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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 unlawful sports betting.

No, they weren't personally in attendance, however the world-famous celebrities were notably included in a slide discussion on social and sweepstakes casinos - the controversial sites using both complimentary casino-style games and profitable prizes, such as money, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The websites are just two cogs in the multibillion-dollar industry that now finds itself besieged by lawsuits. In the eyes of many gaming corporations, not to discuss claim plaintiffs and state regulators, sweepstakes gambling establishments act as traditional gambling establishments, just without the oversight, customer securities and tax laws. So not only can they avoid the steep 24-percent federal gambling levy, however sweepstakes operators aren't based on regulative hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the company faces accusations of prohibited gambling in a New York lawsuit that declares VGW uses celebrity endorsers to 'create a veneer of legitimacy' around its item. (See VGW's declaration below)

'I'm not exactly sure" if you don't trust us, you can rely on 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 video gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers include a series 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 use any distinctions in between standard gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of numerous sweepstakes casinos found online

Ryan Seacrest advises fans to play at Chumba Casino, where many - but not all - video games are complimentary

Drake has an offer with social sweeps casino, Stake, that he regularly promotes on social networks

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Instead, advertisements usually focus around the social aspect of the gambling establishments, while leaving out the capacity for real sports betting losses.

Others lure customers with guarantees of rewards. One such operator, Stake, ran a social networks advertisement flaunting Drake's automobiles, planes and estates before pivoting to video footage of the rapper playing online casino-style games.

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

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

The disparity between gaming websites and social or sweepstakes gambling establishments is a bit complicated, but operators of the latter insist they're not involved with the former.

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 data, the majority of the players on social-sweepstakes gambling establishments are playing for complimentary.

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

Social casinos offer 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 for genuine money, but can be utilized to unlock numerous features within the video games.

But within the world of social gambling establishments exists sweepstakes gaming, enabling customers to get other currency called 'sweeps coins' that can be exchanged for cash or other rewards.

And therein lies the capacity for monetary losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York City. One gamer told the Washington Post he lost more than $100,000 on sweepstakes casinos in the past 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 event

Social sweeps casino Stake ran an advertisement displaying Drake's cars, planes and mansions

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

Traditional online casinos are prohibited in all however 7 states, which has actually helped to fuel the appeal of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes websites, which do not require generally require recognition. However, sites like Chumba will ask for IDs from gamers trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, allow consumers to submit mail-in demands for complimentary sweeps coins, offered the gamers follow painfully particular instructions. What's more, gamers are often rewarded with sweeps coins simply for signing up, thereby providing a reason to try 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 operate in 48 states, while online casinos are banned in all however 7?

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

'Social sweepstakes games are merely a type of online home entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is required to play at social gambling establishments with sweepstakes prizes. Consumers never have to spend for an opportunity to win rewards. That lack of a purchase requirement - or" consideration" - is an essential distinction between social sweeps and traditional online gambling websites like casinos.'

Think of the method that McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and french fries that provide them the possibility to win lucrative prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the game itself doesn't satisfy the meaning of sports betting in the US.

'Sweepstakes are a long-standing method for promoting all type of everyday services in the United States, whatever from hamburgers to publication subscriptions to coffee and home improvement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are regularly used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling industry insiders, that argument does not cut it.

For starters, gaming lawyer Daniel Wallach explains, McDonald's Monopoly video game does not run forever. Rather, it has a distinct start and end, therefore recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote genuine products like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [casinos] possess none of the attributes frequently related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos offer" casino-like" payouts, usually 80 percent or more of earnings, whereas the typical payment percentage for a momentary marketing sweepstakes is an insignificant share of the income earned by the company [generally less than one percent]'

Wallach is fast to liken the online social sweeps gambling establishments to the internet coffee shops that emerged in Florida, offering clients the opportunity to play casino-style games for genuine rewards. Much of those brick-and-mortar facilities have actually because been shuttered over claims of unlawful gaming.

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

Now, Wallach argues, social sweeps casinos must deal with comparable scrutiny.

'These distinctions are not approximate,' Wallach stated of social sweeps casinos. 'They have consistently been cited by courts and state chief law officer as essential elements in figuring out that a sweepstakes promotion was in fact a guise for unlawful 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 brand-new legislation on the issue.

'Consumers are being deprived of protections and states are forgoing significant tax and income chances as this sports betting replaces that conducted through regulated channels,' checked out a well-circulated AGA memo.

And then there are the plaintiffs who have actually taken legal action against social casinos in more than a dozen states.

Sweepstakes casino operators paid a combined $14.2 million in four separate cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action claim, saying the settlement was made to prevent legal expenses and continued litigation.

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

In the latest suit, which is mainly 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 suits for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's ask for remark.

'We generally don't discuss matters before the courts,' a VGW spokesperson told DailyMail.com through email. 'However, we note that this claim has actually only just been filed with the court and VGW has not been formally served.

'We have full confidence in our compliance with all laws and regulations where we operate, and remain positive about the future,' the representative continued. 'We continue to offer our free-to-play video games across most of North America, as we have for more than a decade, creating not only terrific video games, user experiences and entertainment, however also ensuring this is done securely, responsibly and at the highest level of requirements.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are relatively common throughout the online social games market (and the US more broadly), and our standard practice is that we plan to strongly safeguard any claim which might be brought against us.'

The issues in between standard online sports betting and sweepstakes casinos could prove bothersome for some celebrity endorsers.

Towns, a star center with the Knicks, and the 76ers' George both endorse VGW's Global Poker brand while the NBA is partnered with standard video gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking illegal sports betting 'sweeps' websites while at the exact same time the leagues desire to forecast a strong position against prohibited gambling - specifically when attempting to tamp down the periodic gambling scandal,' Glaser informed DailyMail.com.

It was simply eight months ago that Toronto Raptors forward Jontay Porter got a lifetime restriction from the NBA over claims he conspired with gamblers. 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 gambling websites

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

'I 'd anticipate that a league crackdown on professional athletes backing sweepstakes websites refers when, not if,' Glaser included.

Neither an NBA spokesperson nor the players' representatives reacted to DailyMail.com's requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise disregarded to react to DailyMail.com e-mails.

Asked if their star endorsers have an obligation to discuss to clients the distinctions and resemblances between iGaming and sweepstakes casinos, VGW insisted there is nothing more that requires to be done.

'We have full confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the spokesperson said. 'Some of our worths are" our gamers precede" and" we do what's right", and we put our worths at the core of whatever we do.'

Glaser, an outspoken challenger of sweepstakes websites, sees things in a different way.
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'Celebrities who provide their names to shady illegal sports betting websites are, at a minimum, putting their track records at threat in addition to courting civil and class actions by customers who declare damage,' Glaser said. 'There is likewise some danger that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for assisting in illegal gaming.'

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