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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 prohibited sports betting.

No, they weren't personally in participation, however the world-famous stars were notably included in a slide discussion on social and sweepstakes casinos - the controversial sites using both totally free casino-style games and lucrative prizes, such as cash, present cards or cryptocurrency. In one ad, 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 websites are simply two cogs in the multibillion-dollar market that now finds itself besieged by lawsuits. In the eyes of lots of video gaming corporations, not to point out lawsuit complainants and state regulators, sweepstakes casinos function as standard gambling establishments, just without the oversight, consumer protections and tax laws. So not just can they prevent the steep 24-percent federal gaming levy, but sweepstakes operators aren't based on regulative difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the business deals with allegations of prohibited gambling in a New york city suit that claims VGW utilizes celeb endorsers to 'develop a veneer of legitimacy' around its product. (See VGW's declaration below)

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

Sweepstakes endorsers consist of a range of stars from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom provide any distinctions in between traditional sports betting and sweepstakes play.

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

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

Drake has a deal with social sweeps casino, Stake, that he frequently touts on social media

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Instead, advertisements typically focus around the social aspect of the casinos, while omitting the capacity for actual gambling losses.

Others tempt clients with guarantees of rewards. One such operator, Stake, ran a social networks ad revealing off Drake's cars, planes and mansions before pivoting to footage of the rap artist playing online casino-style video games.

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

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

The inconsistency between gambling websites and social or sweepstakes gambling establishments is a bit complex, however operators of the latter insist they're not involved with the previous.

A spokesperson for a market trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA data, the majority of the gamers on social-sweepstakes gambling establishments are playing for complimentary.

'Most social sweeps customers never make a purchase,' the SPGA representative informed DailyMail.com. 'The minority of consumers who make purchases do so in amounts far smaller sized than the common deposit or wager size at real-money online gambling sites.'

Social gambling establishments use customers a possibility to play casino-style games with buddies. Players have the choice to purchase valueless currency often described as 'gold coins,' which can not be exchanged for real cash, but can be utilized to open various features within the video games.

But within the world of social casinos exists sweepstakes video gaming, permitting consumers to obtain other currency understood as 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the potential for financial losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York. One player told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the past 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 Worldwide Poker occasion

Social sweeps casino Stake ran an ad flaunting Drake's vehicles, planes and mansions

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

Traditional online gambling establishments are prohibited in all but 7 states, which has actually helped to fuel the appeal of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes sites, which do not require 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 consumers to submit mail-in demands for totally free sweeps coins, offered the players follow painfully particular directions. What's more, gamers are typically rewarded with sweeps coins just for signing up, consequently giving them a reason to try their hands at any variety of gambling establishment video games for an opportunity to win - or lose - real cash.

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

According to the stakeholders, their product is the complimentary casino-style gaming, and the real-stakes competitors is just a method of promoting their support.

'Social sweepstakes video games are just a kind of online entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is required to dip into social casinos with sweepstakes prizes. Consumers never need to spend for a chance to win prizes. That absence of a purchase requirement - or" consideration" - is an important distinction between social sweeps and conventional online sports betting sites like casinos.'

Think about the manner in which McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and fries that provide them the opportunity to win lucrative rewards, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the video game itself doesn't meet the definition of sports betting in the US.

'Sweepstakes are an enduring approach for promoting all type of everyday services in the United States, whatever from burgers 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 family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling market insiders, that argument doesn't cut it.

For beginners, gaming lawyer Daniel Wallach explains, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a distinct start and end, consequently suggesting the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being used to promote real products like fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're usually not connected to casino-style games of possibility,' Wallach informed DailyMail.com. 'They're just money free gifts.

'The sweepstakes [gambling establishments] have none of the attributes typically related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments use" casino-like" payments, usually 80 percent or more of revenues, whereas the common payout portion for a momentary marketing sweepstakes is a trivial share of the income made by the business [typically less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the web coffee shops that sprang up in Florida, offering customers the possibility to play casino-style games for genuine prizes. Much of those brick-and-mortar facilities have given that been shuttered over allegations of prohibited gambling.

DJ Khaled is amongst a number of celebrity spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps gambling establishments should deal with comparable analysis.

'These distinctions are not arbitrary,' Wallach stated of social sweeps casinos. 'They have actually consistently been mentioned by courts and state chief law officer as crucial elements in figuring out that a sweepstakes promotion remained in truth a guise for unlawful gambling.'

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

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

And after that there are the complainants who have taken legal action against social gambling establishments in more than a lots 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 accepted pay $11.75 million in one class-action claim, stating the settlement was made to avoid legal expenses and continued litigation.

Michael Phelps has signed an offer with the VGW Group, which owns Global Poker

In the current lawsuit, which is mostly similar to its predecessors, New york city 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 enterprise. '

Apple and Google have actually likewise been named as defendants in suits for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com's request for comment.

'We normally do not talk about matters before the courts,' a VGW spokesperson told DailyMail.com through e-mail. 'However, we keep in mind that this claim has actually only simply been submitted with the court and VGW has actually not been officially served.

'We have full confidence in our compliance with all laws and policies where we run, and stay confident about the future,' the representative continued. 'We continue to provide our free-to-play video games across the majority of North America, as we have for more than a years, creating not only terrific video games, user experiences and home entertainment, but likewise ensuring this is done securely, properly and at the greatest level of standards.
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'More broadly, we 'd repeat 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 standard practice is that we mean to vigorously defend any claim which might be brought versus us.'

The concerns in between traditional online gaming and sweepstakes casinos might show problematic 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 paradoxical that expert athletes are hawking prohibited sports betting 'sweeps' websites while at the same time the leagues want to project a strong stance against illegal gambling - particularly when attempting to tamp down the periodic gambling scandal,' Glaser informed DailyMail.com.

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

In addition to VGW, Apple and Google are being taken legal action against for hosting presumably unlawful sports betting sites

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

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

Neither an NBA spokesperson nor the gamers' representatives reacted to DailyMail.com's demands for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also disregarded to react to DailyMail.com e-mails.

Asked if their celebrity endorsers have a duty to explain to consumers the differences and resemblances between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that requires to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the representative stated. 'Some of our worths are" our gamers precede" and" we do what's right", and we put our worths at the core of whatever we do.'

Glaser, an outspoken opponent of sweepstakes sites, sees things in a different way.
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'Celebrities who provide their names to dubious unlawful sports betting sites are, at a minimum, putting their track records at threat along with courting civil and class actions by customers who allege damage,' Glaser stated. 'There is also some risk that state regulators and state attorneys general rope celebrity endorsers into enforcement efforts for facilitating illegal gambling.'

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