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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 prohibited gaming.

No, they weren't personally in attendance, however the world-famous celebs were conspicuously included in a slide discussion on social and sweepstakes casinos - the questionable websites providing both totally free casino-style 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 complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

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 claim plaintiffs and state regulators, sweepstakes casinos function as traditional gambling establishments, just without the oversight, consumer protections and tax laws. So not only can they prevent the steep 24-percent federal gambling levy, but sweepstakes operators aren't based on regulatory difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the business faces allegations of prohibited gaming in a New York lawsuit that claims VGW uses star endorsers to 'develop a veneer of authenticity' around its item. (See VGW's statement below)

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

Sweepstakes endorsers include a range of stars from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions between conventional gaming and sweepstakes play.
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Paris Hilton is seen plugging Wow Vegas, among lots of sweepstakes casinos found online

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

Drake has a handle social sweeps gambling establishment, Stake, that he frequently promotes on social networks

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Instead, ads generally focus around the social aspect of the casinos, while leaving out the capacity for actual gambling losses.

Others lure consumers with promises of prizes. One such operator, Stake, ran a social networks advertisement revealing off Drake's automobiles, planes and mansions before pivoting to footage of the rapper playing online casino-style video games.

'Daddy, why do we have so much cash?' read the very first caption on the screen.

Another caption explained: 'Because I never quit.'

The discrepancy in between gambling websites and social or sweepstakes gambling establishments is a bit complicated, but operators of the latter insist they're not included with the former.

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, many of the gamers on social-sweepstakes gambling establishments are sports betting free.

'Most social sweeps consumers never ever purchase,' the SPGA spokesperson informed DailyMail.com. 'The minority of clients 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 gambling establishments use consumers an opportunity to play casino-style games with friends. Players have the alternative to purchase worthless currency frequently referred to as 'gold coins,' which can not be exchanged genuine cash, however can be used to open numerous features within the games.

But within the world of social casinos exists sweepstakes video gaming, allowing consumers to acquire other currency called 'sweeps coins' that can be exchanged for cash or other rewards.

And therein lies the capacity for monetary losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York City. One gamer informed 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 cash and other things of worth.

The Philadelphia 76ers' Paul George is seen promoting a Worldwide Poker occasion

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake's automobiles, aircrafts and mansions

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 however seven states, which has actually assisted to fuel the popularity of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, permit clients to submit mail-in ask for free sweeps coins, offered the gamers follow painfully specific instructions. What's more, gamers are typically rewarded with sweeps coins simply for signing up, thus providing a reason to try their hands at any number of casino games for a chance to win - or lose - genuine cash.

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

According to the stakeholders, their item is the totally free casino-style gaming, and the real-stakes competition is merely a way of promoting their support.

'Social sweepstakes video games are merely a type of online entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is required to dip into social gambling establishments with sweepstakes rewards. Consumers never ever need to spend for a chance to win rewards. That lack of a purchase requirement - or" consideration" - is a crucial difference in between social sweeps and traditional online gambling websites like casinos.'

Consider the way that McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to gamble, but rather they're buying hamburgers and fries that offer them the opportunity to win profitable prizes, such as a $1 million prize.

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

'Sweepstakes are a long-standing method for promoting all sort of everyday organizations in the United States, everything from burgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are routinely utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous sports betting market insiders, that argument does not cut it.

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

'They don't last permanently and they're normally not tied to games of possibility,' Wallach informed DailyMail.com. 'They're simply cash free gifts.
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'The sweepstakes [casinos] have none of the attributes typically related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments provide" casino-like" payments, generally 80 percent or more of incomes, whereas the normal payment portion for a temporary marketing sweepstakes is an unimportant share of the revenue earned by the business [normally less than one percent]'

Wallach is quick to liken the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, providing customers the opportunity to play casino-style video games for genuine prizes. A lot of those brick-and-mortar establishments have because been shuttered over claims of prohibited sports betting.

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

Now, Wallach argues, social sweeps gambling establishments ought to face comparable examination.
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'These distinctions are not approximate,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been cited by courts and state attorney generals as essential elements in determining that a sweepstakes promo remained in truth a guise for unlawful gambling.'

Among 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 securities and states are giving up significant tax and profits chances as this sports betting replaces that carried out through managed channels,' checked out a well-circulated AGA memo.

And then there are the plaintiffs 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 separate cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action suit, saying the settlement was made to prevent legal costs and continued litigation.

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

In the current suit, which is mostly similar to its predecessors, New York 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 'prohibited gaming enterprise. '

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

'We typically do not talk about matters before the courts,' a VGW spokesperson informed DailyMail.com by means of 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 formally served.

'We have complete confidence in our compliance with all laws and regulations where we operate, and remain positive about the future,' the representative continued. 'We continue to use our free-to-play video games across many of North America, as we have for more than a years, developing not only terrific games, user experiences and entertainment, but also 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 throughout the online social games market (and the US more broadly), and our basic practice is that we plan to intensely defend any claim which may be brought versus us.'

The issues between traditional online sports betting and sweepstakes gambling establishments might prove bothersome for some celeb endorsers.

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

'It's paradoxical that expert athletes are hawking prohibited sports betting wagering 'sweeps' websites while at the same time the leagues desire to project a strong stance versus illegal gaming - particularly when attempting to tamp down the periodic gaming scandal,' Glaser told DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter got a life time ban from the NBA over allegations he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes casinos.

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

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

'I 'd anticipate that a league crackdown on athletes endorsing sweepstakes sites refers when, not if,' Glaser added.

Neither an NBA representative nor the players' representatives responded to DailyMail.com's requests for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise neglected to respond to DailyMail.com e-mails.

Asked if their star endorsers have a responsibility to explain to customers the distinctions and resemblances in between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that needs to be done.

'We have full confidence in our influencer and ambassadorial collaborations, and our service practices more broadly,' the spokesperson said. 'Some of our worths are" our gamers come first" and" we do what's right", and we put our values at the core of everything we do.'
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Glaser, an outspoken challenger of sweepstakes websites, sees things in a different way.

'Celebrities who lend their names to shady prohibited sports betting websites are, at a minimum, putting their reputations at threat along with courting civil and class actions by customers who allege damage,' Glaser stated. 'There is also some threat that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for helping with illegal gaming.'

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