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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.
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No, they weren't personally in attendance, however the world-famous celebrities were conspicuously included in a slide discussion on social and sweepstakes gambling establishments - the controversial websites using both complimentary casino-style video games and rewarding prizes, such as cash, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The sites are simply two cogs in the multibillion-dollar market that now discovers itself besieged by claims. In the eyes of many video gaming corporations, not to discuss suit complainants and state regulators, sweepstakes gambling establishments act as conventional gambling establishments, only without the oversight, customer protections and tax laws. So not only can they avoid the steep 24-percent federal gaming levy, however sweepstakes operators aren't subject to regulative obstacles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings last year alone. Now the business faces allegations of illegal gaming in a New york city suit that declares VGW utilizes celebrity endorsers to 'develop a veneer of authenticity' around its product. (See VGW's statement listed 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 illegal operations out of places 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 gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom provide any differences in between standard gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of numerous sweepstakes gambling establishments found online

Ryan Seacrest advises fans to play at Chumba Casino, where lots of - but not all - video games are free

Drake has a handle social sweeps gambling establishment, Stake, that he frequently touts on social media

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Instead, advertisements generally focus around the social aspect of the casinos, while leaving out the potential for actual sports betting losses.

Others tempt customers with promises of rewards. One such operator, Stake, ran a social media ad flaunting Drake's automobiles, aircrafts and estates before pivoting to footage of the rapper 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 explained: 'Because I never offered up.'

The discrepancy between gaming sites and social or sweepstakes casinos is a bit complex, but operators of the latter insist they're not included with the former.

A spokesperson for a market 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 data, many of the gamers on social-sweepstakes casinos are playing for totally free.

'Most social sweeps clients never make a purchase,' the SPGA spokesperson told DailyMail.com. 'The minority of clients who make purchases do so in quantities far smaller sized than the common deposit or wager size at real-money online gaming websites.'

Social gambling establishments use customers a possibility to play casino-style games with pals. Players have the alternative to buy worthless currency typically referred to as 'gold coins,' which can not be exchanged for real money, but can be used to open different features within the video games.

But within the world of social gambling establishments exists sweepstakes video gaming, allowing consumers to obtain other currency referred to as 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the potential for financial 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 casinos 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 Global Poker occasion

Social sweeps gambling establishment Stake ran an ad revealing off Drake's cars, planes and mansions

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

Traditional online casinos are prohibited in all but 7 states, which has actually assisted to sustain the appeal of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, allow customers to send mail-in demands for complimentary sweeps coins, provided the gamers follow painfully specific guidelines. What's more, gamers are typically rewarded with sweeps coins merely for registering, therefore offering them a reason to try their hands at any variety of gambling establishment video games for a chance to win - or lose - real cash.

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

According to the stakeholders, their product is the complimentary casino-style video gaming, and the real-stakes competition is simply a method of promoting their bread and butter.

'Social sweepstakes games are simply a kind of online home entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is needed to play at social gambling establishments with sweepstakes rewards. Consumers never have to pay for a chance to win prizes. That absence of a purchase requirement - or" factor to consider" - is an important distinction in between social sweeps and conventional online sports betting websites like casinos.'

Consider the method that McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to gamble, however rather they're buying hamburgers and fries that offer them the opportunity to win lucrative prizes, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the video game itself does not meet the definition of gaming in the US.

'Sweepstakes are an enduring approach for promoting all kinds of daily services in the United States, everything from hamburgers to magazine memberships to coffee and home enhancement stores,' the SPGA spokesperson informed 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 market experts, that argument does not cut it.

For starters, gaming attorney Daniel Wallach points out, McDonald's Monopoly video game does not run indefinitely. Rather, it has a well-defined 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 french fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're normally not tied to casino-style games of possibility,' Wallach informed DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [casinos] have none of the attributes typically related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos use" casino-like" payments, generally 80 percent or more of revenues, whereas the typical payout percentage for a short-lived advertising sweepstakes is a trivial share of the profits earned by the company [usually less than one percent]'

Wallach is fast to compare the online social sweeps casinos to the web cafes that emerged in Florida, providing consumers the chance to play casino-style games for genuine prizes. A number of those brick-and-mortar facilities have actually given that been shuttered over allegations of prohibited gaming.

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

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

'These differences are not approximate,' Wallach said of social sweeps casinos. 'They have actually repeatedly been mentioned by courts and state attorney general of the United States as crucial consider figuring out that a sweepstakes promo was in fact a guise for illegal gambling.'

Among the gambling establishment market's leading trade companies, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, in many cases, enact brand-new legislation on the concern.

'Consumers are being denied of defenses and states are passing up considerable tax and revenue opportunities as this sports betting changes that performed through controlled channels,' read a well-circulated AGA memo.

And after that there are the complainants who have actually taken legal action against social gambling establishments in more than a lots states.

Sweepstakes casino operators paid a combined $14.2 million in 4 separate cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action claim, saying the settlement was made to avoid legal expenses and continued litigation.

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

In the latest lawsuit, which is largely comparable to its predecessors, New York state citizens 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 gambling enterprise. '

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

'We usually do not discuss 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 not been officially served.

'We have complete self-confidence in our compliance with all laws and regulations where we operate, and remain confident about the future,' the spokesperson continued. 'We continue to provide our free-to-play games throughout many of North America, as we have for more than a decade, creating not only terrific video games, user experiences and entertainment, but likewise guaranteeing this is done securely, properly and at the highest level of requirements.

'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are reasonably typical across the online social games industry (and the US more broadly), and our basic practice is that we plan to vigorously defend any claim which might be brought against us.'

The issues between conventional online gaming and sweepstakes casinos could prove problematic for some celebrity 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 conventional video gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking unlawful sports betting wagering 'sweeps' websites while at the same time the leagues wish to forecast a strong stance versus illegal sports betting - specifically when trying to tamp down the periodic gambling scandal,' Glaser told DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter received a life time restriction from the NBA over accusations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes casinos.

Together with VGW, Apple and Google are being sued for hosting apparently unlawful sports betting websites

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

'I 'd anticipate that a league crackdown on professional athletes endorsing sweepstakes sites refers when, not if,' Glaser included.
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Neither an NBA spokesman nor the players' representatives reacted to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also overlooked to react to DailyMail.com e-mails.

Asked if their celebrity endorsers have a duty to explain to consumers the differences and similarities in between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that requires to be done.

'We have full self-confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the spokesperson said. 'Some of our worths are" our players precede" and" we do what's right", and we put our worths at the core of everything we do.'

Glaser, an outspoken opponent of sweepstakes sites, sees things differently.
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'Celebrities who lend their names to shady illegal gaming websites are, at a minimum, putting their reputations at danger as well as courting civil and class actions by customers who declare damage,' Glaser stated. 'There is likewise some danger that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for helping with unlawful gambling.'

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