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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 prohibited gaming.
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No, they weren't personally in attendance, however the world-famous stars were notably included in a slide presentation on social and sweepstakes casinos - the questionable websites offering both complimentary casino-style games and profitable rewards, such as cash, 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 websites are just 2 cogs in the multibillion-dollar industry that now finds itself besieged by suits. In the eyes of many video gaming corporations, not to point out lawsuit complainants and state regulators, sweepstakes casinos serve as conventional casinos, only without the oversight, consumer securities and tax laws. So not just can they prevent the steep 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulative difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the business deals with accusations of unlawful sports betting in a New York claim that declares VGW utilizes celeb endorsers to 'create a veneer of authenticity' around its product. (See VGW's statement listed below)

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

Sweepstakes endorsers consist of a variety of celebrities 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 in between conventional gambling and sweepstakes play.

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

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

Drake has a handle social sweeps gambling establishment, Stake, that he routinely touts on social networks

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Instead, ads typically focus around the social aspect of the casinos, while leaving out the potential for actual gambling losses.

Others tempt clients with guarantees of prizes. One such operator, Stake, ran a social networks ad displaying Drake's vehicles, planes and estates before pivoting to video footage of the rap artist playing online casino-style games.

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

Another caption discussed: 'Because I never ever quit.'

The inconsistency in between gaming websites and social or sweepstakes gambling establishments is a bit complicated, however operators of the latter insist they're not involved with the previous.

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA information, many of the gamers on social-sweepstakes gambling establishments are sports betting totally free.

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

Social casinos provide customers a possibility to play casino-style games with pals. Players have the alternative to buy valueless currency often described as 'gold coins,' which can not be exchanged genuine cash, however can be utilized to open various features within the video games.

But within the world of social gambling establishments exists sweepstakes video gaming, enabling clients to obtain other currency known as 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the potential for financial losses, like the ones claimed by complainants 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 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 occasion

Social sweeps gambling establishment Stake ran an advertisement revealing off Drake's automobiles, airplanes and mansions

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

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

Anyone over the age of 18 can access the sweepstakes websites, which do not usually need identification. However, sites like Chumba will request for IDs from gamers trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, permit customers to send mail-in demands for totally free sweeps coins, provided the players follow painfully particular instructions. What's more, players are often rewarded with sweeps coins simply for signing up, consequently providing them a reason to attempt their hands at any number of casino video games for an opportunity to win - or lose - real money.

So why are sweepstakes sites permitted to operate in 48 states, while online casinos are prohibited in all however 7?

According to the stakeholders, their product is the complimentary casino-style video gaming, and the real-stakes competitors is merely a means of promoting their bread and butter.

'Social sweepstakes video games are just a type of online home entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is required to play at social gambling establishments with sweepstakes prizes. Consumers never ever have to spend for a chance to win prizes. That lack of a purchase requirement - or" consideration" - is an essential difference between social sweeps and traditional online sports betting sites like casinos.'

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

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 approach for promoting all kinds of everyday organizations in the United States, whatever from burgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA representative 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 lots of sports betting market insiders, that argument doesn't cut it.

For beginners, gaming attorney Daniel Wallach mentions, McDonald's Monopoly game does not run forever. Rather, it has a distinct start and end, consequently suggesting the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being used to promote genuine items like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [casinos] have none of the qualities commonly related to McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments use" casino-like" payouts, typically 80 percent or more of earnings, whereas the typical payment percentage for a temporary advertising sweepstakes is an insignificant share of the profits made by the company [usually less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the web coffee shops that sprang up in Florida, providing clients the possibility to play casino-style video games for real rewards. A lot of those brick-and-mortar facilities have given that been shuttered over claims of illegal gambling.

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

Now, Wallach argues, social sweeps gambling establishments must deal with comparable analysis.

'These differences are not approximate,' Wallach said of social sweeps gambling establishments. 'They have actually repeatedly been mentioned by courts and state chief law officer as essential consider identifying that a sweepstakes promotion was in truth a guise for prohibited gaming.'

Among the gambling establishment industry's leading trade organizations, the American Gaming Association, is now pressing legislators to investigate sweepstakes operators and, sometimes, enact new legislation on the concern.

'Consumers are being deprived of securities and states are giving up significant tax and earnings chances as this gambling replaces that conducted through controlled 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 gambling establishment operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action lawsuit, saying the settlement was made to avoid legal costs and continued lawsuits.

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

In the current claim, which is mostly comparable to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'illegal gambling enterprise. '

Apple and Google have also been called as offenders in claims for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com's request for remark.

'We typically do not talk about matters before the courts,' a VGW spokesperson informed DailyMail.com through email. 'However, we note that this claim has only simply been submitted with the court and VGW has not been officially served.

'We have complete confidence in our compliance with all laws and regulations where we operate, and remain positive about the future,' the representative continued. 'We continue to use our free-to-play video games throughout the majority of North America, as we have for more than a years, creating not only fantastic video games, user experiences and home entertainment, however also guaranteeing this is done securely, properly and at the greatest level of standards.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are relatively common across the online social video games industry (and the US more broadly), and our standard practice is that we intend to strongly safeguard any claim which may be brought against us.'

The concerns in between standard online gaming and sweepstakes gambling establishments might show troublesome for some celebrity 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 conventional video gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking illegal sports betting wagering 'sweeps' websites while at the very same time the leagues wish to predict a strong stance against unlawful sports betting - particularly when attempting 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 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 demanded hosting apparently unlawful sports betting websites

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

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

Neither an NBA spokesman nor the players' representatives responded to DailyMail.com's requests for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to respond to DailyMail.com e-mails.

Asked if their celeb endorsers have an obligation to discuss to customers the differences and resemblances in between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial collaborations, and our organization practices more broadly,' the spokesperson said. 'Some of our worths are" our players come first" and" we do what's right", and we put our worths at the core of everything we do.'

Glaser, an outspoken opponent of sweepstakes websites, sees things in a different way.

'Celebrities who provide their names to shady unlawful gambling sites are, at a minimum, putting their credibilities at danger as well as courting civil and class actions by consumers who declare damage,' Glaser said. 'There is also some danger that state regulators and state chief law officers rope celebrity endorsers into enforcement efforts for facilitating illegal sports betting.'

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