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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 gambling.

No, they weren't personally in presence, but the world-famous celebs were conspicuously included in a slide presentation on social and sweepstakes gambling establishments - the controversial sites offering both totally free casino-style video games and rewarding prizes, such as money, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for complimentary,' 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 market that now discovers itself besieged by claims. In the eyes of numerous video gaming corporations, not to point out suit complainants and state regulators, sweepstakes gambling establishments act as conventional gambling establishments, just without the oversight, customer protections and tax laws. So not just can they prevent the steep 24-percent federal gambling levy, but sweepstakes operators aren't subject to regulative hurdles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings last year alone. Now the business faces accusations of illegal gambling in a New york city suit that claims VGW utilizes star endorsers to 'produce a veneer of authenticity' around its item. (See VGW's statement below)

'I'm uncertain" if you don't trust us, you can rely on Paris Hilton" is a winning message for companies running multibillion-dollar prohibited 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 consist of a variety of stars 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 distinctions between standard gambling and sweepstakes play.

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

Ryan Seacrest prompts fans to dip into Chumba Casino, where numerous - however not all - games are totally free

Drake has a handle social sweeps casino, Stake, that he routinely touts on social media

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Instead, advertisements generally focus around the social element of the casinos, while omitting the potential for actual sports betting losses.

Others lure customers with promises of prizes. One such operator, Stake, ran a social media advertisement displaying Drake's cars, aircrafts and estates before rotating to footage of the rapper playing online casino-style video games.

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

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

The discrepancy between gambling sites and social or sweepstakes gambling establishments 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), discussed its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA information, the majority of the players on social-sweepstakes gambling establishments are playing for totally free.

'Most social sweeps customers never make a purchase,' the SPGA representative informed 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 gambling sites.'

Social casinos offer clients an opportunity to play casino-style video games with friends. Players have the option to buy valueless frequently referred to as 'gold coins,' which can not be exchanged genuine money, however can be utilized to unlock various features within the video games.

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

And therein lies the capacity for financial losses, like the ones claimed by plaintiffs 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 money and other things of worth.

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

Social sweeps casino Stake ran an advertisement flaunting Drake's cars and trucks, planes 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 but 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 do not require typically require recognition. However, sites like Chumba will ask for IDs from gamers trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, allow clients to send mail-in ask for free sweeps coins, provided the gamers follow painfully particular directions. What's more, gamers are frequently rewarded with sweeps coins merely for signing up, thereby providing a reason to try their hands at any variety of gambling establishment video games for an opportunity to win - or lose - genuine cash.

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

According to the stakeholders, their product is the complimentary casino-style video gaming, and the real-stakes competitors is merely a way of promoting their bread and butter.

'Social sweepstakes video games are simply a kind of online home entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is required to play at social casinos with sweepstakes prizes. Consumers never ever need to pay for an opportunity to win prizes. That absence of a purchase requirement - or" factor to consider" - is an essential distinction between social sweeps and conventional online gaming sites like casinos.'

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

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

'Sweepstakes are a long-standing technique for promoting all kinds of everyday organizations in the United States, everything from hamburgers to magazine memberships to coffee and home improvement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are regularly utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For beginners, gaming lawyer Daniel Wallach explains, McDonald's Monopoly game does not run forever. Rather, it has a distinct beginning and end, thereby recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote genuine items like fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're normally not connected to casino-style video games of possibility,' Wallach told DailyMail.com. 'They're just money free gifts.

'The sweepstakes [gambling establishments] possess none of the characteristics typically related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos offer" casino-like" payments, usually 80 percent or more of profits, whereas the common payment percentage for a temporary promotional sweepstakes is a minor share of the earnings earned by the business [normally less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the internet coffee shops that sprang up in Florida, offering clients the chance to play casino-style video 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 a number of celeb spokespeople for VGW's Global Poker brand

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

'These distinctions are not approximate,' Wallach stated of social sweeps casinos. 'They have actually consistently been mentioned by courts and state attorney general of the United States as essential elements in figuring out that a sweepstakes promotion remained in reality a guise for unlawful gaming.'

One of the gambling establishment market's leading trade organizations, the American Gaming Association, is now pushing lawmakers to examine sweepstakes operators and, in some cases, enact new legislation on the concern.

'Consumers are being deprived of protections and states are forgoing considerable tax and profits opportunities as this sports betting changes that carried out through controlled channels,' checked out a well-circulated AGA memo.

And then there are the complainants who have actually taken legal action against social gambling establishments in more than a dozen states.

Sweepstakes casino operators paid a combined $14.2 million in four 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 lawsuits.

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

In the latest lawsuit, which is mainly similar to its predecessors, New York state residents Lamar Prater and Rebecca Pratt both claim 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 actually also been called as defendants in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com's request for remark.

'We usually do not comment on matters before the courts,' a VGW spokesperson told DailyMail.com through e-mail. 'However, we note that this claim has actually only simply been filed with the court and VGW has not been formally served.

'We have full self-confidence in our compliance with all laws and regulations where we run, and stay confident about the future,' the spokesperson continued. 'We continue to use our free-to-play video games across many of North America, as we have for more than a decade, producing not only great video games, user experiences and home entertainment, but also ensuring this is done safely, properly and at the highest level of requirements.

'More broadly, we 'd restate that class actions and other litigations and arbitrations are fairly typical across the online social video games industry (and the US more broadly), and our standard practice is that we intend to vigorously safeguard any claim which may be brought against us.'

The problems between conventional online gambling and sweepstakes casinos might show problematic for some celebrity endorsers.

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

'It's ironic that professional athletes are hawking unlawful sports betting 'sweeps' sites while at the exact same time the leagues wish to forecast a strong stance versus prohibited gaming - particularly when trying to tamp down the occasional gaming scandal,' Glaser told DailyMail.com.

It was simply eight months ago that Toronto Raptors forward Jontay Porter got a lifetime ban from the NBA over allegations he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes casinos.

Together with VGW, Apple and Google are being sued for hosting allegedly prohibited gambling websites

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

'I 'd anticipate that a league crackdown on athletes endorsing sweepstakes websites 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 overlooked to respond to DailyMail.com e-mails.

Asked if their star endorsers have a duty to describe to consumers the distinctions and resemblances in between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that requires to be done.

'We have complete confidence in our influencer and ambassadorial collaborations, and our business practices more broadly,' the spokesperson stated. 'Some of our worths are" our players precede" and" we do what's right", and we put our values at the core of everything we do.'

Glaser, an outspoken challenger of sweepstakes websites, sees things in a different way.
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'Celebrities who lend their names to dubious prohibited gambling sites are, at a minimum, putting their reputations at threat along with courting civil and class actions by customers who declare harm,' Glaser said. 'There is also some danger that state regulators and state lawyers general rope star endorsers into enforcement efforts for assisting in illegal gambling.'

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