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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 unlawful sports betting.

No, they weren't personally in attendance, however the world-famous celebrities were notably included in a slide discussion on social and sweepstakes gambling establishments - the questionable sites offering both complimentary casino-style games and financially rewarding prizes, such as cash, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are simply 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 lawsuit plaintiffs and state regulators, sweepstakes casinos function as traditional casinos, just without the oversight, consumer protections and tax laws. So not just can they avoid the high 24-percent federal sports betting levy, but sweepstakes operators aren't subject to regulative obstacles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the business deals with accusations of prohibited sports betting in a New york city lawsuit that declares VGW utilizes celebrity endorsers to 'produce a veneer of authenticity' around its item. (See VGW's declaration below)

'I'm not sure" if you don't trust us, you can rely on Paris Hilton" is a winning message for business operating multibillion-dollar illegal 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 celebs from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions between traditional sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among lots of sweepstakes gambling establishments found online

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

Drake has an offer with social sweeps gambling establishment, Stake, that he routinely promotes on social media

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Instead, ads normally center around the social aspect of the casinos, while omitting the potential for real gambling losses.

Others lure consumers with guarantees of rewards. One such operator, Stake, ran a social networks advertisement revealing off Drake's cars, aircrafts and estates before pivoting to footage of the rapper playing online casino-style video games.

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

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

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

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, the majority of the gamers on social-sweepstakes gambling establishments are sports betting free.

'Most social sweeps consumers never purchase,' the SPGA spokesperson told DailyMail.com. 'The minority of customers who make purchases do so in amounts far smaller sized than the typical deposit or bet size at real-money online sports betting sites.'

Social casinos provide consumers a possibility to play casino-style video games with good friends. Players have the option to purchase valueless currency often described as 'gold coins,' which can not be exchanged genuine cash, but can be utilized to open various features within the games.

But within the world of social casinos exists sweepstakes gaming, permitting consumers to acquire other currency referred to as 'sweeps coins' that can be exchanged for cash or other prizes.
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And therein lies the potential for financial losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York City. One gamer told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the past year after continuing to buy more coins in pursuit of money and other things of worth.
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The Philadelphia 76ers' Paul George is seen promoting an International Poker occasion

Social sweeps casino Stake ran an ad showing off Drake's cars, 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 banned in all but seven states, which has assisted to sustain the appeal of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes sites, which don't require normally require recognition. However, sites like Chumba will ask for IDs from players attempting to withdraw any funds.

Many websites, like the crypto-compatible Stake, allow clients to submit mail-in ask for complimentary sweeps coins, supplied the gamers follow painfully particular directions. What's more, gamers are frequently rewarded with sweeps coins simply for signing up, thereby giving them a factor to try their hands at any variety of gambling establishment games for a possibility to win - or lose - real cash.

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

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

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

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

And without a purchase requirement, or 'consideration', the game itself does not fulfill the definition of gambling in the US.

'Sweepstakes are an enduring technique for promoting all sort of everyday services in the United States, everything from burgers to magazine memberships to coffee and home improvement 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 many sports betting industry insiders, that argument does not cut it.

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

'They do not last forever and they're usually not connected to casino-style games of opportunity,' Wallach informed DailyMail.com. 'They're just money giveaways.

'The sweepstakes [casinos] have none of the attributes commonly connected with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments provide" casino-like" payouts, typically 80 percent or more of revenues, whereas the typical payment portion for a short-lived advertising sweepstakes is an unimportant share of the revenue earned by the business [typically less than one percent]'

Wallach is quick to compare the online social sweeps gambling establishments to the web cafes that sprang up in Florida, using consumers the chance to play casino-style games for real rewards. A number of those brick-and-mortar establishments have actually because been shuttered over claims of illegal gaming.

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

Now, Wallach argues, social sweeps gambling establishments need to deal with comparable scrutiny.

'These differences are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have consistently been mentioned by courts and state attorney generals as key factors in determining that a sweepstakes promo was in reality a guise for prohibited sports betting.'

Among the gambling establishment market's leading trade companies, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, sometimes, enact brand-new legislation on the problem.

'Consumers are being denied of securities and states are forgoing significant tax and income chances as this sports betting changes that conducted through regulated channels,' checked out a well-circulated AGA memo.

And then there are the plaintiffs who have taken legal action against social casinos in more than a lots states.
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Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action lawsuit, saying the settlement was made to prevent legal costs and continued lawsuits.

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

In the latest claim, which is mainly similar to its predecessors, New york city 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 gambling business. '

Apple and Google have actually also been named as defendants in claims for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for comment.

'We normally don't comment on matters before the courts,' a VGW spokesperson told DailyMail.com by means of e-mail. 'However, we keep in mind that this claim has only simply been filed with the court and VGW has actually not been officially served.

'We have complete confidence in our compliance with all laws and regulations where we operate, and stay confident about the future,' the representative continued. 'We continue to provide our free-to-play games across the majority of North America, as we have for more than a decade, producing not only great video games, user experiences and home entertainment, however likewise guaranteeing this is done safely, properly and at the highest level of standards.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are relatively common throughout the online social video games industry (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 issues between conventional online sports betting and sweepstakes gambling establishments might show troublesome for some celeb 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 traditional video gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking unlawful sports betting wagering 'sweeps' websites while at the very same time the leagues desire to project a strong stance against unlawful gaming - specifically when attempting to tamp down the periodic sports betting scandal,' Glaser told DailyMail.com.

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

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

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

'I 'd expect that a league crackdown on athletes backing sweepstakes sites is a matter of when, not if,' Glaser included.
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Neither an NBA representative nor the players' representatives reacted to DailyMail.com's ask for comment. For that matter, for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise ignored to react to DailyMail.com e-mails.

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

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

Glaser, an outspoken opponent of sweepstakes websites, sees things in a different way.

'Celebrities who lend their names to dubious unlawful gaming websites are, at a minimum, putting their credibilities at risk in addition to courting civil and class actions by consumers who declare harm,' Glaser stated. 'There is likewise some danger that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for helping with illegal sports betting.'

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