The smiling faces of Paris Hilton and Ryan Seacrest made surprise looks before the Louisiana Senate for Friday's hearing on unlawful gaming.
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No, they weren't personally in attendance, but the world-famous celebrities were notably included in a slide presentation on social and sweepstakes gambling establishments - the controversial sites using both complimentary casino-style video games and rewarding prizes, such as cash, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody 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 sites are just two cogs in the multibillion-dollar market that now discovers itself besieged by claims. In the eyes of numerous video gaming corporations, not to mention claim complainants and state regulators, sweepstakes casinos function as standard gambling establishments, only without the oversight, customer protections and tax laws. So not just can they avoid the steep 24-percent federal sports betting levy, however sweepstakes operators aren't subject to like anti-money laundering and responsible-gaming defenses.
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One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the company faces allegations of illegal gambling in a New york city claim that claims VGW utilizes star endorsers to 'develop a veneer of authenticity' around its product. (See VGW's declaration below)

'I'm uncertain" if you don't 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 speaker, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a series of stars from gambling 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 standard gaming and sweepstakes play.

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

Ryan Seacrest advises fans to dip into Chumba Casino, where many - however not all - games are complimentary

Drake has a handle social sweeps gambling establishment, Stake, that he frequently promotes on social networks

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Instead, advertisements usually center around the social element of the gambling establishments, while omitting the potential for real gambling losses.

Others lure clients with pledges of rewards. One such operator, Stake, ran a social networks advertisement flaunting Drake's cars, aircrafts and estates before pivoting to video of the rapper playing online casino-style games.

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

Another caption explained: 'Because I never ever provided up.'

The disparity between gambling websites and social or sweepstakes casinos is a bit intricate, 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), explained its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, the majority of the players on social-sweepstakes casinos are sports betting free.

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

Social gambling establishments offer consumers a chance to play casino-style video games with pals. Players have the alternative to purchase worthless currency often referred to as 'gold coins,' which can not be exchanged genuine money, but can be used to unlock different functions within the video games.

But within the world of social casinos exists sweepstakes gaming, permitting clients to acquire other currency understood as 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the capacity for monetary losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York. One player informed 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 cash and other things of value.

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

Social sweeps gambling establishment Stake ran an ad showing off Drake's cars, airplanes and mansions

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

Traditional online casinos are banned in all however seven states, which has actually assisted to sustain the appeal of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, allow customers to send mail-in ask for totally free sweeps coins, offered the players follow painfully specific directions. What's more, gamers are often rewarded with sweeps coins merely for signing up, consequently giving them a factor to attempt their hands at any number of casino games for a chance to win - or lose - genuine money.

So why are sweepstakes websites permitted to operate in 48 states, while online gambling establishments are prohibited in all but 7?

According to the stakeholders, their product is the free casino-style video gaming, and the real-stakes competition is just a means of promoting their bread and butter.

'Social sweepstakes video games are just a form of online home entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is required to dip into social casinos with sweepstakes rewards. Consumers never ever need to spend for a chance to win prizes. That lack of a purchase requirement - or" consideration" - is a vital distinction in between social sweeps and traditional online sports betting sites like casinos.'

Consider the manner in which McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're buying hamburgers and fries that provide them the chance to win financially rewarding prizes, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the game itself does not meet the definition of gaming in the US.

'Sweepstakes are an enduring technique for promoting all sort of daily organizations in the United States, everything from burgers to publication memberships to coffee and home enhancement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are frequently utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many gambling industry insiders, that argument doesn't cut it.

For beginners, gaming lawyer Daniel Wallach explains, McDonald's Monopoly game doesn't run forever. Rather, it has a well-defined beginning and end, thereby suggesting the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being used to promote genuine products like french fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're normally not tied to casino-style video games of chance,' Wallach informed DailyMail.com. 'They're simply money free gifts.

'The sweepstakes [gambling establishments] possess none of the characteristics typically associated with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos use" casino-like" payouts, usually 80 percent or more of earnings, whereas the common payout percentage for a momentary advertising sweepstakes is an insignificant share of the income made by the company [normally less than one percent]'

Wallach is quick to compare the online social sweeps gambling establishments to the internet coffee shops that sprang up in Florida, providing clients the opportunity to play casino-style video games for real prizes. A number of those brick-and-mortar facilities have actually since been shuttered over accusations of prohibited sports betting.

DJ Khaled is amongst several celebrity spokespeople for VGW's Global Poker brand

Now, Wallach argues, social sweeps casinos ought to face comparable scrutiny.

'These differences are not approximate,' Wallach stated of social sweeps casinos. 'They have consistently been pointed out by courts and state lawyer generals as key consider determining that a sweepstakes promotion was in reality a guise for prohibited gambling.'

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

'Consumers are being denied of securities and states are passing up significant tax and revenue opportunities as this sports betting changes that conducted through controlled channels,' read a well-circulated AGA memo.

And after that there are the complainants who have actually sued social casinos in more than a dozen states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 different 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 avoid legal costs and continued litigation.

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

In the most current claim, which is largely comparable to its predecessors, New York state locals Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'unlawful gambling business. '

Apple and Google have also been named as accuseds in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for remark.

'We typically don't comment on matters before the courts,' a VGW representative informed DailyMail.com through e-mail. 'However, we note that this claim has actually only simply been filed with the court and VGW has not been formally served.

'We have full confidence in our compliance with all laws and policies where we operate, and stay positive about the future,' the spokesperson continued. 'We continue to use our free-to-play video games throughout the majority of North America, as we have for more than a years, producing not only terrific games, user experiences and entertainment, but also guaranteeing this is done securely, responsibly and at the greatest level of requirements.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are fairly common across the online social games market (and the US more broadly), and our standard practice is that we plan to vigorously protect any claim which may be brought against us.'

The issues in between conventional online sports betting and sweepstakes gambling establishments could show problematic for some celebrity endorsers.

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

'It's paradoxical that expert athletes are hawking unlawful sports betting 'sweeps' sites while at the very same time the leagues desire to predict a strong stance versus illegal gaming - especially when trying to tamp down the occasional gaming scandal,' Glaser informed DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter received a life time restriction from the NBA over accusations 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 taken legal action against for hosting allegedly unlawful sports betting sites

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

'I 'd anticipate that a league crackdown on athletes backing sweepstakes websites is a matter of when, not if,' Glaser added.

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 also ignored to react to DailyMail.com e-mails.

Asked if their celeb endorsers have a responsibility to explain to clients the distinctions and similarities between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that needs to be done.

'We have full self-confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the spokesperson 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 differently.
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'Celebrities who provide their names to shady prohibited sports betting sites are, at a minimum, putting their reputations at risk as well as courting civil and class actions by consumers who declare damage,' Glaser said. 'There is also some danger that state regulators and state chief law officers rope star endorsers into enforcement efforts for facilitating prohibited sports betting.'

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