The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on illegal gaming.
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No, they weren't personally in presence, but the world-famous celebs were conspicuously consisted of in a slide discussion on social and sweepstakes gambling establishments - the questionable sites providing both totally free casino-style video games and rewarding rewards, such as money, gift cards or cryptocurrency. In one advertisement, 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.

The sites are just 2 cogs in the multibillion-dollar industry that now finds itself besieged by suits. In the eyes of lots of gaming corporations, not to mention claim complainants and state regulators, sweepstakes gambling establishments act as conventional gambling establishments, just without the oversight, customer protections and tax laws. So not only can they avoid the steep 24-percent federal gambling levy, however sweepstakes operators aren't subject to regulative obstacles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits last year alone. Now the business deals with allegations of prohibited gambling in a New York lawsuit that declares VGW uses celeb endorsers to 'produce a veneer of legitimacy' around its item. (See VGW's statement listed below)

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

Sweepstakes endorsers consist of a variety of celebs from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions between standard gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among numerous sweepstakes gambling establishments found online

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

Drake has an offer with social sweeps casino, Stake, that he routinely touts on social media

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Instead, advertisements generally focus around the social aspect of the gambling establishments, while leaving out the potential for real gambling losses.

Others tempt consumers with promises of rewards. One such operator, Stake, ran a social media advertisement displaying Drake's automobiles, airplanes and mansions before pivoting to video of the rapper playing online casino-style video games.

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

Another caption explained: 'Because I never provided up.'

The inconsistency in between and social or sweepstakes casinos is a bit intricate, 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 competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, most of the players on social-sweepstakes gambling establishments are playing for free.

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

Social casinos provide consumers a chance to play casino-style games with good friends. Players have the choice to purchase valueless currency often referred to as 'gold coins,' which can not be exchanged for genuine money, but can be utilized to unlock various functions within the games.

But within the world of social casinos exists sweepstakes gaming, enabling customers to acquire other currency referred to as 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the capacity for financial 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 past year after continuing to purchase more coins in pursuit of money and other things of worth.

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

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake's vehicles, aircrafts and estates

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

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

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

Many sites, like the crypto-compatible Stake, allow customers to submit mail-in requests for free sweeps coins, provided the players follow painfully specific directions. What's more, gamers are typically rewarded with sweeps coins simply for registering, consequently providing a reason to try their hands at any variety of casino video games for a possibility to win - or lose - real cash.

So why are sweepstakes websites allowed to run in 48 states, while online gambling establishments are banned in all but 7?

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

'Social sweepstakes video games are simply a kind of online entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is required to play at social casinos with sweepstakes rewards. Consumers never need to pay for a chance to win prizes. That absence of a purchase requirement - or" consideration" - is a crucial difference in between social sweeps and conventional online sports betting websites like casinos.'

Think about the method that McDonald's uses its yearly Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're buying hamburgers and french fries that offer them the opportunity to win rewarding prizes, such as a $1 million prize.

And without a purchase requirement, or 'factor to consider', the video game itself does not fulfill the definition of gaming in the US.

'Sweepstakes are a long-standing method for promoting all sort of everyday companies in the United States, everything from hamburgers to publication memberships to coffee and home improvement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are routinely used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For beginners, video gaming lawyer Daniel Wallach mentions, McDonald's Monopoly video game does not run forever. Rather, it has a distinct start 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 typically not tied to casino-style games of possibility,' Wallach informed DailyMail.com. 'They're just money free gifts.

'The sweepstakes [gambling establishments] have none of the qualities commonly connected with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments use" casino-like" payouts, usually 80 percent or more of revenues, whereas the typical payment portion for a momentary marketing sweepstakes is a minor share of the revenue earned by the company [usually less than one percent]'
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Wallach is fast to compare the online social sweeps casinos to the web cafes that sprang up in Florida, providing customers the opportunity to play casino-style games for real prizes. Many of those brick-and-mortar establishments have actually since been shuttered over allegations of illegal gambling.

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

Now, Wallach argues, social sweeps casinos must face comparable analysis.

'These distinctions are not approximate,' Wallach stated of social sweeps casinos. 'They have actually consistently been cited by courts and state chief law officer as key elements in identifying that a sweepstakes promo remained in reality a guise for illegal gambling.'
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Among the gambling establishment industry's leading trade companies, the American Gaming Association, is now pressing legislators to examine sweepstakes operators and, in many cases, enact brand-new legislation on the problem.

'Consumers are being denied of defenses and states are passing up substantial tax and earnings chances as this sports betting changes that conducted through managed channels,' checked out a well-circulated AGA memo.

And after that there are the complainants who have actually taken legal action against 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 misbehavior, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action lawsuit, saying the settlement was made to prevent legal costs and continued litigation.

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

In the most recent claim, which is largely similar to its predecessors, New York state homeowners 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 'illegal gaming business. '

Apple and Google have likewise been called as defendants in claims for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for remark.

'We typically do not talk about matters before the courts,' a VGW representative told DailyMail.com by means of email. 'However, we keep in mind that this claim has actually only just been submitted with the court and VGW has not been formally served.

'We have complete self-confidence in our compliance with all laws and guidelines where we run, and remain confident about the future,' the spokesperson continued. 'We continue to use our free-to-play video games across the majority of The United States and Canada, as we have for more than a years, creating not just great video games, user experiences and home entertainment, but likewise guaranteeing this is done securely, responsibly and at the highest level of standards.

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

The issues between traditional online gambling and sweepstakes gambling establishments could show 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 conventional gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking prohibited sports betting 'sweeps' websites while at the exact same time the leagues wish to predict a strong position against prohibited sports betting - especially when trying to tamp down the periodic gambling scandal,' Glaser told DailyMail.com.

It was simply 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 unrelated to anything including social or sweepstakes casinos.

Along with VGW, Apple and Google are being demanded hosting apparently unlawful sports betting websites

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

'I 'd expect that a league crackdown on athletes backing sweepstakes sites refers when, not if,' Glaser included.

Neither an NBA spokesperson nor the gamers' agents reacted to DailyMail.com's ask 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 celebrity endorsers have a duty to explain to clients the distinctions and resemblances between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that needs to be done.

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the spokesperson stated. 'Some of our values are" our players come first" and" we do what's right", and we put our worths at the core of whatever we do.'
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Glaser, an outspoken opponent of sweepstakes websites, sees things in a different way.
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'Celebrities who provide their names to shady prohibited gambling sites are, at a minimum, putting their reputations at risk along with courting civil and class actions by customers who declare harm,' Glaser said. 'There is also some threat that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for assisting in illegal sports betting.'

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