The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on unlawful sports betting.
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No, they weren't personally in presence, but the world-famous celebrities were conspicuously included in a slide discussion on social and sweepstakes casinos - the controversial sites using both free casino-style games and financially rewarding rewards, such as money, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are just 2 cogs in the multibillion-dollar industry that now discovers itself besieged by claims. In the eyes of many gaming corporations, not to point out claim complainants and state regulators, sweepstakes gambling establishments function as traditional gambling establishments, just without the oversight, consumer protections and tax laws. So not only can they prevent the high 24-percent federal gaming levy, however sweepstakes operators aren't based on regulatory hurdles 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 accusations of prohibited sports betting in a New York claim that claims 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 rely on 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 speaker, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers consist of a series of celebrities 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 offer any distinctions in between conventional gambling and sweepstakes play.

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

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

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

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

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

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

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

The discrepancy between gambling sites and social or sweepstakes gambling establishments is a bit complex, however 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), explained its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, most of the players on social-sweepstakes casinos are playing for complimentary.

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

Social gambling establishments offer consumers an opportunity to play casino-style video games with pals. Players have the option 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 consumers to acquire other currency referred to as 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the capacity for financial losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York City. One player told the Washington Post he lost more than $100,000 on sweepstakes casinos in the past year after continuing to buy 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 showing off Drake's vehicles, airplanes and estates
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Karl-Anthony Towns of the New York Knicks is another NBA star plugging VGW's Global Poker

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

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

Many sites, like the crypto-compatible Stake, enable consumers to submit mail-in requests for free sweeps coins, provided the players follow painfully particular instructions. What's more, players are typically rewarded with sweeps coins merely for signing up, consequently providing a factor to attempt their hands at any variety of gambling establishment video games for a chance to win - or lose - genuine cash.

So why are sweepstakes sites permitted to run in 48 states, while online casinos are banned in all but 7?
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According to the stakeholders, their product is the free casino-style video gaming, and the real-stakes competition is simply a means of promoting their bread and butter.

'Social sweepstakes games are simply a form of online home entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is needed to play at social gambling establishments with sweepstakes rewards. Consumers never ever have to pay for a chance to win rewards. That lack of a purchase requirement - or" consideration" - is a vital distinction between social sweeps and traditional online gambling websites like casinos.'

Consider the method that McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and fries that offer them the chance to win rewarding rewards, such as a $1 million prize.

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

'Sweepstakes are an enduring method for promoting all sort of everyday organizations in the United States, whatever from hamburgers to magazine subscriptions to coffee and home improvement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are regularly used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many gambling market insiders, that argument does not cut it.

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

'They do not last forever and they're usually not connected to casino-style video games of opportunity,' Wallach informed DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [gambling establishments] have none of the qualities typically connected with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos use" casino-like" payments, generally 80 percent or more of revenues, whereas the common payout portion for a short-lived marketing sweepstakes is a minor share of the profits earned by the company [typically less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, offering clients the chance to play casino-style games for real rewards. Many of those brick-and-mortar establishments have since been shuttered over accusations of prohibited sports betting.

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

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

'These distinctions are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have consistently been pointed out by courts and state attorney general of the United States as key elements in identifying that a sweepstakes promotion remained in reality a guise for prohibited gaming.'

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

'Consumers are being denied of protections and states are giving up substantial tax and profits chances as this sports betting changes that conducted through regulated channels,' checked out a well-circulated AGA memo.

And after that there are the complainants who have taken legal action against social gambling establishments in more than a lots states.
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Sweepstakes casino operators paid a combined $14.2 million in four different cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, saying the settlement was made to prevent legal costs and continued lawsuits.

Michael Phelps has signed a deal with the VGW Group, which owns Global Poker
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In the latest suit, which is mostly comparable to its predecessors, New York state residents Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited gaming business. '

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

'We generally do not discuss matters before the courts,' a VGW spokesperson informed DailyMail.com by means of e-mail. 'However, we note that this claim has only just been filed 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 operate, and remain positive about the future,' the spokesperson 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 years, developing not just fantastic video games, user experiences and home entertainment, however also ensuring this is done safely, properly and at the highest level of requirements.

'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are relatively typical throughout the online social games industry (and the US more broadly), and our standard practice is that we plan to intensely protect any claim which may be brought against us.'

The problems in between conventional online sports betting and sweepstakes gambling establishments might prove bothersome for some celebrity endorsers.

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 video gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking illegal sports betting wagering 'sweeps' sites while at the very same time the leagues want to predict a strong stance against unlawful gambling - particularly when trying to tamp down the periodic gaming scandal,' Glaser informed DailyMail.com.

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

Along with VGW, Apple and Google are being demanded hosting allegedly unlawful sports betting websites

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

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

Neither an NBA spokesman nor the gamers' agents reacted to DailyMail.com's demands for remark. 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 describe to clients the distinctions and similarities between iGaming and sweepstakes casinos, VGW 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. 'Some of our values are" our gamers come initially" and" we do what's right", and we put our worths at the core of everything we do.'

Glaser, an outspoken challenger of sweepstakes sites, sees things differently.

'Celebrities who lend their names to dubious prohibited gambling sites are, at a minimum, putting their credibilities at danger in addition to courting civil and class actions by customers who allege harm,' Glaser said. 'There is also some threat that state regulators and state attorneys general rope celeb endorsers into enforcement efforts for helping with prohibited gaming.'

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