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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 gambling.

No, they weren't personally in presence, but the world-famous celebrities were conspicuously included in a slide discussion on social and sweepstakes gambling establishments - the controversial websites offering both free casino-style video games and financially rewarding prizes, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are simply 2 cogs in the multibillion-dollar market that now finds itself besieged by suits. In the eyes of numerous video gaming corporations, not to mention claim complainants and state regulators, sweepstakes gambling establishments act as conventional casinos, only without the oversight, consumer securities and tax laws. So not just can they prevent the high 24-percent federal gambling levy, but sweepstakes operators aren't based on regulative hurdles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits last year alone. Now the company deals with accusations of unlawful sports betting in a New York lawsuit that declares VGW uses celebrity endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's declaration below)

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

Sweepstakes endorsers consist of a variety of celebrities from gambling 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 traditional gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among numerous sweepstakes gambling establishments discovered online

Ryan Seacrest advises fans to dip into Chumba Casino, where lots of - but not all - video games are totally free

Drake has a deal with social sweeps gambling establishment, Stake, that he routinely touts on social networks

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Instead, advertisements typically focus around the social element of the casinos, while omitting the potential for actual gaming losses.

Others lure consumers with pledges of rewards. One such operator, Stake, ran a social networks ad displaying Drake's cars, airplanes and estates before rotating to video of the rap artist playing online casino-style video games.

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

Another caption described: 'Because I never quit.'

The discrepancy in between sports betting sites and social or sweepstakes gambling establishments is a bit intricate, but operators of the latter insist they're not included with the previous.

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 data, many of the gamers on social-sweepstakes casinos are playing for complimentary.

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

Social casinos offer customers a chance to play casino-style video games with good friends. Players have the alternative to purchase valueless currency frequently described as 'gold coins,' which can not be exchanged genuine money, but can be used to open various features within the video games.

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

The Philadelphia 76ers' Paul George is seen promoting an International Poker event
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Social sweeps gambling establishment Stake ran an advertisement displaying Drake's cars and trucks, 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 helped to sustain the popularity of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, enable clients to send mail-in requests for free sweeps coins, supplied the players follow painfully specific instructions. What's more, players are often rewarded with sweeps coins merely for signing up, consequently offering them a reason to try their hands at any number of gambling establishment games for a chance to win - or lose - genuine cash.

So why are sweepstakes websites allowed to run in 48 states, while are banned in all but 7?

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

'Social sweepstakes games are merely a form of online entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is required to play at social casinos with sweepstakes prizes. Consumers never need to pay for a chance to win prizes. That absence of a purchase requirement - or" factor to consider" - is a crucial difference in between social sweeps and standard online gambling websites like casinos.'

Think about the manner in which McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and french fries that offer them the possibility to win profitable rewards, such as a $1 million jackpot.

And without a purchase requirement, or 'factor to consider', the video game itself does not satisfy the definition of gambling in the US.

'Sweepstakes are an enduring technique for promoting all type of daily organizations in the United States, whatever from burgers to publication subscriptions to coffee and home improvement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are frequently utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For beginners, video gaming lawyer Daniel Wallach explains, McDonald's Monopoly game does not run indefinitely. Rather, it has a distinct start and end, thus recommending 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 do not last permanently and they're generally not connected to casino-style games of opportunity,' Wallach told DailyMail.com. 'They're just money giveaways.

'The sweepstakes [gambling establishments] possess none of the characteristics commonly related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments use" casino-like" payouts, typically 80 percent or more of profits, whereas the common payout percentage for a short-term advertising sweepstakes is an unimportant share of the earnings made by the company [generally less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the web coffee shops that sprang up in Florida, providing consumers the opportunity to play casino-style video games for genuine prizes. Many of those brick-and-mortar establishments have actually because been shuttered over claims of prohibited gaming.

DJ Khaled is among numerous celeb spokespeople for VGW's Global Poker brand name

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

'These differences are not arbitrary,' Wallach stated of social sweeps casinos. 'They have consistently been cited by courts and state lawyer generals as crucial consider figuring out that a sweepstakes promotion was in reality a guise for illegal gaming.'

One of the casino industry's leading trade organizations, the American Gaming Association, is now pressing legislators to investigate sweepstakes operators and, in some cases, enact new legislation on the concern.

'Consumers are being denied of defenses and states are forgoing significant tax and profits opportunities as this sports betting replaces that conducted through managed channels,' checked out 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 gambling establishment operators paid a combined $14.2 million in 4 different cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, saying the settlement was made to prevent legal costs and continued litigation.
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Michael Phelps has actually signed an offer with the VGW Group, which owns Global Poker

In the latest lawsuit, which is mainly comparable to its predecessors, New York state homeowners Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'illegal gaming business. '

Apple and Google have likewise 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 normally don't comment on matters before the courts,' a VGW spokesperson told DailyMail.com via email. 'However, we note 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 policies where we operate, and stay positive about the future,' the representative continued. 'We continue to use our free-to-play video games across the majority of North America, as we have for more than a decade, producing not just excellent video games, user experiences and entertainment, however also guaranteeing this is done securely, responsibly and at the highest level of requirements.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are relatively typical across the online social games market (and the US more broadly), and our basic practice is that we intend to strongly protect any claim which might be brought against us.'

The issues in between standard online gaming and sweepstakes casinos could show bothersome 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 conventional video gaming titans like FanDuel and DraftKings.

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

It was just eight 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 unassociated to anything involving social or sweepstakes gambling establishments.

Together with VGW, Apple and Google are being sued for hosting supposedly unlawful gambling websites

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

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

Neither an NBA representative nor the gamers' representatives responded to DailyMail.com's ask 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 describe to clients the differences and resemblances in between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is absolutely nothing more that needs to be done.

'We have full self-confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the representative stated. 'Some of our worths are" our players precede" and" we do what's right", and we put our values 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 shady illegal sports betting websites are, at a minimum, putting their credibilities at threat in addition to courting civil and class actions by consumers who declare harm,' Glaser stated. 'There is likewise some threat that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for assisting in unlawful sports betting.'

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