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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 prohibited sports betting.
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No, they weren't personally in attendance, but the world-famous celebrities were notably consisted of in a slide presentation on social and sweepstakes gambling establishments - the controversial sites providing both complimentary casino-style video games and financially rewarding rewards, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for totally 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 finds itself besieged by claims. In the eyes of numerous gaming corporations, not to discuss claim complainants and state regulators, sweepstakes gambling establishments function as standard casinos, only without the oversight, consumer defenses and tax laws. So not just can they prevent the high 24-percent federal gambling 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 profits last year alone. Now the business faces accusations of prohibited gambling in a New york city suit that declares VGW uses celebrity endorsers to 'develop a veneer of authenticity' around its product. (See VGW's declaration below)

'I'm not sure" if you don't trust us, you can rely on Paris Hilton" is a winning message for companies running multibillion-dollar unlawful operations out of locations 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 stars 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 use any distinctions between conventional sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among many sweepstakes casinos found online

Ryan Seacrest advises fans to play at Chumba Casino, where many - but not all - games are totally free

Drake has a handle social sweeps casino, Stake, that he regularly touts on social networks

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Instead, advertisements generally focus around the social aspect of the casinos, while leaving out the capacity for real gaming losses.

Others tempt customers with promises of rewards. One such operator, Stake, ran a social media ad flaunting Drake's vehicles, planes and mansions before rotating to video footage of the rapper playing online casino-style games.

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

Another caption explained: 'Because I never quit.'

The inconsistency in between gambling websites and social or sweepstakes gambling establishments is a bit complex, but operators of the latter insist they're not included with the previous.

A representative 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, the majority of the players on social-sweepstakes gambling establishments are playing for complimentary.

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

Social gambling establishments provide clients a chance to play casino-style video games with friends. Players have the choice to buy valueless currency frequently described as 'gold coins,' which can not be exchanged genuine money, however can be utilized to unlock various functions within the video games.

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

And therein lies the capacity for financial losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York. One gamer told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the previous year after continuing to purchase more coins in pursuit of cash and other things of value.

The Philadelphia 76ers' Paul George is seen promoting an International Poker event

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake's cars, planes and mansions

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

Traditional online gambling establishments are banned in all but 7 states, which has assisted to sustain the appeal of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes websites, which do not need generally need identification. However, websites like Chumba will ask for IDs from players attempting to withdraw any funds.

Many sites, like the crypto-compatible Stake, permit customers to send mail-in requests for complimentary sweeps coins, provided the gamers follow painfully specific instructions. What's more, players are typically rewarded with sweeps coins merely for registering, therefore providing a factor to attempt their hands at any variety of gambling establishment video games for a possibility to win - or lose - genuine money.

So why are sweepstakes sites enabled to operate in 48 states, while online gambling establishments are banned in all but 7?

According to the stakeholders, their item is the free casino-style video gaming, and the real-stakes competition is just a way of promoting their support.

'Social sweepstakes video games are simply a form of online home entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is required to dip into social gambling establishments with sweepstakes rewards. Consumers never ever have to spend for an opportunity to win rewards. That lack of a purchase requirement - or" factor to consider" - is a crucial distinction between social sweeps and standard online gambling websites like casinos.'

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

And without a purchase requirement, or 'consideration', the video game itself doesn't fulfill the meaning of gambling in the US.

'Sweepstakes are a long-standing technique for promoting all type of everyday organizations in the United States, everything from hamburgers to publication memberships to coffee and home enhancement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are regularly utilized by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous sports betting market insiders, that argument doesn't cut it.

For beginners, video gaming lawyer Daniel Wallach mentions, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a well-defined beginning and end, thus recommending the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being utilized to promote real items like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [casinos] have none of the characteristics frequently associated with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments use" casino-like" payouts, typically 80 percent or more of earnings, whereas the normal payment portion for a short-lived advertising sweepstakes is a trivial share of the revenue made by the business [generally less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the web cafes that emerged in Florida, providing clients the chance to play casino-style games for real prizes. Many of those brick-and-mortar establishments have since been shuttered over accusations of illegal gambling.

DJ Khaled is among a number of celeb spokespeople for VGW's Global Poker brand

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

'These distinctions are not arbitrary,' Wallach stated of social sweeps casinos. 'They have repeatedly been cited by courts and state chief law officer as key factors in determining that a sweepstakes promo remained in reality a guise for illegal sports betting.'

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

'Consumers are being denied of securities and states are passing up substantial tax and revenue opportunities as this gambling replaces that performed through regulated channels,' read a well-circulated AGA memo.

And after that there are the plaintiffs who have actually sued social gambling establishments 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 misdeed, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action lawsuit, saying the settlement was made to avoid legal expenses and continued litigation.

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

In the most current lawsuit, which is mainly 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 sports betting enterprise. '

Apple and Google have also been named as accuseds in suits for hosting the sweepstakes websites. But unlike VGW, neither tech business responded to DailyMail.com's ask for comment.

'We typically do not talk about matters before the courts,' a VGW representative informed DailyMail.com via e-mail. 'However, we note that this claim has only just been filed with the court and VGW has not been officially served.

'We have full self-confidence in our compliance with all laws and regulations where we run, and remain confident about the future,' the spokesperson continued. 'We continue to offer our free-to-play video games across the majority of The United States and Canada, as we have for more than a decade, producing not just great video games, user experiences and home entertainment, however also ensuring this is done safely, responsibly and at the highest level of standards.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are relatively common across the online social games market (and the US more broadly), and our basic practice is that we mean to strongly protect any claim which might be brought against us.'
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The issues in between traditional online gambling and sweepstakes casinos could prove problematic for some celebrity 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 traditional gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking unlawful sports betting wagering 'sweeps' sites while at the exact same time the leagues desire to forecast a strong stance against illegal gambling - particularly when trying to tamp down the occasional gaming scandal,' Glaser told DailyMail.com.

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

Along with VGW, Apple and Google are being sued for prohibited sports betting sites

Regardless, Glaser sees sweepstakes casinos as a significant issue 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 reacted to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise overlooked to react to DailyMail.com e-mails.

Asked if their star endorsers have an obligation to explain to customers the differences and similarities between iGaming and sweepstakes casinos, VGW insisted there is nothing more that requires to be done.

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

Glaser, an outspoken challenger of sweepstakes websites, sees things differently.
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'Celebrities who provide their names to shady illegal sports betting sites are, at a minimum, putting their track records at risk as well as courting civil and class actions by customers who declare damage,' Glaser said. 'There is also some threat that state regulators and state attorneys basic rope celebrity endorsers into enforcement efforts for helping with prohibited gambling.'

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