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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 participation, but the world-famous celebrities were conspicuously consisted of in a slide discussion on social and sweepstakes casinos - the questionable sites providing both totally free casino-style games and profitable rewards, such as cash, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The websites are just 2 cogs in the multibillion-dollar industry that now discovers itself besieged by claims. In the eyes of lots of video gaming corporations, not to discuss lawsuit plaintiffs and state regulators, sweepstakes gambling establishments serve as traditional gambling establishments, just without the oversight, customer securities and tax laws. So not only can they prevent the steep 24-percent federal gaming levy, however sweepstakes operators aren't based on regulative difficulties like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the company faces accusations of unlawful sports betting in a New York suit that declares VGW uses celeb endorsers to 'produce a veneer of authenticity' around its item. (See VGW's statement listed below)

'I'm not sure" if you don't 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 video gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers include a variety of stars from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions in between standard sports betting and sweepstakes play.

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

Ryan Seacrest advises fans to play at Chumba Casino, where many - but 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, advertisements normally focus around the social element of the casinos, while omitting the capacity for real gambling losses.

Others lure clients with pledges of prizes. One such operator, Stake, ran a social networks ad showing off Drake's vehicles, planes and mansions before pivoting to footage of the rapper playing online casino-style video games.

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

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

The discrepancy between gaming websites and social or sweepstakes casinos is a bit complicated, but operators of the latter insist they're not involved with the previous.

A spokesperson for a market trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, the majority of the players on social-sweepstakes gambling establishments are playing for free.

'Most social sweeps consumers never purchase,' the SPGA spokesperson informed DailyMail.com. 'The minority of clients who make purchases do so in quantities far smaller than the typical deposit or bet size at real-money online sports betting websites.'

Social gambling establishments offer consumers an opportunity to play casino-style video games with good friends. Players have the option to purchase worthless currency typically described as 'gold coins,' which can not be exchanged genuine money, but can be used to open different functions within the games.

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

And therein lies the capacity for financial losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York City. One gamer informed 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 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 ad flaunting Drake's cars, aircrafts and mansions

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

Traditional online casinos are prohibited in all however 7 states, which has assisted to sustain the appeal of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, enable consumers to submit mail-in demands for complimentary sweeps coins, provided the gamers follow painfully specific instructions. What's more, gamers are often rewarded with sweeps coins simply for registering, thereby giving them a factor to try their hands at any variety of casino video games for a possibility to win - or lose - genuine cash.

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

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

'Social sweepstakes games are merely a type of online entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is required to dip into social gambling establishments with sweepstakes prizes. Consumers never have to pay for a chance to win prizes. That lack of a purchase requirement - or" consideration" - is a vital difference in between social sweeps and conventional online gaming websites like casinos.'

Think of the method that 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 use them the opportunity to win financially rewarding prizes, such as a $1 million prize.

And without a purchase requirement, or 'factor to consider', the video game itself does not fulfill the definition of gaming in the US.

'Sweepstakes are a long-standing approach for promoting all type of daily services in the United States, everything from hamburgers to publication memberships to coffee and home improvement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are regularly used by a who's who of household 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 starters, gaming lawyer Daniel Wallach explains, McDonald's Monopoly video game does not run indefinitely. Rather, it has a distinct start and end, therefore suggesting the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being used to promote real items like french fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're generally not connected to casino-style games of possibility,' Wallach informed DailyMail.com. 'They're simply money free gifts.

'The sweepstakes [casinos] have none of the qualities typically related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes casinos use" casino-like" payments, normally 80 percent or more of earnings, whereas the normal payment percentage for a temporary promotional sweepstakes is a trivial share of the earnings earned by the company [typically less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the web coffee shops that emerged in Florida, providing consumers the opportunity to play casino-style games for genuine rewards. A number of those brick-and-mortar facilities have because been shuttered over allegations of unlawful gambling.

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

Now, Wallach argues, social sweeps casinos should deal with comparable examination.

'These differences are not approximate,' Wallach said of social sweeps casinos. 'They have actually consistently been pointed out by courts and state lawyer generals as essential consider figuring out that a sweepstakes promo remained in reality a guise for unlawful gambling.'

Among the casino industry's leading trade organizations, the American Gaming Association, is now pressing legislators to investigate sweepstakes operators and, sometimes, enact brand-new legislation on the concern.

'Consumers are being deprived of defenses and states are giving up substantial tax and revenue opportunities as this sports betting replaces that performed through managed channels,' checked out a well-circulated AGA memo.

And after that there are the plaintiffs who have actually taken legal action against social casinos in more than a dozen 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 agreed to pay $11.75 million in one class-action suit, stating the settlement was made to prevent legal costs and continued lawsuits.

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

In the current lawsuit, which is mostly comparable to its predecessors, New York state homeowners 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 'prohibited gaming business. '

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

'We generally don't comment on matters before the courts,' a VGW representative told DailyMail.com by means of e-mail. 'However, we note that this claim has only simply been filed with the court and VGW has not been officially served.

'We have full confidence in our compliance with all laws and regulations where we operate, and stay positive about the future,' the representative continued. 'We continue to provide our free-to-play video games across the majority of North America, as we have for more than a decade, producing not only great video games, user experiences and entertainment, however also ensuring this is done safely, responsibly and at the highest level of standards.

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

The issues in between traditional online sports betting and sweepstakes gambling establishments could prove troublesome for some star endorsers.

Towns, a star center with the Knicks, and the 76ers' George both endorse VGW's Global Poker brand name while the NBA is partnered with traditional video 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 project a strong position versus unlawful gambling - specifically when 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 lifetime ban from the NBA over accusations 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 sued for hosting allegedly unlawful gambling sites

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

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

Neither an NBA spokesman nor the players' representatives reacted to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise neglected to react to DailyMail.com emails.

Asked if their celeb endorsers have a responsibility to discuss to clients the distinctions and similarities between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that requires to be done.

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

Glaser, an outspoken opponent of sweepstakes websites, sees things differently.
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'Celebrities who provide their names to dubious unlawful gambling sites are, at a minimum, putting their reputations at danger in addition to courting civil and class actions by customers who declare damage,' Glaser said. 'There is likewise some risk that state regulators and state chief law officers rope star endorsers into enforcement efforts for facilitating unlawful gaming.'

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