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 celebrities were conspicuously consisted of in a slide presentation on social and sweepstakes casinos - the questionable sites offering both free casino-style video games and rewarding prizes, such as cash, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The websites are simply 2 cogs in the multibillion-dollar market that now discovers itself besieged by lawsuits. In the eyes of numerous video gaming corporations, not to mention claim plaintiffs and state regulators, sweepstakes casinos function as traditional gambling establishments, only without the oversight, customer securities and tax laws. So not just can they prevent the high 24-percent federal sports betting levy, however sweepstakes operators aren't subject to regulatory difficulties like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the company deals with accusations of prohibited gambling in a New york city suit that declares VGW utilizes star endorsers to 'create a veneer of legitimacy' around its item. (See VGW's statement below)

'I'm unsure" if you do not trust us, you can rely on Paris Hilton" is a winning message for companies running multibillion-dollar unlawful operations out of places like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers include a series of celebs from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as 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 lots of sweepstakes gambling establishments discovered online

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

Drake has a deal with social sweeps casino, Stake, that he regularly promotes on social networks

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

Others lure clients with promises of prizes. One such operator, Stake, ran a social media advertisement displaying Drake's cars, planes and estates before rotating to video footage of the rap artist playing online casino-style games.

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

Another caption discussed: 'Because I never quit.'

The inconsistency in between gaming websites and social or sweepstakes gambling establishments is a bit intricate, but operators of the latter insist they're not included with the previous.
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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, most of the gamers on social-sweepstakes casinos are sports betting totally free.

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

Social casinos offer consumers a possibility to play casino-style video games with good friends. Players have the alternative to buy valueless currency typically described as 'gold coins,' which can not be exchanged genuine cash, but can be used to unlock various functions within the video games.

But within the world of social casinos exists sweepstakes video gaming, permitting clients to get other currency called 'sweeps coins' that can be exchanged for cash or other rewards.

And therein lies the potential for financial losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York. One player informed 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 money and other things of value.

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

Social sweeps gambling establishment Stake ran an advertisement displaying Drake's vehicles, aircrafts and estates

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 but 7 states, which has assisted to sustain the popularity of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes sites, which don't require typically require recognition. However, sites like Chumba will request for IDs from gamers trying to withdraw any funds.
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Many sites, like the crypto-compatible Stake, allow clients to send mail-in ask for totally free sweeps coins, supplied the players follow painfully particular guidelines. What's more, gamers are often rewarded with sweeps coins just for signing up, therefore providing a reason to try their hands at any variety of gambling establishment video games for a possibility to win - or lose - real money.

So why are sweepstakes sites enabled 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 games are just a kind of online home entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is required to play at social casinos with sweepstakes prizes. Consumers never have to pay for a chance to win prizes. That absence of a purchase requirement - or" consideration" - is an essential difference in between social sweeps and standard online sports betting websites like gambling establishments.'

Consider the manner in which McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're and fries that use them the opportunity to win financially rewarding prizes, such as a $1 million jackpot.

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

'Sweepstakes are a long-standing approach for promoting all type of everyday businesses in the United States, everything from burgers to publication memberships to coffee and home improvement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are regularly utilized by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of gambling market experts, that argument does not cut it.

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

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

'The sweepstakes [casinos] possess none of the characteristics commonly related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments offer" casino-like" payouts, usually 80 percent or more of profits, whereas the typical payment percentage for a short-lived marketing sweepstakes is a trivial share of the revenue made by the company [usually less than one percent]'
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Wallach fasts to liken the online social sweeps casinos to the internet cafes that emerged in Florida, offering clients the chance to play casino-style video games for real prizes. Much of those brick-and-mortar establishments have actually because been shuttered over allegations of prohibited sports betting.

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

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

'These differences are not approximate,' Wallach stated of social sweeps casinos. 'They have actually consistently been pointed out by courts and state chief law officer as crucial consider identifying that a sweepstakes promotion was in fact a guise for illegal gaming.'

One of the casino industry's leading trade organizations, the American Gaming Association, is now pushing legislators 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 significant tax and revenue opportunities as this gaming changes that conducted through controlled channels,' checked out a well-circulated AGA memo.

And after that there are the plaintiffs who have taken legal action against social gambling establishments in more than a lots states.

Sweepstakes casino 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 lawsuit, saying the settlement was made to prevent legal costs and continued lawsuits.

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

In the most current claim, which is mostly similar to its predecessors, New york city state locals Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is explained in the filing as an 'unlawful gaming enterprise. '

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

'We typically do not discuss matters before the courts,' a VGW spokesperson told DailyMail.com through e-mail. 'However, we keep in mind that this claim has actually only simply been submitted with the court and VGW has actually not been officially served.

'We have full confidence in our compliance with all laws and regulations where we run, and remain confident about the future,' the spokesperson continued. 'We continue to offer our free-to-play video games across the majority of The United States and Canada, as we have for more than a years, creating not only fantastic games, user experiences and entertainment, however also guaranteeing this is done safely, properly and at the highest level of standards.

'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 basic practice is that we plan to intensely defend any claim which may be brought against us.'

The concerns between traditional online gambling and sweepstakes gambling establishments might show problematic for some celeb 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 standard video gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking unlawful sports betting wagering 'sweeps' websites while at the exact same time the leagues wish to predict a strong stance versus prohibited gaming - specifically when trying to tamp down the periodic gaming scandal,' Glaser informed 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 gamblers. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes casinos.

Along with VGW, Apple and Google are being sued for hosting apparently prohibited sports betting sites

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

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

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

Asked if their celebrity endorsers have a duty to explain to consumers the distinctions and resemblances in between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that requires to be done.

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the representative said. 'A few of our worths are" our players come initially" 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 dubious unlawful gambling sites are, at a minimum, putting their track records at threat along with courting civil and class actions by customers who declare damage,' Glaser said. 'There is likewise some threat that state regulators and state attorneys general rope celeb endorsers into enforcement efforts for helping with illegal sports betting.'

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