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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 illegal sports betting.

No, they weren't personally in attendance, but the world-famous celebrities were notably included in a slide discussion on social and sweepstakes gambling establishments - the questionable websites offering both free casino-style games and profitable prizes, such as cash, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can ‘bet totally free,’ while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are just two cogs in the multibillion-dollar industry that now finds itself besieged by claims. In the eyes of many gaming corporations, not to mention claim complainants and state regulators, sweepstakes gambling establishments serve as traditional casinos, only without the oversight, consumer securities and tax laws. So not just can they avoid the steep 24-percent federal sports betting levy, but sweepstakes operators aren't based on regulatory hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the business faces accusations of illegal gaming in a New york city lawsuit that declares VGW uses star endorsers to ‘produce a veneer of legitimacy’ around its product. (See VGW's declaration listed below)

'I'm not exactly sure” if you do not trust us, you can trust Paris Hilton” is a winning message for business operating 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, told DailyMail.com.

Sweepstakes endorsers include a variety 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 use any distinctions between conventional gaming and sweepstakes play.

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

Ryan Seacrest prompts fans to play at Chumba Casino, where lots of - however not all - games are complimentary

Drake has a handle social sweeps casino, Stake, that he routinely promotes on social networks

Find out more

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

Others lure clients with pledges of prizes. One such operator, Stake, ran a social media ad displaying Drake's cars and trucks, aircrafts and estates before rotating to video footage of the rap artist playing online casino-style games.

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

Another caption described: ‘Because I never ever quit.‘

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

A representative for an industry trade group, the Social and Promotional Gaming Association (SPGA), discussed 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 free.

'Most social sweeps customers never purchase,’ the SPGA spokesperson told DailyMail.com. ‘The minority of consumers who make purchases do so in amounts far smaller sized than the typical deposit or bet size at real-money online gambling websites.‘

Social gambling establishments provide clients an opportunity to play casino-style video games with friends. Players have the choice to buy worthless currency frequently described as ‘gold coins,’ which can not be exchanged for genuine money, however can be used to unlock numerous functions within the games.

But within the world of social gambling establishments exists sweepstakes gaming, allowing clients to obtain other currency known as ‘sweeps coins’ that can be exchanged for cash or other rewards.

And therein lies the potential for financial losses, like the ones claimed 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 Worldwide Poker occasion

Social sweeps gambling establishment Stake ran an ad displaying Drake's automobiles, aircrafts and mansions

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

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

Anyone over the age of 18 can access the sweepstakes sites, which don't need usually need recognition. However, websites like Chumba will ask for IDs from players trying to withdraw any funds.
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Many websites, like the crypto-compatible Stake, permit consumers to submit mail-in ask for totally free sweeps coins, supplied the players follow painfully particular guidelines. What's more, players are typically rewarded with sweeps coins just for registering, thereby providing a factor to attempt their hands at any number of casino games for a chance to win - or lose - genuine money.

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

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

'Social sweepstakes games are simply a kind of online entertainment,’ an SPGA representative informed DailyMail.com by email. ‘No purchase is needed to dip into social gambling establishments with sweepstakes rewards. Consumers never have to spend for a chance to win rewards. That lack of a purchase requirement - or” factor to consider” - is an essential distinction in between social sweeps and standard online gaming sites like gambling establishments.‘

Consider the manner in which McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and french fries that offer them the opportunity to win financially rewarding rewards, such as a $1 million prize.

And without a purchase requirement, or ‘factor to consider’, the video game itself does not satisfy the meaning of gaming in the US.

'Sweepstakes are a long-standing method for promoting all sort of daily companies in the United States, whatever from hamburgers to magazine memberships to coffee and home improvement shops,’ the SPGA spokesperson told DailyMail.com. ‘Sweepstakes promotions are routinely used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.‘

But to numerous gambling industry experts, that argument doesn't cut it.

For beginners, video gaming attorney Daniel Wallach mentions, McDonald's Monopoly video game doesn't run forever. Rather, it has a well-defined start and end, therefore suggesting the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being used to promote real products like fries, shakes, and the Filet-O-Fish.
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'They don't last forever and they're normally not connected to casino-style video games of possibility,’ Wallach told DailyMail.com. ‘They're simply cash giveaways.

'The sweepstakes [casinos] have none of the characteristics frequently related to McDonald's-style sweepstakes promos,’ Wallach continued. ‘Besides running in all time, the sweepstakes gambling establishments provide” casino-like” payouts, normally 80 percent or more of revenues, whereas the common payout portion for a temporary promotional sweepstakes is an insignificant share of the profits made by the business [usually less than one percent]‘

Wallach is quick to liken the online social sweeps casinos to the web cafes that sprang up in Florida, using consumers the chance to play casino-style video games for genuine rewards. A number of those brick-and-mortar establishments have because been shuttered over accusations of prohibited sports betting.

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

Now, Wallach argues, social sweeps gambling establishments should face similar examination.

'These differences are not arbitrary,’ Wallach stated of social sweeps casinos. ‘They have actually consistently been mentioned by courts and state chief law officer as key consider determining that a sweepstakes promotion was in fact a guise for illegal gambling.‘

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

'Consumers are being deprived of defenses and states are passing up substantial tax and income opportunities as this sports betting changes that carried out through managed channels,’ read a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in four separate cases in Kentucky without admitting any misdeed, 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 costs and continued litigation.

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

In the current claim, which is mostly comparable to its predecessors, New York state homeowners Lamar Prater and Rebecca Pratt both to have actually lost well over $1,000 to VGW, which is described in the filing as an ‘prohibited sports betting business. ‘

Apple and Google have also been named as defendants in suits for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's request for comment.
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'We usually do not comment on matters before the courts,’ a VGW spokesperson told DailyMail.com through e-mail. ‘However, we note that this claim has actually only simply been submitted with the court and VGW has actually not been officially served.

'We have full self-confidence in our compliance with all laws and regulations where we operate, and remain positive about the future,’ the representative continued. ‘We continue to offer our free-to-play games across most of North America, as we have for more than a years, creating not only fantastic video games, user experiences and entertainment, however likewise guaranteeing this is done safely, responsibly and at the greatest level of standards.

'More broadly, we ‘d reiterate that class actions and other litigations and arbitrations are fairly typical across the online social video games industry (and the US more broadly), and our basic practice is that we intend to vigorously safeguard any claim which may be brought against us.‘
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The issues in between conventional online gambling and sweepstakes casinos could show bothersome for some celebrity endorsers.

Towns, a star center with the Knicks, and the 76ers’ George both back VGW's Global Poker brand 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’ sites while at the same time the leagues desire to predict a strong stance versus prohibited sports betting - specifically when attempting to tamp down the occasional gambling scandal,’ Glaser told DailyMail.com.

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

Along with VGW, Apple and Google are being sued for hosting apparently illegal gambling sites

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

'I ‘d anticipate 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 ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also ignored to react to DailyMail.com e-mails.

Asked if their celeb endorsers have a responsibility to discuss to customers the differences and resemblances in between iGaming and sweepstakes casinos, VGW firmly insisted there is absolutely nothing more that requires to be done.

'We have complete confidence in our influencer and ambassadorial collaborations, and our business practices more broadly,’ the representative stated. ‘A few of our values 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 provide their names to dubious unlawful gambling sites are, at a minimum, putting their track records at danger as well as courting civil and class actions by consumers who declare damage,’ Glaser stated. ‘There is likewise some threat that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for facilitating illegal sports betting.‘

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