The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on unlawful gambling.
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No, they weren't personally in attendance, however the world-famous celebrities were conspicuously included in a slide presentation on social and sweepstakes gambling establishments - the controversial sites using both free casino-style video games and rewarding prizes, such as money, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone 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 suits. In the eyes of numerous gaming corporations, not to discuss suit plaintiffs and state regulators, sweepstakes casinos function as conventional casinos, only without the oversight, customer protections and tax laws. So not only can they avoid the steep 24-percent federal gambling levy, but sweepstakes operators aren't subject to regulatory obstacles 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 deals with accusations of illegal sports betting in a New York suit that declares VGW uses celebrity endorsers to 'develop a veneer of legitimacy' around its item. (See VGW's declaration listed below)

'I'm uncertain" if you don't 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 video gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a variety of celebs 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 traditional sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among many sweepstakes gambling establishments discovered online

Ryan Seacrest prompts fans to dip into Chumba Casino, where numerous - however not all - games are complimentary

Drake has a handle social sweeps casino, Stake, that he regularly promotes on social media

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Instead, advertisements typically focus around the social aspect of the gambling establishments, while omitting the potential for real gaming losses.
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Others lure customers with pledges of prizes. One such operator, Stake, ran a social media ad showing off Drake's automobiles, airplanes and mansions before pivoting to video of the rap artist playing online casino-style games.

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

Another caption discussed: 'Because I never quit.'

The inconsistency between sports betting websites and social or sweepstakes gambling establishments is a bit complex, however operators of the latter insist they're not included with the former.

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, most of the gamers on social-sweepstakes gambling establishments are sports betting complimentary.

'Most social sweeps consumers never ever purchase,' the SPGA spokesperson told DailyMail.com. 'The minority of clients who make purchases do so in amounts far smaller than the typical deposit or wager size at real-money online sports betting sites.'

Social gambling establishments offer customers a possibility to play casino-style video games with friends. Players have the choice to buy valueless currency typically described as 'gold coins,' which can not be exchanged for real cash, however can be utilized to unlock numerous functions within the video games.

But within the world of social casinos exists sweepstakes gaming, allowing consumers to obtain 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 claimed by complainants in Florida, Georgia, New Jersey and New York City. One player informed 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 money and other things of worth.

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

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake's cars, airplanes and estates

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

Traditional are prohibited in all but seven states, which has actually assisted to fuel the appeal of sweepstakes casinos.
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Anyone over the age of 18 can access the sweepstakes sites, which do not require usually need recognition. However, sites like Chumba will request IDs from players attempting to withdraw any funds.

Many sites, like the crypto-compatible Stake, enable consumers to submit mail-in requests for free sweeps coins, supplied the gamers follow painfully specific guidelines. What's more, players are typically rewarded with sweeps coins merely for registering, consequently giving them a factor to attempt their hands at any number of gambling establishment video games for an opportunity to win - or lose - real money.

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 competition is merely a way of promoting their bread and butter.

'Social sweepstakes games are merely a form 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 prizes. Consumers never ever need to spend for an opportunity to win rewards. That lack of a purchase requirement - or" consideration" - is a vital difference in between social sweeps and conventional online sports betting sites like casinos.'
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Think of the method that McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and french fries that provide them the chance to win rewarding prizes, such as a $1 million prize.

And without a purchase requirement, or 'factor to consider', the game itself doesn't fulfill the meaning of gambling in the US.
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'Sweepstakes are an enduring approach for promoting all sort of daily companies in the United States, whatever from burgers to publication memberships to coffee and home improvement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are regularly utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many gambling market experts, that argument doesn't cut it.

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

'They don't last forever and they're usually not tied to casino-style video games of chance,' Wallach informed DailyMail.com. 'They're simply cash giveaways.

'The sweepstakes [gambling establishments] possess none of the characteristics frequently connected with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments use" casino-like" payouts, generally 80 percent or more of profits, whereas the common payment portion for a short-lived advertising sweepstakes is a minor share of the revenue made by the company [normally less than one percent]'

Wallach is quick to compare the online social sweeps gambling establishments to the web cafes that emerged in Florida, providing consumers the chance to play casino-style games for real rewards. Much of those brick-and-mortar establishments have actually given that been shuttered over allegations of unlawful sports betting.

DJ Khaled is amongst a number of star spokespeople for VGW's Global Poker brand

Now, Wallach argues, social sweeps casinos should face similar analysis.

'These distinctions are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have actually repeatedly been cited by courts and state attorney generals as crucial consider identifying that a sweepstakes promotion remained in reality a guise for unlawful gaming.'

One of the gambling establishment industry's leading trade organizations, the American Gaming Association, is now pushing lawmakers to examine sweepstakes operators and, sometimes, enact brand-new legislation on the issue.

'Consumers are being denied of securities and states are passing up considerable tax and earnings chances as this sports betting replaces that carried out through controlled 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 casino operators paid a combined $14.2 million in four separate cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action suit, saying the settlement was made to avoid legal costs and continued lawsuits.
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Michael Phelps has signed a handle the VGW Group, which owns Global Poker

In the most recent lawsuit, which is mainly comparable to its predecessors, New york city state homeowners Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is described in the filing as an 'prohibited gambling business. '

Apple and Google have also been named as defendants in claims for hosting the sweepstakes sites. But unlike VGW, neither tech business responded to DailyMail.com's demand for remark.

'We usually don't comment on matters before the courts,' a VGW spokesperson informed DailyMail.com through e-mail. 'However, we note that this claim has actually only just 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 run, and remain confident about the future,' the representative continued. 'We continue to offer our free-to-play video games throughout many of North America, as we have for more than a decade, creating not just fantastic games, user experiences and entertainment, however also ensuring this is done securely, responsibly and at the greatest level of standards.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are reasonably typical throughout the online social games industry (and the US more broadly), and our basic practice is that we intend to strongly defend any claim which may be brought against us.'
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The concerns between traditional online sports betting and sweepstakes gambling establishments might show bothersome for some celeb 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 standard video gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking unlawful sports betting wagering 'sweeps' sites while at the exact same time the leagues desire to predict a strong stance against illegal sports betting - especially when attempting to tamp down the occasional gambling scandal,' Glaser informed DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter received a lifetime ban from the NBA over claims he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes gambling establishments.

Along with VGW, Apple and Google are being taken legal action against for hosting presumably unlawful gambling sites

Regardless, Glaser sees sweepstakes casinos as a significant concern for leagues such as the NBA.

'I 'd anticipate that a league crackdown on athletes endorsing sweepstakes sites is a matter of when, not if,' Glaser included.

Neither an NBA representative nor the players' agents reacted to DailyMail.com's requests for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise disregarded to react to DailyMail.com emails.

Asked if their celebrity endorsers have an obligation to discuss to customers the distinctions and resemblances between iGaming and sweepstakes casinos, 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 values are" our gamers come first" 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 in a different way.

'Celebrities who provide their names to shady prohibited gaming sites are, at a minimum, putting their track records at threat along with courting civil and class actions by customers who declare harm,' Glaser said. 'There is likewise some threat that state regulators and state chief law officers rope star endorsers into enforcement efforts for facilitating illegal gaming.'

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