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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 included in a slide discussion on social and sweepstakes gambling establishments - the controversial sites using both complimentary casino-style games and lucrative prizes, such as cash, present cards or cryptocurrency. In one advertisement, 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 simply two cogs in the multibillion-dollar market that now finds itself besieged by claims. In the eyes of lots of video gaming corporations, not to point out claim plaintiffs and state regulators, sweepstakes gambling establishments act as traditional gambling establishments, only without the oversight, customer protections 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 obstacles like anti-money laundering and responsible-gaming securities.

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

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

Sweepstakes endorsers consist of a series of celebrities 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 differences between conventional gambling and sweepstakes play.

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

Ryan Seacrest urges fans to dip into Chumba Casino, where numerous - but not all - video games are free

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

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

Others tempt clients with promises of prizes. One such operator, Stake, ran a social networks ad flaunting Drake's automobiles, aircrafts and estates before pivoting to video of the rap artist playing online casino-style video games.

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

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

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 previous.

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

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

Social gambling establishments provide customers a possibility to play casino-style video games with pals. Players have the option to buy worthless currency often referred to as 'gold coins,' which can not be exchanged for real cash, however can be utilized to unlock numerous functions within the games.

But within the world of social casinos exists sweepstakes gaming, permitting consumers to get other currency understood 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 plaintiffs in Florida, Georgia, New Jersey and New York. One player informed 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 value.

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

Social sweeps gambling establishment Stake ran an advertisement displaying Drake's cars and trucks, aircrafts and mansions
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Karl-Anthony Towns of the New York Knicks is another NBA star plugging VGW's Global Poker

Traditional online casinos are banned in all however seven states, which has actually helped to sustain the appeal of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes websites, which do not require generally need recognition. However, sites like Chumba will request IDs from gamers trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, allow clients to send mail-in ask for free sweeps coins, offered the players follow painfully particular directions. What's more, gamers are typically rewarded with sweeps coins merely for registering, therefore giving them a factor to attempt their hands at any number of casino games for a possibility to win - or lose - genuine money.
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So why are sweepstakes sites permitted to run in 48 states, while online gambling establishments are prohibited in all but 7?

According to the stakeholders, their product is the free casino-style gaming, and the real-stakes competitors is simply a method of promoting their support.

'Social sweepstakes games are just a kind of online home entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is needed to dip into social casinos with sweepstakes rewards. Consumers never have to pay for an opportunity to win rewards. That lack of a purchase requirement - or" consideration" - is an essential difference between social sweeps and conventional online gaming sites like gambling establishments.'

Consider the way that McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and fries that use them the chance to win financially rewarding rewards, such as a $1 million prize.

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

'Sweepstakes are a long-standing approach for promoting all sort of daily services in the United States, whatever from hamburgers to magazine memberships to coffee and home enhancement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are routinely used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many sports betting industry experts, that argument doesn't cut it.

For starters, gaming attorney Daniel Wallach mentions, McDonald's Monopoly video game does not run forever. Rather, it has a well-defined beginning and end, consequently recommending the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being utilized to promote genuine products like fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're usually not tied to casino-style video games of opportunity,' Wallach informed DailyMail.com. 'They're just cash free gifts.

'The sweepstakes [casinos] possess none of the attributes frequently connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos use" casino-like" payments, generally 80 percent or more of revenues, whereas the normal payment portion for a short-term promotional sweepstakes is a minor share of the revenue earned by the company [generally less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the web coffee shops that emerged in Florida, using customers the opportunity to play casino-style video games for genuine rewards. Many of those brick-and-mortar facilities have given that been shuttered over allegations of unlawful sports betting.

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

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

'These distinctions are not approximate,' Wallach stated of social sweeps casinos. 'They have actually consistently been cited by courts and state attorney general of the United States as key elements in figuring out that a sweepstakes promotion was in reality a guise for unlawful gaming.'

Among the gambling establishment market'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 deprived of protections and states are passing up substantial tax and earnings chances as this sports betting changes that conducted through controlled channels,' read a well-circulated AGA memo.

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

Sweepstakes casino paid a combined $14.2 million in four different cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action claim, saying the settlement was made to prevent legal expenses and continued lawsuits.

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

In the current lawsuit, which is mainly comparable to its predecessors, New York state locals Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited gambling enterprise. '

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

'We generally do not comment on matters before the courts,' a VGW representative told DailyMail.com by means of e-mail. 'However, we keep in mind that this claim has only just been filed with the court and VGW has not been formally served.

'We have full self-confidence in our compliance with all laws and regulations where we run, and stay positive about the future,' the spokesperson continued. 'We continue to provide our free-to-play video games throughout most of The United States and Canada, as we have for more than a decade, producing not only terrific games, user experiences and home entertainment, however also ensuring this is done safely, responsibly and at the greatest level of requirements.

'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are relatively common across the online social video games industry (and the US more broadly), and our standard practice is that we plan to strongly defend any claim which might be brought versus us.'

The concerns in between standard online sports betting and sweepstakes gambling establishments might prove problematic for some star 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 standard gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking prohibited sports betting 'sweeps' websites while at the exact same time the leagues wish to project a strong stance versus unlawful sports betting - specifically when attempting to tamp down the occasional gaming scandal,' Glaser told DailyMail.com.

It was simply eight months ago that Toronto Raptors forward Jontay Porter got a lifetime restriction from the NBA over allegations he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes gambling establishments.

Along with VGW, Apple and Google are being sued for hosting presumably unlawful gambling websites

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

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

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

Asked if their star endorsers have an obligation to describe to clients the differences and resemblances between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that requires to be done.

'We have full self-confidence in our influencer and ambassadorial collaborations, and our business practices more broadly,' the representative said. 'Some of our values are" our gamers precede" and" we do what's right", and we put our values at the core of whatever we do.'

Glaser, an outspoken challenger of sweepstakes websites, sees things differently.
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'Celebrities who lend their names to dubious prohibited gambling websites are, at a minimum, putting their track records at threat in addition to courting civil and class actions by consumers who declare harm,' Glaser said. 'There is likewise some threat that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for helping with illegal gaming.'

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