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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 gaming.

No, they weren't personally in presence, however the world-famous stars were conspicuously consisted of in a slide discussion on social and sweepstakes gambling establishments - the controversial websites offering both totally free casino-style video 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 anyone can 'bet 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 suits. In the eyes of numerous video gaming corporations, not to mention claim complainants and state regulators, sweepstakes gambling establishments function as standard gambling establishments, only without the oversight, consumer protections and tax laws. So not only can they avoid the steep 24-percent federal gaming levy, but sweepstakes operators aren't based on regulative obstacles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the company deals with allegations of illegal gaming in a New york city lawsuit that claims VGW uses celeb endorsers to 'produce a veneer of authenticity' around its item. (See VGW's declaration listed below)

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

Sweepstakes endorsers consist of a series of celebs from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions in between traditional sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among lots of sweepstakes casinos found online
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Ryan Seacrest prompts fans to dip into Chumba Casino, where numerous - but not all - video games are totally free

Drake has a handle social sweeps casino, Stake, that he regularly touts on social networks

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Instead, ads normally focus around the social aspect of the gambling establishments, while omitting the capacity for actual gaming losses.

Others tempt customers with guarantees of prizes. One such operator, Stake, ran a social media ad revealing off Drake's automobiles, aircrafts and mansions before rotating to video of the rap artist playing online casino-style video games.

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

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

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

A representative for an industry 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 information, many of the gamers on social-sweepstakes casinos are playing for totally free.

'Most social sweeps customers never ever purchase,' the SPGA representative informed 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 sports betting websites.'

Social casinos provide consumers a chance to play casino-style games with pals. Players have the alternative to buy valueless currency often described as 'gold coins,' which can not be exchanged genuine cash, however can be utilized to open different functions within the games.

But within the world of social gambling establishments exists sweepstakes gaming, enabling clients to obtain other currency referred to as 'sweeps coins' that can be exchanged for cash or other prizes.

And therein lies the potential for financial losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York. One player informed the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the past year after continuing to purchase more coins in pursuit of money 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 showing off Drake's cars and trucks, aircrafts and estates

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

Traditional online gambling establishments are prohibited in all however 7 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 require generally require recognition. However, sites like Chumba will request for IDs from gamers attempting to withdraw any funds.
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Many sites, like the crypto-compatible Stake, allow consumers to send mail-in ask for complimentary sweeps coins, provided the players follow painfully particular directions. What's more, players are frequently rewarded with sweeps coins just for registering, thus providing them a reason to try their hands at any number of casino games for an opportunity to win - or lose - genuine cash.

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

According to the stakeholders, their item is the free casino-style video gaming, and the real-stakes competitors is merely a method of promoting their support.

'Social sweepstakes video games are merely a form of online home entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is required to play at social casinos with sweepstakes prizes. Consumers never ever need to pay for an opportunity to win rewards. 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.'

Think of the method that McDonald's uses its yearly Monopoly game to its food: Customers aren't paying to bet, however rather they're buying hamburgers and french fries that provide them the possibility to win rewarding rewards, such as a $1 million jackpot.

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

'Sweepstakes are an enduring technique for promoting all kinds of daily services in the United States, everything from burgers to magazine memberships to coffee and home enhancement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are frequently used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many gambling industry experts, that argument does not cut it.

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

'They don't last forever and they're usually not tied to casino-style games of chance,' Wallach told DailyMail.com. 'They're just cash free gifts.

'The sweepstakes [gambling establishments] possess none of the attributes commonly connected with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments use" casino-like" payments, usually 80 percent or more of incomes, whereas the typical payout percentage for a temporary promotional sweepstakes is an insignificant share of the profits earned by the business [generally less than one percent]'
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Wallach is fast to liken the online social sweeps casinos to the web coffee shops that emerged in Florida, providing customers the chance to play casino-style games for real prizes. Much of those brick-and-mortar establishments have actually given that been shuttered over allegations of unlawful gaming.

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

Now, Wallach argues, social sweeps casinos must face comparable analysis.

'These distinctions are not approximate,' Wallach said of social sweeps casinos. 'They have repeatedly been cited by courts and state chief law officer as key factors in identifying that a sweepstakes promotion remained in fact a guise for prohibited gambling.'

Among the gambling establishment industry's leading trade companies, the American Gaming Association, is now pushing legislators to examine sweepstakes operators and, in many cases, enact brand-new legislation on the problem.

'Consumers are being deprived of defenses and states are passing up substantial tax and revenue chances as this sports betting replaces that carried out through regulated channels,' checked out a well-circulated AGA memo.

And then there are the complainants 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 admitting any misbehavior, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action suit, saying 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 current suit, which is mainly comparable to its predecessors, New York state locals Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'illegal sports betting enterprise. '

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

'We normally do not comment on matters before the courts,' a VGW spokesperson informed DailyMail.com through e-mail. 'However, we note that this claim has only simply been submitted with the court and VGW has not been officially served.

'We have complete confidence in our compliance with all laws and guidelines where we operate, and stay confident about the future,' the spokesperson continued. 'We continue to use our free-to-play games across the majority of The United States and Canada, as we have for more than a years, producing not just terrific video games, user experiences and home entertainment, however also ensuring this is done safely, properly and at the greatest level of standards.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are reasonably typical across the online social video games market (and the US more broadly), and our standard practice is that we intend to strongly defend any claim which might be brought versus us.'

The issues in between traditional online gaming and sweepstakes casinos might prove troublesome for some star 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 standard gaming titans like FanDuel and DraftKings.
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'It's ironic that expert athletes are hawking prohibited sports betting 'sweeps' sites while at the very same time the leagues wish to forecast a strong stance against unlawful gaming - specifically when trying to tamp down the occasional sports betting scandal,' Glaser informed DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter received a life time restriction from the NBA over accusations he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes gambling establishments.

In addition to VGW, Apple and Google are being taken legal action against for hosting allegedly prohibited gambling websites

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

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

Neither an NBA spokesman nor the gamers' representatives responded to DailyMail.com's requests for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise overlooked to react to DailyMail.com emails.

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

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

'Celebrities who lend their names to dubious prohibited gaming websites are, at a minimum, putting their reputations at threat in addition to courting civil and class actions by customers who declare damage,' Glaser stated. 'There is also some threat that state regulators and state lawyers general rope celebrity endorsers into enforcement efforts for assisting in unlawful gambling.'

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