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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 unlawful gaming.

No, they weren't personally in presence, but the world-famous stars were notably consisted of in a slide presentation on social and sweepstakes gambling establishments - the controversial sites offering both totally free casino-style video games and lucrative rewards, such as cash, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for 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 2 cogs in the multibillion-dollar industry that now discovers itself besieged by claims. In the eyes of lots of video gaming corporations, not to discuss claim complainants and state regulators, sweepstakes casinos function as traditional gambling establishments, just without the oversight, consumer protections and tax laws. So not just can they avoid the high 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulatory hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the business faces allegations of illegal gaming in a New york city lawsuit that claims VGW uses celeb endorsers to 'create a veneer of authenticity' around its product. (See VGW's statement listed below)

'I'm not exactly sure" if you don't trust us, you can rely on Paris Hilton" is a winning message for companies operating multibillion-dollar illegal operations out of locations 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 include a series of celebrities from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom use any differences in between traditional gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of lots of sweepstakes gambling establishments discovered online

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

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

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Instead, advertisements generally center around the social element of the gambling establishments, while omitting the capacity for actual gambling losses.

Others tempt clients with pledges of prizes. One such operator, Stake, ran a social networks advertisement revealing off Drake's vehicles, airplanes and estates before pivoting to video of the rap artist playing online casino-style games.

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

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

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

A spokesperson for a market trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA information, most of the players on social-sweepstakes casinos are playing for free.

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

Social casinos offer clients a chance to play casino-style video games with pals. Players have the option to purchase worthless currency frequently referred to as 'gold coins,' which can not be exchanged for genuine money, but can be used to open different functions within the games.

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

And therein lies the potential for monetary losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York City. 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 worth.

The Philadelphia 76ers' Paul George is seen promoting a Global Poker event

Social sweeps gambling establishment Stake ran an advertisement showing off Drake's automobiles, airplanes and mansions

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

Traditional online casinos are prohibited in all however seven states, which has actually assisted to sustain the popularity of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, permit consumers to send mail-in demands for totally free sweeps coins, provided the players follow painfully specific directions. What's more, players are typically rewarded with sweeps coins simply for signing up, consequently offering them a reason to attempt their hands at any variety of casino games for a possibility to win - or lose - real cash.

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

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

'Social sweepstakes video games are just a type of online home entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is needed to play at social gambling establishments with sweepstakes prizes. Consumers never have to spend for a chance to win rewards. That absence of a purchase requirement - or" factor to consider" - is a crucial difference in between social sweeps and standard online sports betting websites like casinos.'

Consider the manner in which McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and fries that use them the chance to win rewarding prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'factor to consider', the video game itself doesn't meet the definition of gambling in the US.

'Sweepstakes are an enduring approach for promoting all type of everyday businesses in the United States, everything from hamburgers to publication memberships to coffee and home improvement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are regularly used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'
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But to many gambling market insiders, that argument doesn't cut it.

For beginners, video gaming attorney explains, McDonald's Monopoly game does not run indefinitely. Rather, it has a well-defined start and end, thereby suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote real products like fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're generally not tied to casino-style video games of chance,' Wallach told DailyMail.com. 'They're simply money free gifts.

'The sweepstakes [gambling establishments] have none of the characteristics frequently connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments offer" casino-like" payments, normally 80 percent or more of incomes, whereas the typical payment portion for a short-lived promotional sweepstakes is a minor share of the income made by the company [usually less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, providing customers the possibility to play casino-style video games for real prizes. Many of those brick-and-mortar facilities have since been shuttered over claims of unlawful sports betting.

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

Now, Wallach argues, social sweeps casinos need to face comparable examination.

'These distinctions are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have repeatedly been mentioned by courts and state attorney generals as crucial consider figuring out that a sweepstakes promotion remained in reality a guise for prohibited gambling.'

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

'Consumers are being deprived of protections and states are forgoing significant tax and income chances as this gaming replaces that conducted through controlled channels,' checked out a well-circulated AGA memo.

And after that there are the complainants who have actually sued social casinos in more than a lots states.

Sweepstakes casino operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action suit, stating the settlement was made to avoid legal expenses and continued lawsuits.

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

In the most current lawsuit, which is largely comparable to its predecessors, New York state homeowners Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is explained in the filing as an 'unlawful gaming enterprise. '

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

'We generally don't discuss matters before the courts,' a VGW spokesperson informed DailyMail.com via email. 'However, we keep in mind that this claim has only just been filed 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 run, and remain confident about the future,' the spokesperson continued. 'We continue to provide our free-to-play video games throughout the majority of The United States and Canada, as we have for more than a years, creating not only fantastic video games, user experiences and home entertainment, but also guaranteeing this is done safely, properly and at the greatest level of standards.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are relatively typical throughout the online social video games market (and the US more broadly), and our standard practice is that we mean to strongly protect any claim which may be brought against us.'

The problems between conventional online gambling and sweepstakes gambling establishments 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 while the NBA is partnered with conventional gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking illegal sports betting 'sweeps' sites while at the very same time the leagues want to forecast a strong stance versus unlawful gambling - particularly when trying to tamp down the periodic gaming scandal,' Glaser informed DailyMail.com.

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

Along with VGW, Apple and Google are being demanded hosting apparently unlawful gambling sites

Regardless, Glaser sees sweepstakes casinos as a significant problem 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 spokesman nor the players' agents responded to DailyMail.com's requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to respond to DailyMail.com emails.

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

'We have full confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the spokesperson stated. '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 challenger of sweepstakes websites, sees things differently.

'Celebrities who lend their names to shady prohibited gambling websites are, at a minimum, putting their track records at threat in addition to courting civil and class actions by customers who declare damage,' Glaser stated. 'There is likewise some risk that state regulators and state lawyers general rope celeb endorsers into enforcement efforts for facilitating illegal gaming.'

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