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The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on illegal sports betting.
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No, they weren't personally in participation, but the world-famous celebrities were notably included in a slide discussion on social and sweepstakes casinos - the controversial websites using both complimentary casino-style video games and profitable prizes, such as cash, present cards or cryptocurrency. In one advertisement, 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 simply 2 cogs in the multibillion-dollar market that now discovers itself besieged by suits. In the eyes of numerous video gaming corporations, not to mention lawsuit complainants and state regulators, sweepstakes casinos function as standard casinos, just without the oversight, consumer defenses and tax laws. So not just can they prevent the high 24-percent federal gambling levy, however sweepstakes operators aren't based on regulative difficulties like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the company faces accusations of prohibited gaming in a New york city claim that claims VGW uses celebrity endorsers to 'develop a veneer of legitimacy' around its product. (See VGW's declaration listed below)

'I'm not exactly sure" if you do not trust us, you can rely on Paris Hilton" is a winning message for business running 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, informed DailyMail.com.

Sweepstakes endorsers include a series of stars from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom use any differences between standard sports betting and sweepstakes play.

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

Ryan Seacrest advises fans to play at Chumba Casino, where many - but not all - games are free

Drake has a handle social sweeps gambling establishment, Stake, that he routinely promotes on social media

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Instead, advertisements usually center around the social element of the casinos, while omitting the potential for actual gambling losses.

Others lure clients with pledges of rewards. One such operator, Stake, ran a social networks advertisement displaying Drake's cars, airplanes and estates before rotating to video of the rap artist playing online casino-style games.

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

Another caption described: 'Because I never offered up.'

The discrepancy in between sports betting websites and social or sweepstakes casinos is a bit complicated, however operators of the latter insist they're not involved with the former.

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, many of the players on social-sweepstakes casinos are sports betting complimentary.
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'Most social sweeps clients never purchase,' the SPGA representative informed DailyMail.com. 'The minority of customers who make purchases do so in amounts far smaller than the typical deposit or bet size at real-money online gaming sites.'

Social casinos use customers an opportunity to play casino-style video games with good friends. Players have the option to buy valueless currency typically referred to as 'gold coins,' which can not be exchanged for real money, but can be used to open numerous functions within the video games.

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

And therein lies the potential for monetary losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York. One gamer 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 worth.

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

Social sweeps gambling establishment Stake ran an advertisement displaying Drake's automobiles, airplanes 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 actually assisted to fuel the appeal of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes sites, which don't require usually need recognition. However, websites like Chumba will request for IDs from players trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, allow customers to submit mail-in ask for free sweeps coins, provided the players follow painfully specific instructions. What's more, players are typically rewarded with sweeps coins simply for registering, thereby giving them a reason to try their hands at any number of gambling establishment video games for a possibility to win - or lose - real money.

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

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

'Social sweepstakes games are simply a form of online entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is required to play at social casinos with sweepstakes prizes. Consumers never need to spend for a chance to win rewards. That lack of a purchase requirement - or" factor to consider" - is an important distinction between social sweeps and traditional online gambling sites like gambling establishments.'

Think about the way that McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and french fries that use them the possibility to win rewarding rewards, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the game itself doesn't meet the meaning of gaming in the US.

'Sweepstakes are a long-standing approach for promoting all type of daily companies in the United States, everything from hamburgers to publication memberships to coffee and home enhancement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are routinely used 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 does not cut it.

For starters, video gaming lawyer Daniel Wallach explains, McDonald's Monopoly game does not run indefinitely. Rather, it has a distinct beginning and end, thus recommending 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 permanently and they're generally not tied to casino-style games of chance,' Wallach told DailyMail.com. 'They're just cash free gifts.

'The sweepstakes [gambling establishments] have none of the qualities commonly related to McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments use" casino-like" payouts, generally 80 percent or more of revenues, whereas the common payment portion for a temporary marketing sweepstakes is a trivial share of the income earned by the company [generally less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the web cafes that sprang up in Florida, using clients the possibility to play casino-style games for genuine prizes. A number of those brick-and-mortar facilities have given that been shuttered over claims of unlawful gaming.

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

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

'These differences are not approximate,' Wallach stated of social sweeps casinos. 'They have actually repeatedly been mentioned by courts and state chief law officer as crucial elements in figuring out that a sweepstakes promotion was in reality a guise for unlawful sports betting.'

One of the casino industry's leading trade organizations, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, in some cases, enact brand-new legislation on the concern.

'Consumers are being deprived of defenses and states are passing up considerable tax and earnings opportunities as this gaming replaces that conducted through managed channels,' read a well-circulated AGA memo.

And after that there are the complainants who have sued social casinos in more than a dozen states.

Sweepstakes casino operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, stating the settlement was made to prevent legal costs and continued litigation.

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

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

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

'We typically don't comment on matters before the courts,' a VGW spokesperson informed DailyMail.com by means of e-mail. 'However, we keep in mind that this claim has actually only just 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 positive about the future,' the representative continued. 'We continue to provide our free-to-play video games across many of The United States and Canada, as we have for more than a decade, creating not just fantastic games, user experiences and home entertainment, however also guaranteeing this is done safely, responsibly and at the greatest level of requirements.

'More broadly, we 'd restate that class actions and other litigations and arbitrations are relatively common across the online social games market (and the US more broadly), and our standard practice is that we intend to vigorously protect any claim which might be brought versus us.'

The concerns between standard online sports betting and sweepstakes casinos 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 while the NBA is partnered with traditional gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking prohibited sports betting wagering 'sweeps' sites while at the same time the leagues wish to project a strong stance versus prohibited gambling - specifically when trying to tamp down the periodic sports betting scandal,' Glaser informed DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter got a life time restriction from the NBA over claims he conspired with bettors. 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 sued for hosting allegedly illegal gambling websites

Regardless, Glaser sees sweepstakes gambling establishments as a major issue for leagues such as the NBA.

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

Neither an NBA representative nor the players' agents reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also disregarded to react to DailyMail.com e-mails.

Asked if their celeb endorsers have a responsibility to discuss to customers the distinctions and resemblances in between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is absolutely nothing more that requires to be done.

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

Glaser, an outspoken challenger of sweepstakes sites, sees things in a different way.
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'Celebrities who lend their names to shady prohibited gambling sites are, at a minimum, putting their credibilities at risk in addition to courting civil and class actions by customers who allege damage,' Glaser said. 'There is also some danger that state and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for assisting in illegal gambling.'

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