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 participation, but the world-famous celebs were notably of in a slide presentation on social and sweepstakes casinos - the questionable sites providing both complimentary casino-style video games and lucrative rewards, such as money, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are simply two cogs in the multibillion-dollar industry that now discovers itself besieged by lawsuits. In the eyes of lots of gaming corporations, not to discuss claim complainants and state regulators, sweepstakes casinos function as standard casinos, just without the oversight, customer protections and tax laws. So not just can they avoid the high 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulatory difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the business faces allegations of illegal gambling in a New York suit that declares VGW uses star endorsers to 'produce a veneer of legitimacy' around its product. (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 locations like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers include a variety of stars from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom offer any differences in between conventional gaming and sweepstakes play.

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

Ryan Seacrest advises fans to play at Chumba Casino, where numerous - however not all - games are complimentary

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

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Instead, ads usually focus around the social element of the casinos, while leaving out the capacity for actual gaming losses.

Others tempt clients with pledges of prizes. One such operator, Stake, ran a social networks ad displaying Drake's cars and trucks, planes and mansions before rotating to video of the rap artist playing online casino-style games.

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

Another caption discussed: 'Because I never offered up.'

The discrepancy between sports betting sites 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), discussed its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA data, most of the gamers on social-sweepstakes gambling establishments are playing for totally free.

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

Social casinos use consumers a possibility to play casino-style games with good friends. Players have the alternative to buy worthless currency typically described as 'gold coins,' which can not be exchanged for real money, however can be used to unlock different features within the games.

But within the world of social gambling establishments exists sweepstakes video gaming, enabling consumers to acquire other currency referred to as 'sweeps coins' that can be exchanged for cash or other prizes.

And therein lies the potential for monetary losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York City. 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 worth.

The Philadelphia 76ers' Paul George is seen promoting an International Poker occasion
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Social sweeps gambling establishment Stake ran an ad showing off Drake's vehicles, aircrafts and estates

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

Traditional online casinos are prohibited in all however 7 states, which has actually assisted to sustain the appeal of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes sites, which don't require generally require recognition. However, websites like Chumba will request for IDs from gamers attempting to withdraw any funds.

Many sites, like the crypto-compatible Stake, allow consumers to send mail-in ask for totally free sweeps coins, offered the gamers follow painfully specific guidelines. What's more, players are frequently rewarded with sweeps coins merely for signing up, consequently providing them a reason to attempt their hands at any variety of gambling establishment games for an opportunity to win - or lose - genuine money.

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

According to the stakeholders, their item is the complimentary casino-style video gaming, and the real-stakes competitors is just a way of promoting their bread and butter.

'Social sweepstakes video games are merely a form of online home entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is needed to dip into social gambling establishments with sweepstakes prizes. Consumers never ever have to pay for a chance to win prizes. That lack of a purchase requirement - or" factor to consider" - is an important difference between social sweeps and standard online gambling sites like gambling establishments.'

Consider the manner in which McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're buying hamburgers and fries that provide them the opportunity to win lucrative prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the game itself doesn't meet the definition of gaming in the US.

'Sweepstakes are an enduring method for promoting all type of daily services in the United States, whatever from hamburgers to publication memberships to coffee and home enhancement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are frequently used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting industry insiders, that argument does not cut it.

For beginners, video gaming attorney Daniel Wallach points out, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a distinct start and end, thereby recommending the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being utilized to promote real products like fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're typically not connected to casino-style games of possibility,' Wallach informed DailyMail.com. 'They're just money giveaways.

'The sweepstakes [casinos] have none of the attributes typically connected with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments provide" casino-like" payments, usually 80 percent or more of revenues, whereas the typical payout portion for a momentary marketing sweepstakes is an insignificant share of the income earned by the business [usually less than one percent]'
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Wallach fasts to compare the online social sweeps gambling establishments to the web cafes that sprang up in Florida, providing customers the chance to play casino-style games for real rewards. Many of those brick-and-mortar facilities have actually since been shuttered over allegations of illegal sports betting.

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

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

'These distinctions are not arbitrary,' Wallach stated of social sweeps casinos. 'They have consistently been cited by courts and state lawyer generals as key elements in determining that a sweepstakes promo remained in fact a guise for illegal gaming.'

One of the casino market's leading trade organizations, the American Gaming Association, is now pushing lawmakers to examine sweepstakes operators and, sometimes, enact new legislation on the concern.

'Consumers are being denied of defenses and states are forgoing substantial tax and revenue opportunities as this gambling replaces that conducted through managed channels,' read a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in four different cases in Kentucky without admitting any misbehavior, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action lawsuit, stating the settlement was made to avoid legal expenses and continued litigation.

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

In the newest claim, which is mostly comparable to its predecessors, New York state homeowners Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'illegal sports betting business. '

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

'We typically don't talk about 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 officially served.

'We have complete self-confidence in our compliance with all laws and policies where we run, and remain positive about the future,' the representative continued. 'We continue to use our free-to-play video games throughout most of The United States and Canada, as we have for more than a decade, creating not only fantastic games, user experiences and entertainment, but likewise guaranteeing this is done securely, properly and at the highest level of standards.

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

The issues in between traditional online gaming and sweepstakes gambling establishments might show problematic for some celeb endorsers.
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Towns, a star center with the Knicks, and the 76ers' George both back VGW's Global Poker brand while the NBA is partnered with conventional 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 position against illegal sports betting - particularly when attempting to tamp down the occasional gambling scandal,' Glaser informed DailyMail.com.
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It was just 8 months ago that Toronto Raptors forward Jontay Porter received a life time restriction from the NBA over accusations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes gambling establishments.

In addition to VGW, Apple and Google are being demanded hosting allegedly unlawful sports betting sites

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

'I 'd expect that a league crackdown on professional athletes endorsing sweepstakes websites refers when, not if,' Glaser added.
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Neither an NBA spokesman nor the gamers' representatives responded to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to respond to DailyMail.com e-mails.

Asked if their celebrity endorsers have a responsibility to discuss to consumers the distinctions and similarities between iGaming and sweepstakes casinos, VGW firmly insisted there is absolutely nothing more that requires to be done.

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the representative said. 'A few 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 sites, sees things differently.

'Celebrities who lend their names to shady unlawful sports betting sites are, at a minimum, putting their reputations at risk in addition to courting civil and class actions by customers who declare harm,' Glaser stated. 'There is likewise some threat that state regulators and state chief law officers rope celeb endorsers into enforcement efforts for helping with illegal gambling.'

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