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The smiling faces of Paris Hilton and Ryan Seacrest made surprise looks before the Louisiana Senate for Friday's hearing on illegal sports betting.

No, they weren't personally in participation, however the world-famous stars were notably included in a slide presentation on social and sweepstakes casinos - the questionable sites offering both totally free casino-style games and lucrative prizes, such as money, gift 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.
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The sites are simply two cogs in the multibillion-dollar industry that now discovers itself besieged by suits. In the eyes of many video gaming corporations, not to mention suit plaintiffs and state regulators, sweepstakes gambling establishments function as standard gambling establishments, just without the oversight, consumer securities and tax laws. So not only can they avoid the steep 24-percent federal gambling levy, but sweepstakes operators aren't based on regulatory difficulties like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the company faces allegations of illegal gambling in a New York suit that declares VGW utilizes celebrity endorsers to 'create a veneer of legitimacy' around its item. (See listed below)

'I'm not sure" if you do not trust us, you can trust Paris Hilton" is a winning message for companies running 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 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 offer any differences between standard gaming and sweepstakes play.

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

Ryan Seacrest prompts fans to dip into Chumba Casino, where lots of - but not all - video games are free

Drake has an offer with social sweeps gambling establishment, Stake, that he frequently promotes on social networks

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Instead, ads typically center around the social element of the casinos, while omitting the potential for actual gambling losses.

Others tempt clients with guarantees of prizes. One such operator, Stake, ran a social media ad flaunting Drake's cars, aircrafts and estates before rotating to video of the rapper playing online casino-style games.

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

Another caption described: 'Because I never ever offered up.'

The discrepancy in between sports betting sites and social or sweepstakes casinos is a bit complex, 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 competition with online casinos and sportsbooks. Furthermore, according to SPGA information, the majority of the players on social-sweepstakes gambling establishments are sports betting free.

'Most social sweeps clients never ever purchase,' the SPGA representative told DailyMail.com. 'The minority of clients who make purchases do so in amounts far smaller sized than the typical deposit or bet size at real-money online gambling sites.'

Social casinos offer consumers a chance to play casino-style games with pals. Players have the alternative to buy worthless currency frequently described as 'gold coins,' which can not be exchanged genuine money, however can be utilized to unlock various features within the games.

But within the world of social gambling establishments exists sweepstakes gaming, enabling clients to obtain other currency called 'sweeps coins' that can be exchanged for money or other prizes.
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And therein lies the capacity for monetary losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York City. 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.

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

Social sweeps casino Stake ran an advertisement showing off Drake's cars and trucks, aircrafts and estates
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Karl-Anthony Towns of the New York City Knicks is another NBA star plugging VGW's Global Poker

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

Anyone over the age of 18 can access the sweepstakes sites, which don't need typically need identification. However, sites like Chumba will request for IDs from players attempting to withdraw any funds.

Many websites, like the crypto-compatible Stake, allow customers to send mail-in ask for totally free sweeps coins, provided the players follow painfully particular directions. What's more, players are often rewarded with sweeps coins merely for registering, thereby providing a reason to attempt their hands at any number of gambling establishment games for a chance to win - or lose - real money.

So why are sweepstakes sites allowed to run in 48 states, while online gambling establishments are prohibited in all however 7?
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According to the stakeholders, their item is the complimentary casino-style gaming, and the real-stakes competitors is merely a method of promoting their support.

'Social sweepstakes video games are merely a kind of online home entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is required to play at social gambling establishments with sweepstakes prizes. Consumers never ever need to pay for a chance to win rewards. That absence of a purchase requirement - or" factor to consider" - is a crucial distinction in between social sweeps and standard online gambling websites like gambling establishments.'

Think about the way that McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're buying hamburgers and french fries that use them the opportunity to win financially rewarding rewards, such as a $1 million prize.

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

'Sweepstakes are an enduring technique for promoting all sort of daily companies in the United States, whatever from hamburgers to publication memberships to coffee and home improvement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are routinely utilized by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous sports betting market insiders, that argument does not cut it.

For beginners, gaming attorney Daniel Wallach explains, McDonald's Monopoly game doesn't run forever. Rather, it has a well-defined beginning and end, thus suggesting the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being used to promote genuine products 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 simply cash free gifts.

'The sweepstakes [casinos] possess none of the attributes frequently related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments provide" casino-like" payments, normally 80 percent or more of earnings, whereas the normal payout percentage for a short-term promotional sweepstakes is a trivial share of the revenue earned by the business [normally less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the internet coffee shops that sprang up in Florida, providing clients the opportunity to play casino-style games for real prizes. A lot of those brick-and-mortar establishments have actually considering that been shuttered over accusations of prohibited gaming.

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

Now, Wallach argues, social sweeps casinos must deal with similar examination.

'These distinctions are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have repeatedly been cited by courts and state attorney generals as essential factors in identifying that a sweepstakes promotion remained in reality a guise for illegal sports betting.'

One of the gambling establishment industry's leading trade organizations, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, in some cases, enact brand-new legislation on the problem.

'Consumers are being denied of defenses and states are forgoing considerable tax and income chances as this gambling replaces that performed through managed channels,' read a well-circulated AGA memo.

And then there are the plaintiffs who have sued social gambling establishments in more than a dozen states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action suit, stating the settlement was made to prevent legal costs and continued litigation.

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

In the most recent suit, which is mostly comparable to its predecessors, New york city state citizens Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is described in the filing as an 'illegal sports betting business. '

Apple and Google have actually also been called as accuseds in suits for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's demand for comment.

'We normally don't comment on matters before the courts,' a VGW spokesperson informed DailyMail.com by means of e-mail. 'However, we keep in mind that this claim has actually only just been submitted with the court and VGW has actually not been officially served.

'We have full self-confidence in our compliance with all laws and guidelines where we run, and stay confident about the future,' the representative continued. 'We continue to use our free-to-play games throughout the majority of The United States and Canada, as we have for more than a decade, developing not just terrific video games, user experiences and home entertainment, but likewise ensuring this is done securely, properly and at the greatest level of standards.

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

The concerns between traditional online sports betting and sweepstakes casinos could prove troublesome for some star 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 conventional gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking illegal sports betting wagering 'sweeps' sites while at the very same time the leagues wish to project a strong stance against unlawful gambling - especially when attempting to tamp down the occasional gambling scandal,' Glaser told DailyMail.com.

It was simply eight months ago that Toronto Raptors forward Jontay Porter got 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 supposedly illegal gambling websites

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

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

Neither an NBA spokesperson nor the gamers' agents reacted to DailyMail.com's requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise ignored to react to DailyMail.com emails.

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

'We have full self-confidence in our influencer and ambassadorial collaborations, and our business practices more broadly,' the representative said. 'A few of our worths 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 opponent of sweepstakes sites, sees things in a different way.
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'Celebrities who lend their names to dubious prohibited sports betting websites are, at a minimum, putting their track records at risk along with courting civil and class actions by customers who allege damage,' Glaser said. 'There is also some risk that state regulators and state attorneys general rope celeb endorsers into enforcement efforts for helping with unlawful gambling.'

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