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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 participation, however the world-famous celebs were conspicuously consisted of in a slide presentation on social and sweepstakes gambling establishments - the questionable websites providing 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 anybody can 'bet 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 two cogs in the multibillion-dollar industry that now finds itself besieged by suits. In the eyes of many video gaming corporations, not to mention suit complainants and state regulators, sweepstakes gambling establishments serve as traditional casinos, just without the oversight, consumer protections and tax laws. So not only can they prevent the high 24-percent federal gambling levy, but sweepstakes operators aren't based on regulatory obstacles 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 company faces allegations of unlawful gaming in a New york city lawsuit that claims VGW uses celeb endorsers to 'create a veneer of authenticity' around its product. (See VGW's statement below)

'I'm unsure" if you do not trust us, you can rely on Paris Hilton" is a winning message for companies operating multibillion-dollar prohibited operations out of places like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers include a range of stars from sports betting 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 between standard gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among lots of sweepstakes casinos found online

Ryan Seacrest urges fans to play at Chumba Casino, where lots of - but not all - video games are totally free

Drake has a deal with social sweeps casino, Stake, that he regularly touts on social media

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Instead, ads normally center around the social element of the gambling establishments, while leaving out the potential for actual sports betting losses.

Others lure clients with promises of prizes. One such operator, Stake, ran a social media advertisement displaying 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 explained: 'Because I never ever provided up.'

The inconsistency in between sports betting websites and social or sweepstakes casinos is a bit complex, however operators of the latter insist they're not involved with the former.
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A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, many of the gamers on social-sweepstakes casinos are playing for free.

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

Social gambling establishments use clients a chance to play casino-style games with pals. Players have the option to buy worthless currency often described as 'gold coins,' which can not be exchanged for genuine cash, but can be utilized to open various features within the video games.

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

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 value.

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

Social sweeps gambling establishment Stake ran an ad showing off Drake's vehicles, 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 prohibited in all but 7 states, which has assisted to sustain the appeal of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes sites, which do not need typically require identification. However, sites like Chumba will ask for IDs from players trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, enable consumers to send mail-in requests for complimentary sweeps coins, offered the gamers follow painfully particular instructions. What's more, players are typically rewarded with sweeps coins simply for registering, thus providing a factor to try their hands at any variety of gambling establishment games for a chance to win - or lose - real money.

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

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

'Social sweepstakes video games are merely a kind of online home entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is needed to play at social casinos with sweepstakes prizes. Consumers never have to pay for a chance to win rewards. That absence of a purchase requirement - or" factor to consider" - is an essential difference between social sweeps and standard online sports betting sites like gambling establishments.'

Think of the manner in which 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 profitable prizes, such as a $1 million prize.

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

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

But to lots of gambling market insiders, that argument does not cut it.

For beginners, video gaming lawyer Daniel Wallach mentions, McDonald's Monopoly video game does not run forever. Rather, it has a well-defined start and end, therefore recommending the sweepstakes is not the fast-food giant's main item. 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 connected to casino-style video games of chance,' Wallach told DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [casinos] possess none of the qualities typically related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments provide" casino-like" payments, normally 80 percent or more of incomes, whereas the common payout percentage for a short-lived advertising sweepstakes is a minor share of the earnings made by the company [normally less than one percent]'

Wallach is fast to compare the online social sweeps casinos to the internet cafes that emerged in Florida, using clients the possibility to games for genuine rewards. A number of those brick-and-mortar establishments have given that been shuttered over accusations of unlawful sports betting.

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

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

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

One of the gambling establishment market's leading trade organizations, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, sometimes, enact new legislation on the concern.

'Consumers are being deprived of defenses and states are passing up substantial tax and profits chances as this sports betting changes that performed through regulated channels,' read a well-circulated AGA memo.

And then there are the complainants who have taken legal action against social gambling establishments in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 different cases in Kentucky without admitting any misdeed, 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 litigation.

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

In the newest claim, which is mostly similar to its predecessors, New york city state homeowners Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'unlawful sports betting enterprise. '

Apple and Google have actually also been called as defendants in suits for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com's ask for comment.

'We generally do not talk about matters before the courts,' a VGW spokesperson told DailyMail.com by means of e-mail. '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 full 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 many of North America, as we have for more than a decade, producing not just fantastic video games, user experiences and entertainment, however also guaranteeing this is done securely, responsibly and at the highest 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 market (and the US more broadly), and our basic practice is that we intend to vigorously safeguard any claim which might be brought against us.'

The issues in between conventional online gaming and sweepstakes casinos might show bothersome for some star 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 standard gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking prohibited sports betting wagering 'sweeps' sites while at the exact same time the leagues desire to forecast a strong position versus unlawful gaming - particularly when attempting to tamp down the periodic gaming scandal,' Glaser informed DailyMail.com.

It was simply 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 unrelated to anything involving social or sweepstakes casinos.

Along with VGW, Apple and Google are being demanded hosting allegedly unlawful sports betting websites

Regardless, Glaser sees sweepstakes casinos as a major issue 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 players' representatives reacted to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to react to DailyMail.com emails.

Asked if their star endorsers have a duty to discuss to customers the differences and resemblances in between iGaming and sweepstakes casinos, VGW insisted there is nothing more that requires to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the representative said. 'Some of our values 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 challenger of sweepstakes websites, sees things in a different way.

'Celebrities who provide their names to shady prohibited sports betting sites are, at a minimum, putting their reputations at danger along with courting civil and class actions by customers who allege harm,' Glaser stated. 'There is also some threat that state regulators and state attorneys basic rope star endorsers into enforcement efforts for helping with prohibited gambling.'

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