performed through regulated channels,' read a well-circulated AGA memo.

And after that 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 four separate cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action claim, stating the settlement was made to prevent legal expenses and continued lawsuits.

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

In the newest claim, which is largely similar 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 described in the filing as an 'illegal gambling enterprise. '

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

'We typically don't talk about matters before the courts,' a VGW representative told DailyMail.com through email. 'However, we keep in mind that this claim has actually only just been submitted with the court and VGW has not been formally served.

'We have full self-confidence in our compliance with all laws and policies where we run, and remain confident about the future,' the representative continued. 'We continue to use our free-to-play video games throughout most of The United States and Canada, as we have for more than a decade, producing not only great games, user experiences and home entertainment, but likewise ensuring this is done securely, properly and at the greatest level of standards.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are reasonably common across the online social games market (and the US more broadly), and our standard practice is that we plan to strongly defend any claim which may be brought against us.'

The problems in between standard online gambling and sweepstakes casinos could prove troublesome 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 gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking prohibited sports betting 'sweeps' websites while at the exact same time the leagues desire to predict a strong stance against illegal gambling - especially when attempting to tamp down the occasional gaming scandal,' Glaser informed DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter got a lifetime ban from the NBA over allegations he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes casinos.

Along with VGW, Apple and Google are being demanded hosting presumably prohibited gambling sites

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

'I 'd anticipate that a league crackdown on athletes backing sweepstakes websites is a matter of when, not if,' Glaser included.

Neither an NBA spokesman nor the gamers' representatives reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also ignored to react to DailyMail.com emails.

Asked if their star endorsers have an obligation to explain to consumers the distinctions and resemblances in between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that needs to be done.

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our service practices more broadly,' the spokesperson stated. 'A few of our values are" our players precede" and" we do what's right", and we put our worths at the core of whatever we do.'

Glaser, an outspoken challenger of sweepstakes websites, sees things in a different way.
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'Celebrities who lend their names to dubious prohibited gambling sites are, at a minimum, putting their credibilities at risk as well as courting civil and class actions by customers who allege damage,' Glaser stated. 'There is also some danger that state regulators and state chief law officers rope star endorsers into enforcement efforts for helping with illegal gaming.'

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