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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 prohibited sports betting.
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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 video games and lucrative prizes, such as cash, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are simply 2 cogs in the multibillion-dollar industry that now finds itself besieged by suits. In the eyes of many gaming corporations, not to discuss suit complainants and state regulators, sweepstakes gambling establishments serve as standard gambling establishments, only 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 securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the company deals with allegations of unlawful gaming in a New york city lawsuit that declares VGW utilizes celebrity endorsers to 'develop a veneer of authenticity' around its product. (See VGW's statement below)

'I'm uncertain" if you don't trust us, you can trust Paris Hilton" is a winning message for companies running multibillion-dollar illegal operations out of places like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a variety of stars from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions between standard gambling and sweepstakes play.

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

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

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

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

Others lure customers with guarantees of rewards. One such operator, Stake, ran a social networks ad showing off Drake's vehicles, airplanes and mansions before rotating to footage of the rapper playing online casino-style video games.

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

Another caption described: 'Because I never ever provided up.'
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The disparity between gambling sites and social or sweepstakes gambling establishments is a bit intricate, but operators of the latter insist they're not involved with the former.

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 gamers on social-sweepstakes casinos are sports betting complimentary.

'Most social sweeps consumers never purchase,' the SPGA representative 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 gambling websites.'

Social casinos use clients a possibility to play casino-style games with friends. Players have the choice to buy valueless currency often referred to as 'gold coins,' which can not be exchanged genuine cash, however can be used to open different functions within the games.

But within the world of social gambling establishments exists sweepstakes gaming, allowing customers to obtain other currency known 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. One player told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the previous year after continuing to buy more coins in pursuit of money and other things of worth.

The Philadelphia 76ers' Paul George is seen promoting an International Poker event

Social sweeps gambling establishment Stake ran an advertisement displaying Drake's automobiles, planes and mansions

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

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

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

Many websites, like the crypto-compatible Stake, allow clients to submit mail-in demands for complimentary sweeps coins, offered the players follow painfully specific guidelines. What's more, gamers are often rewarded with sweeps coins merely for registering, therefore providing them a factor to attempt their hands at any variety of casino games for an opportunity to win - or lose - real money.

So why are sweepstakes websites allowed to run in 48 states, while online gambling establishments are banned in all but 7?

According to the stakeholders, their item is the totally free casino-style video gaming, and the real-stakes competition is simply a means of promoting their support.

'Social sweepstakes video games are just a form of online entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is needed to dip into social casinos with sweepstakes rewards. Consumers never need to pay for an opportunity to win prizes. That absence of a purchase requirement - or" factor to consider" - is an important distinction between social sweeps and conventional online gaming sites like casinos.'

Think of the way that McDonald's utilizes its annual Monopoly game to promote its food: Customers aren't paying to gamble, but rather they're buying hamburgers and french fries that use them the possibility to win profitable prizes, such as a $1 million prize.

And without a purchase requirement, or 'factor to consider', the game itself doesn't fulfill the meaning of gaming in the US.

'Sweepstakes are an enduring technique for promoting all type of daily organizations in the United States, whatever from burgers to magazine memberships to coffee and home enhancement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are routinely utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For beginners, video gaming attorney Daniel Wallach points out, McDonald's Monopoly game doesn't run forever. Rather, it has a distinct start and end, consequently suggesting the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being utilized to promote real items like french fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're generally not connected to casino-style games of possibility,' Wallach informed DailyMail.com. 'They're simply cash giveaways.

'The sweepstakes [gambling establishments] have none of the characteristics typically related to McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos use" casino-like" payouts, typically 80 percent or more of revenues, whereas the normal payout percentage for a short-term promotional sweepstakes is an unimportant share of the revenue made by the company [typically 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 consumers the opportunity to play casino-style video games for genuine prizes. A lot of those brick-and-mortar establishments have actually because been shuttered over allegations of prohibited gaming.

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

Now, Wallach argues, social sweeps gambling establishments need to face similar analysis.

'These distinctions are not approximate,' Wallach said of social sweeps gambling establishments. 'They have consistently been mentioned by courts and state lawyer generals as crucial consider determining that a sweepstakes promo was in fact a guise for illegal gaming.'

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

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

And after that there are the plaintiffs who have actually taken legal action against social gambling establishments 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 wrongdoing, according to the Washington Post. Meanwhile VGW consented to 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 an offer with the VGW Group, which owns Global Poker

In the most current lawsuit, which is mostly comparable to its predecessors, New york city state locals Lamar Prater and both claim to have actually lost well over $1,000 to VGW, which is described in the filing as an 'unlawful gaming business. '

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

'We normally do not discuss matters before the courts,' a VGW spokesperson informed DailyMail.com via email. 'However, we keep in mind that this claim has actually only just been filed with the court and VGW has not been officially served.

'We have full confidence in our compliance with all laws and guidelines where we run, and remain positive about the future,' the spokesperson continued. 'We continue to use our free-to-play games across the majority of North America, as we have for more than a years, producing not just terrific video games, user experiences and entertainment, however likewise guaranteeing this is done securely, properly and at the highest level of requirements.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are fairly typical across the online social video games market (and the US more broadly), and our basic practice is that we plan to strongly safeguard any claim which might be brought versus us.'

The concerns in between standard online gambling and sweepstakes gambling establishments might prove bothersome for some star 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 traditional video gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking unlawful sports betting wagering 'sweeps' sites while at the exact same time the leagues wish to forecast a strong stance versus prohibited gambling - specifically when attempting to tamp down the periodic gaming scandal,' Glaser told DailyMail.com.

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

In addition to VGW, Apple and Google are being taken legal action against for hosting apparently illegal sports betting sites

Regardless, Glaser sees sweepstakes gambling establishments as a major problem for leagues such as the NBA.

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

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

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

'We have full self-confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the representative stated. 'A few of our values 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 websites, sees things differently.
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'Celebrities who provide their names to shady illegal gambling sites are, at a minimum, putting their track records at risk as well as courting civil and class actions by customers who declare damage,' Glaser said. 'There is likewise some danger that state regulators and state attorneys basic rope celebrity endorsers into enforcement efforts for facilitating prohibited gaming.'

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