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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, however the world-famous celebs were notably consisted of in a slide presentation on social and sweepstakes casinos - the questionable sites providing both totally free casino-style video games and rewarding prizes, such as money, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are just two cogs in the multibillion-dollar market that now discovers itself besieged by suits. In the eyes of numerous gaming corporations, not to discuss claim complainants and state regulators, sweepstakes gambling establishments act as traditional casinos, only without the oversight, consumer defenses and tax laws. So not only can they prevent the high 24-percent federal gaming levy, however sweepstakes operators aren't subject to regulatory difficulties like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the business deals with accusations of unlawful sports betting in a New York claim that declares VGW uses star endorsers to 'create a veneer of legitimacy' around its product. (See VGW's statement listed below)

'I'm unsure" 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 presenter, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers include a variety of celebrities 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 traditional gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of lots of sweepstakes gambling establishments discovered online

Ryan Seacrest urges fans to dip into Chumba Casino, where many - but not all - games are free

Drake has an offer with social sweeps gambling establishment, Stake, that he routinely touts on social networks

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Instead, ads normally center around the social aspect of the casinos, while omitting the potential for actual sports betting losses.

Others tempt customers with pledges of rewards. One such operator, Stake, ran a social networks advertisement flaunting Drake's vehicles, planes and estates before rotating to video of the rap artist playing online casino-style video games.

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

Another caption described: 'Because I never quit.'

The inconsistency between sports betting sites and social or sweepstakes casinos is a bit complicated, however operators of the latter insist they're not involved with the previous.

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA information, most of the players on social-sweepstakes gambling establishments are sports betting complimentary.

'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 common deposit or bet size at real-money online sports betting websites.'

Social casinos provide clients a possibility to play casino-style games with buddies. Players have the alternative to buy valueless currency frequently described as 'gold coins,' which can not be exchanged for real money, however can be used to unlock different features within the video games.

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

And therein lies the potential for monetary losses, like the ones declared 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 previous year after continuing to buy more coins in pursuit of money and other things of worth.

The Philadelphia 76ers' Paul George is seen promoting an International Poker occasion

Social sweeps casino Stake ran an ad displaying Drake's vehicles, aircrafts and estates

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

Traditional online casinos are prohibited in all but seven states, which has actually assisted to sustain the appeal of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, allow clients to send mail-in ask for free sweeps coins, offered the gamers follow painfully specific directions. What's more, gamers are often rewarded with sweeps coins just for registering, thereby providing them a reason to try their hands at any number of gambling establishment video games for a chance to win - or lose - real cash.

So why are sweepstakes websites enabled to run in 48 states, while online casinos 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 simply a kind of online entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is needed to play at social casinos with sweepstakes prizes. Consumers never ever have to pay for an opportunity to win prizes. That lack of a purchase requirement - or" consideration" - is a crucial difference between social sweeps and standard online sports betting sites like gambling establishments.'

Consider the manner in which McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're buying hamburgers and french fries that offer them the chance to win lucrative prizes, such as a $1 million jackpot.

And without a requirement, or 'consideration', the video game itself does not meet the definition of gaming in the US.

'Sweepstakes are an enduring technique for promoting all sort of everyday organizations in the United States, everything from hamburgers to magazine memberships to coffee and home enhancement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are routinely utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting industry insiders, that argument does not cut it.

For beginners, video gaming lawyer Daniel Wallach mentions, McDonald's Monopoly video game doesn't run forever. Rather, it has a well-defined beginning and end, therefore suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote genuine products like fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're generally not tied to casino-style video games of opportunity,' Wallach told DailyMail.com. 'They're just money free gifts.

'The sweepstakes [gambling establishments] possess none of the attributes frequently associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos use" casino-like" payments, normally 80 percent or more of revenues, whereas the normal payout portion for a momentary advertising sweepstakes is an unimportant share of the revenue made by the company [typically less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the internet coffee shops that emerged in Florida, using customers the chance to play casino-style video games for real rewards. Much of those brick-and-mortar facilities have given that been shuttered over accusations of prohibited gambling.

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

Now, Wallach argues, social sweeps casinos need to deal with similar scrutiny.

'These distinctions are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have actually consistently been mentioned by courts and state lawyer generals as key factors in determining that a sweepstakes promo was in truth a guise for unlawful gaming.'

One of the casino industry's leading trade companies, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, sometimes, enact brand-new legislation on the problem.

'Consumers are being denied of securities and states are passing up significant tax and earnings chances as this gaming changes that performed 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 casino operators paid a combined $14.2 million in four 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 avoid legal costs and continued lawsuits.

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

In the latest suit, which is mostly similar to its predecessors, New York state locals 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 'unlawful gaming business. '

Apple and Google have actually likewise been called as offenders in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech company responded to DailyMail.com's ask for comment.

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

'We have full self-confidence in our compliance with all laws and policies where we operate, and remain positive about the future,' the representative continued. 'We continue to provide our free-to-play games throughout the majority of North America, as we have for more than a decade, developing not just excellent games, user experiences and home entertainment, but likewise ensuring this is done safely, properly and at the highest level of requirements.

'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are relatively typical across the online social video games market (and the US more broadly), and our basic practice is that we mean to intensely defend any claim which may be brought against us.'

The problems between standard online gambling and sweepstakes gambling establishments could show problematic 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 conventional gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking unlawful sports betting wagering 'sweeps' sites while at the same time the leagues wish to forecast a strong position versus prohibited sports betting - especially when attempting to tamp down the occasional gambling scandal,' Glaser told DailyMail.com.

It was simply eight months ago that Toronto Raptors forward Jontay Porter got a life time ban from the NBA over allegations he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes gambling establishments.

Together with VGW, Apple and Google are being sued for hosting allegedly unlawful sports betting sites

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

'I 'd expect that a league crackdown on professional athletes backing sweepstakes sites refers when, not if,' Glaser added.

Neither an NBA spokesperson nor the gamers' representatives reacted to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also ignored to react to DailyMail.com emails.

Asked if their star endorsers have a responsibility to describe to clients the differences and resemblances between iGaming and sweepstakes casinos, VGW insisted there is nothing more that needs to be done.

'We have full confidence in our influencer and ambassadorial collaborations, and our business practices more broadly,' the spokesperson stated. 'Some of our worths are" our gamers 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 sites, sees things in a different way.
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'Celebrities who provide their names to shady unlawful gaming websites are, at a minimum, putting their credibilities at risk as well as courting civil and class actions by consumers who allege harm,' Glaser said. 'There is likewise some danger that state regulators and state lawyers general rope celeb endorsers into enforcement efforts for assisting in prohibited sports betting.'

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