The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on illegal gaming.
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No, they weren't personally in presence, however the world-famous stars were conspicuously included in a slide presentation on social and sweepstakes gambling establishments - the controversial websites using both totally free casino-style games and financially rewarding prizes, such as cash, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are just 2 cogs in the multibillion-dollar market that now finds itself besieged by suits. In the eyes of lots of video gaming corporations, not to mention lawsuit plaintiffs and state regulators, sweepstakes gambling establishments act as traditional casinos, just without the oversight, customer protections and tax laws. So not just can they avoid the high 24-percent federal sports betting levy, however sweepstakes operators aren't based on regulatory obstacles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income last year alone. Now the company faces allegations of prohibited gambling in a New York claim that declares VGW utilizes celebrity endorsers to 'produce a veneer of legitimacy' around its item. (See VGW's statement below)

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

Sweepstakes endorsers consist of a variety of stars 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 provide any distinctions in between standard gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among lots of sweepstakes casinos discovered online

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

Drake has a deal with social sweeps gambling establishment, Stake, that he frequently promotes on social media

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

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

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

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

The disparity in between gaming websites and social or sweepstakes gambling establishments is a bit intricate, but operators of the latter insist they're not included with the former.
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A spokesperson for a market trade group, the Social and Promotional Gaming Association (SPGA), explained 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 casinos are playing for complimentary.

'Most social sweeps clients never purchase,' the SPGA spokesperson informed DailyMail.com. 'The minority of clients who make purchases do so in quantities far smaller sized than the normal deposit or bet size at real-money online gambling sites.'

Social casinos offer clients a possibility to play casino-style games with good friends. Players have the choice to buy worthless currency often referred to as 'gold coins,' which can not be exchanged for genuine money, but can be utilized to open numerous features within the video games.

But within the world of social casinos exists sweepstakes video gaming, permitting clients to acquire other currency referred to as 'sweeps coins' that can be exchanged for cash or other prizes.

And therein lies the capacity for financial losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York City. One player informed the Washington Post he lost more than $100,000 on sweepstakes casinos in the previous year after continuing to purchase more coins in pursuit of cash and other things of value.

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

Social sweeps gambling establishment Stake ran an ad showing off Drake's automobiles, aircrafts and mansions

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

Traditional online gambling establishments are banned in all but 7 states, which has actually helped to sustain the popularity 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 ask for IDs from players trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, allow customers to submit mail-in demands for totally free sweeps coins, supplied the players follow painfully specific guidelines. What's more, gamers are often rewarded with sweeps coins simply for signing up, thus giving them a factor to attempt their hands at any variety of casino video games for an opportunity to win - or lose - real cash.
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So why are sweepstakes sites allowed to run in 48 states, while online casinos are prohibited in all however 7?

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

'Social sweepstakes video games are simply a kind of online entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is needed to dip into social gambling establishments with sweepstakes prizes. Consumers never have to spend for a chance 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 method that McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and fries that provide them the opportunity to win financially rewarding rewards, such as a $1 million prize.

And without a purchase requirement, or 'factor to consider', the game itself doesn't fulfill the meaning of gambling in the US.

'Sweepstakes are an enduring method for promoting all kinds of everyday organizations in the United States, everything from hamburgers to publication memberships to coffee and home improvement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions 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 gambling industry insiders, that argument doesn't cut it.

For beginners, video gaming attorney Daniel Wallach explains, McDonald's Monopoly game does not run indefinitely. 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 utilized to promote real items like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [casinos] have none of the qualities commonly connected with McDonald's-design sweepstakes promotions,' Wallach continued. running in eternity, the sweepstakes gambling establishments use" casino-like" payments, normally 80 percent or more of profits, whereas the typical payment portion for a short-term advertising sweepstakes is a minor share of the income made by the business [typically less than one percent]'

Wallach is quick to compare the online social sweeps casinos to the web coffee shops that sprang up in Florida, using consumers the opportunity to play casino-style games for genuine rewards. Much of those brick-and-mortar establishments have actually since been shuttered over allegations of unlawful sports betting.

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

Now, Wallach argues, social sweeps gambling establishments ought to deal with similar scrutiny.

'These distinctions are not approximate,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been pointed out by courts and state chief law officer as crucial consider identifying that a sweepstakes promotion remained in reality a guise for illegal sports betting.'

Among the gambling establishment industry's leading trade organizations, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, in some cases, enact new legislation on the issue.

'Consumers are being denied of protections and states are giving up considerable tax and profits opportunities as this gaming replaces that performed through regulated channels,' read a well-circulated AGA memo.

And then there are the complainants 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 claim, saying the settlement was made to prevent legal costs and continued litigation.

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

In the latest lawsuit, which is mainly similar to its predecessors, New york city state homeowners 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 'unlawful sports betting enterprise. '

Apple and Google have actually also been called as accuseds in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for remark.

'We generally do not discuss matters before the courts,' a VGW representative told DailyMail.com via email. 'However, we keep in mind that this claim has only simply been submitted with the court and VGW has actually not been formally served.

'We have full self-confidence in our compliance with all laws and guidelines where we run, and stay positive about the future,' the spokesperson continued. 'We continue to use our free-to-play video games across most of The United States and Canada, as we have for more than a decade, creating not only terrific video games, user experiences and home entertainment, however likewise guaranteeing this is done safely, responsibly and at the highest level of standards.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are fairly common across the online social games market (and the US more broadly), and our standard practice is that we intend to vigorously safeguard any claim which may be brought versus us.'

The issues in between traditional online sports betting and sweepstakes casinos could show bothersome for some star 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 gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking prohibited sports betting wagering 'sweeps' sites while at the very same time the leagues want to predict a strong position versus illegal gambling - specifically when trying to tamp down the periodic sports betting scandal,' Glaser informed DailyMail.com.

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

Along with VGW, Apple and Google are being demanded hosting apparently prohibited gambling sites

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

'I 'd expect that a league crackdown on professional athletes endorsing sweepstakes sites is a matter of when, not if,' Glaser included.

Neither an NBA spokesman nor the gamers' representatives reacted to DailyMail.com's requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise disregarded to respond to DailyMail.com emails.

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

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the representative said. 'A few of our values 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.

'Celebrities who lend their names to dubious illegal sports betting websites are, at a minimum, putting their credibilities at risk along with courting civil and class actions by customers who allege damage,' Glaser stated. 'There is also some risk that state regulators and state chief law officers rope star endorsers into enforcement efforts for facilitating unlawful sports betting.'

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