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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 prohibited sports betting.

No, they weren't personally in presence, however the world-famous celebs were notably included in a slide presentation on social and sweepstakes gambling establishments - the controversial websites using both free casino-style games and financially rewarding prizes, such as cash, gift 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 sites are just 2 cogs in the multibillion-dollar industry that now finds itself besieged by lawsuits. In the eyes of numerous gaming corporations, not to point out claim plaintiffs and state regulators, sweepstakes casinos serve as standard casinos, only without the oversight, consumer defenses and tax laws. So not just can they prevent the steep 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 last year alone. Now the company deals with allegations of illegal sports betting in a New York claim that claims VGW utilizes celebrity endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's statement below)

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

Sweepstakes endorsers include a variety of celebrities from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom use any differences between conventional gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of many sweepstakes casinos discovered online

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

Drake has a deal with social sweeps casino, Stake, that he routinely promotes on social networks

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Instead, ads usually focus around the social element of the gambling establishments, while omitting the capacity for real sports betting losses.

Others lure customers with pledges of prizes. One such operator, Stake, ran a social media ad displaying Drake's cars, aircrafts and mansions before pivoting to video of the rapper playing online casino-style games.

'Daddy, why do we have so much cash?' read the first caption on the screen.
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Another caption discussed: 'Because I never ever quit.'

The disparity in between gambling sites and social or sweepstakes casinos is a bit complex, 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), explained its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA information, most of the players on social-sweepstakes casinos are playing for free.

'Most social sweeps clients never ever purchase,' the SPGA representative told DailyMail.com. 'The minority of consumers who make purchases do so in amounts far smaller than the typical deposit or bet size at real-money online gambling websites.'

Social casinos offer clients a possibility to play casino-style games with buddies. Players have the option to buy worthless currency typically described as 'gold coins,' which can not be exchanged for real cash, however can be used to open various features within the games.

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

And therein lies the capacity for financial losses, like the ones declared 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 gambling establishments 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 Worldwide Poker event

Social sweeps gambling establishment Stake ran an ad flaunting Drake's cars and trucks, 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 seven states, which has assisted to sustain the popularity of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes websites, which do not require normally require identification. However, sites like Chumba will request IDs from gamers attempting to withdraw any funds.

Many sites, like the crypto-compatible Stake, permit customers to submit mail-in ask for totally free sweeps coins, offered the players follow painfully specific instructions. What's more, players are frequently rewarded with sweeps coins merely for signing up, consequently offering them a reason to attempt their hands at any variety of gambling establishment video games for a chance to win - or lose - genuine money.

So why are sweepstakes sites permitted to run in 48 states, while online gambling establishments are prohibited in all however 7?

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

'Social sweepstakes video games are simply a type of online home entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is required to dip into social casinos with sweepstakes rewards. Consumers never need to spend for an opportunity to win prizes. That lack of a purchase requirement - or" factor to consider" - is an important difference in between social sweeps and conventional online gambling websites like gambling establishments.'

Consider the manner in which McDonald's uses its yearly Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're buying hamburgers and french 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 meet the meaning of gambling in the US.

'Sweepstakes are a long-standing method for promoting all kinds of daily businesses in the United States, whatever from burgers to magazine subscriptions to coffee and home improvement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are frequently utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For beginners, gaming lawyer Daniel Wallach explains, video game doesn't run forever. 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 items like french fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're usually not connected to casino-style video games of opportunity,' Wallach told DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [gambling establishments] have none of the attributes typically associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments provide" casino-like" payouts, normally 80 percent or more of revenues, whereas the normal payment percentage for a temporary advertising sweepstakes is an unimportant share of the profits earned by the business [normally less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, providing customers the possibility to play casino-style games for genuine prizes. A lot of those brick-and-mortar establishments have considering that been shuttered over claims of illegal sports betting.

DJ Khaled is among several celeb spokespeople for VGW's Global Poker brand name
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Now, Wallach argues, social sweeps gambling establishments need to deal with comparable examination.

'These distinctions are not approximate,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been mentioned by courts and state attorney general of the United States as essential consider figuring out that a sweepstakes promo was in truth a guise for prohibited gambling.'

One of the casino market's leading trade companies, the American Gaming Association, is now pushing legislators to examine sweepstakes operators and, in many cases, enact new legislation on the problem.

'Consumers are being deprived of defenses and states are forgoing significant tax and earnings opportunities as this sports betting changes that conducted through managed channels,' read a well-circulated AGA memo.

And then there are the plaintiffs who have actually taken legal action against social casinos in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without admitting any misbehavior, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action claim, stating the settlement was made to avoid legal costs and continued litigation.

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

In the most recent lawsuit, which is largely comparable to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is explained in the filing as an 'illegal sports betting business. '

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

'We normally do not comment on matters before the courts,' a VGW representative told DailyMail.com via e-mail. 'However, we note that this claim has actually only simply been filed 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 run, and remain positive about the future,' the spokesperson continued. 'We continue to provide our free-to-play games across most of North America, as we have for more than a years, producing not only terrific video games, user experiences and entertainment, however likewise 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 reasonably typical across the online social games market (and the US more broadly), and our basic practice is that we mean to intensely safeguard any claim which may be brought against us.'

The concerns between conventional online gambling and sweepstakes gambling establishments could show troublesome for some celebrity endorsers.

Towns, a star center with the Knicks, and the 76ers' George both back VGW's Global Poker brand name while the NBA is partnered with traditional video gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking illegal sports betting 'sweeps' sites while at the exact same time the leagues desire to project a strong position against illegal gaming - specifically when trying to tamp down the periodic sports betting scandal,' Glaser informed DailyMail.com.

It was simply eight months ago that Toronto Raptors forward Jontay Porter received a life time ban from the NBA over accusations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes gambling establishments.
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Along with VGW, Apple and Google are being demanded hosting apparently illegal gambling sites

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

'I 'd anticipate that a league crackdown on athletes backing sweepstakes websites refers when, not if,' Glaser added.

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 likewise disregarded to react to DailyMail.com emails.

Asked if their celeb endorsers have an obligation to explain to consumers the differences and similarities in between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the representative stated. 'Some 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 lend their names to dubious unlawful gambling sites are, at a minimum, putting their track records at risk along with courting civil and class actions by consumers who declare damage,' Glaser stated. 'There is also some risk that state regulators and state chief law officers rope celeb endorsers into enforcement efforts for assisting in illegal gambling.'

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