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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 presence, however the world-famous celebs were conspicuously included in a slide presentation on social and sweepstakes gambling establishments - the controversial websites using both totally free casino-style video games and financially rewarding rewards, such as cash, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for complimentary,' 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 industry that now discovers itself besieged by suits. In the eyes of lots of gaming corporations, not to discuss claim complainants and state regulators, sweepstakes gambling establishments function as standard casinos, only without the oversight, customer protections and tax laws. So not just can they avoid the high 24-percent federal sports betting levy, but sweepstakes operators aren't based on regulative difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the business faces allegations of unlawful sports betting in a New york city lawsuit that claims VGW uses celebrity endorsers to 'develop a veneer of legitimacy' around its item. (See VGW's statement listed below)

'I'm uncertain" if you don't trust us, you can trust Paris Hilton" is a winning message for companies running 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, informed DailyMail.com.

Sweepstakes endorsers include a series of celebs from sports betting 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 differences in between standard gambling and sweepstakes play.

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

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

Drake has a deal with social sweeps casino, Stake, that he routinely promotes on social media

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Instead, ads normally center around the social element of the casinos, while leaving out the potential for real gambling losses.

Others tempt consumers with guarantees of prizes. One such operator, Stake, ran a social networks advertisement flaunting Drake's cars, planes and estates before rotating to footage of the rap artist playing online casino-style games.

'Daddy, why do we have a lot money?' read the very first caption on the screen.
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Another caption discussed: 'Because I never ever quit.'

The disparity between gambling websites and social or sweepstakes casinos is a bit intricate, but operators of the latter insist they're not included with the former.

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 information, many of the players on social-sweepstakes gambling establishments are playing for free.

'Most social sweeps consumers never buy,' the SPGA spokesperson informed DailyMail.com. 'The minority of customers who make purchases do so in quantities far smaller than the normal deposit or bet size at real-money online gambling websites.'

Social casinos offer clients an opportunity to play casino-style games with good friends. Players have the alternative to buy worthless currency frequently described as 'gold coins,' which can not be exchanged genuine money, but can be used to unlock different functions within the games.

But within the world of social gambling establishments exists sweepstakes gaming, permitting clients to acquire 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 declared by complainants in Florida, Georgia, New Jersey and New York. One player told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the past year after continuing to buy more coins in pursuit of cash and other things of worth.
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The Philadelphia 76ers' Paul George is seen promoting an International Poker occasion
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Social sweeps gambling establishment Stake ran an ad flaunting Drake's cars, 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 however 7 states, which has assisted to sustain the popularity of sweepstakes casinos.
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Anyone over the age of 18 can access the sweepstakes websites, which do not require generally need identification. However, websites like Chumba will request for IDs from gamers trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, permit customers to send mail-in demands for complimentary sweeps coins, offered the players follow painfully specific guidelines. What's more, gamers are typically rewarded with sweeps coins merely for signing up, thus offering them a factor to try their hands at any number of casino video games for a chance to win - or lose - genuine money.

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

According to the stakeholders, their item is the totally free casino-style gaming, and the real-stakes competitors is simply a method of promoting their bread and butter.

'Social sweepstakes games are just a type of online home entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is needed to dip into social gambling establishments with sweepstakes rewards. Consumers never ever have to spend for a chance to win rewards. That absence of a purchase requirement - or" factor to consider" - is an essential distinction in between social sweeps and conventional online sports betting websites like casinos.'

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

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

'Sweepstakes are a long-standing approach for promoting all kinds of daily organizations in the United States, everything from hamburgers to magazine memberships to coffee and home enhancement shops,' the SPGA spokesperson 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 many sports betting industry insiders, that argument does not cut it.

For starters, video gaming lawyer Daniel Wallach explains, McDonald's Monopoly game does not run indefinitely. Rather, it has a distinct start and end, consequently suggesting the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being used to promote real items like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [gambling establishments] possess none of the characteristics typically associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos offer" casino-like" payouts, generally 80 percent or more of incomes, whereas the common payout portion for a temporary promotional sweepstakes is a minor share of the income earned by the company [generally less than one percent]'

Wallach is fast to compare the online social sweeps gambling establishments to the internet cafes that emerged in Florida, providing customers the opportunity to play casino-style video games for real rewards. Many of those brick-and-mortar facilities have since been shuttered over claims of illegal sports betting.

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

Now, Wallach argues, social sweeps casinos ought to deal with comparable examination.

'These distinctions are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have actually repeatedly been mentioned by courts and state attorney general of the United States as crucial consider figuring out that a sweepstakes promo was in fact a guise for illegal gaming.'

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

'Consumers are being deprived of securities and states are giving up considerable tax and income opportunities as this gambling replaces that performed through controlled channels,' read a well-circulated AGA memo.

And then there are the complainants who have taken legal action against social casinos in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in four separate cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile pay $11.75 million in one class-action claim, stating the settlement was made to avoid legal costs and continued litigation.

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

In the current claim, which is largely 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 described in the filing as an 'unlawful sports betting enterprise. '

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

'We generally do not discuss matters before the courts,' a VGW representative told DailyMail.com through email. 'However, we keep in mind that this claim has actually only simply been submitted with the court and VGW has not been formally served.

'We have complete confidence in our compliance with all laws and policies where we operate, and stay positive about the future,' the representative continued. 'We continue to offer our free-to-play video games throughout many of The United States and Canada, as we have for more than a decade, creating not just terrific games, user experiences and home entertainment, however also ensuring this is done securely, properly and at the highest level of requirements.

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

The problems between traditional online gambling and sweepstakes casinos could show bothersome for some celebrity endorsers.
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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 illegal sports betting wagering 'sweeps' websites while at the same time the leagues want to forecast a strong position versus illegal gaming - specifically when trying to tamp down the periodic gambling scandal,' Glaser informed DailyMail.com.

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

Together with VGW, Apple and Google are being sued for hosting allegedly illegal gambling websites

Regardless, Glaser sees sweepstakes gambling establishments as a major concern 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 representative nor the players' agents responded to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also disregarded to react to DailyMail.com emails.

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

'We have full confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the representative said. 'A few 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 sites, sees things differently.
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'Celebrities who lend their names to shady prohibited sports betting sites are, at a minimum, putting their track records at threat in addition to courting civil and class actions by consumers who declare damage,' Glaser said. 'There is also some threat that state regulators and state attorneys general rope star endorsers into enforcement efforts for assisting in illegal gaming.'

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