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The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on prohibited gambling.

No, they weren't personally in attendance, however the world-famous celebs were notably included in a slide presentation on social and sweepstakes gambling establishments - the controversial sites providing both free casino-style video 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.

The sites are just 2 cogs in the multibillion-dollar industry that now finds itself besieged by suits. In the eyes of many gaming corporations, not to mention lawsuit plaintiffs and state regulators, sweepstakes gambling establishments act as conventional casinos, just without the oversight, customer protections and tax laws. So not just can they prevent the high 24-percent federal gambling levy, however sweepstakes operators aren't based on regulative difficulties like anti-money laundering and responsible-gaming protections.
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One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the company faces allegations of unlawful gambling in a New York claim that claims VGW utilizes celeb endorsers to 'create a veneer of authenticity' around its item. (See VGW's statement below)

'I'm not exactly sure" if you don't trust us, you can rely on Paris Hilton" is a winning message for business 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, informed DailyMail.com.
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Sweepstakes endorsers consist of 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 standard sports betting and sweepstakes play.

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

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

Drake has an offer with social sweeps casino, Stake, that he frequently promotes on social media

Learn more
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Instead, advertisements usually center around the social element of the casinos, while omitting the capacity for real sports betting losses.

Others lure consumers with pledges of prizes. One such operator, Stake, ran a social media ad revealing off Drake's cars and trucks, airplanes and mansions before pivoting to video footage of the rap artist playing online casino-style video games.

'Daddy, why do we have so much cash?' check out the first caption on the screen.
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Another caption discussed: 'Because I never ever offered up.'

The inconsistency in between sports betting sites and social or sweepstakes casinos is a bit complex, however operators of the latter insist they're not involved with the former.

A representative for an industry trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA data, the majority of the gamers on social-sweepstakes casinos are sports betting free.

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

Social gambling establishments use customers a chance to play casino-style video games with pals. Players have the option to purchase worthless currency often described as 'gold coins,' which can not be exchanged for genuine cash, however can be used to unlock various features within the video games.

But within the world of social casinos exists sweepstakes video gaming, allowing consumers to obtain other currency referred to as 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the potential for monetary losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York City. One gamer informed the Washington Post he lost more than $100,000 on sweepstakes casinos 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 an International Poker occasion

Social sweeps gambling establishment Stake ran an ad displaying vehicles, airplanes and mansions

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

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

Anyone over the age of 18 can access the sweepstakes websites, which do not need normally require recognition. However, websites like Chumba will request IDs from players trying to withdraw any funds.
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Many websites, like the crypto-compatible Stake, allow clients to send mail-in ask for free sweeps coins, provided the players follow painfully particular directions. What's more, gamers are often rewarded with sweeps coins simply for registering, thus providing a reason to try their hands at any variety of casino video games for a chance to win - or lose - real cash.

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

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

'Social sweepstakes video games are simply a form of online entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is required to dip into social gambling establishments with sweepstakes rewards. Consumers never have to spend for an opportunity to win prizes. That absence of a purchase requirement - or" consideration" - is an important distinction between social sweeps and traditional online sports betting websites like gambling establishments.'

Think about the method that McDonald's utilizes its annual Monopoly game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and fries that provide them the possibility to win profitable prizes, such as a $1 million prize.

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

'Sweepstakes are an enduring technique for promoting all kinds of daily organizations in the United States, whatever from hamburgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are regularly used 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, gaming attorney Daniel Wallach points out, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a distinct start and end, thereby recommending the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being utilized to promote genuine products like fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're generally not tied to casino-style video games of chance,' Wallach told DailyMail.com. 'They're just cash free gifts.

'The sweepstakes [gambling establishments] have none of the characteristics commonly connected with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments use" casino-like" payouts, usually 80 percent or more of profits, whereas the common payment portion for a temporary promotional sweepstakes is a minor share of the profits made by the company [generally less than one percent]'

Wallach is quick to compare the online social sweeps gambling establishments to the internet cafes that emerged in Florida, providing clients the opportunity to play casino-style video games for genuine prizes. Many of those brick-and-mortar facilities have because been shuttered over allegations of prohibited gaming.

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

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

'These distinctions are not arbitrary,' Wallach stated of social sweeps casinos. 'They have actually consistently been pointed out by courts and state attorney general of the United States as crucial aspects in determining that a sweepstakes promo remained in fact a guise for prohibited sports betting.'

One of the casino industry's leading trade companies, the American Gaming Association, is now pressing legislators to examine sweepstakes operators and, sometimes, enact brand-new legislation on the concern.

'Consumers are being denied of protections and states are forgoing considerable tax and income opportunities as this gaming changes that carried out through controlled channels,' read a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in four different cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action claim, saying the settlement was made to avoid legal costs and continued lawsuits.

Michael Phelps has actually signed an offer with the VGW Group, which owns Global Poker

In the newest claim, which is largely comparable to its predecessors, New york city state locals Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is described in the filing as an 'illegal sports betting enterprise. '

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

'We usually do not discuss matters before the courts,' a VGW representative informed DailyMail.com through e-mail. 'However, we note that this claim has actually only simply been submitted with the court and VGW has not been officially served.

'We have complete confidence in our compliance with all laws and guidelines where we run, and stay confident about the future,' the spokesperson continued. 'We continue to provide our free-to-play video games throughout the majority of The United States and Canada, as we have for more than a years, creating not only terrific video games, user experiences and home entertainment, but also guaranteeing this is done safely, properly and at the highest level of standards.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are reasonably typical throughout the online social games market (and the US more broadly), and our basic practice is that we intend to intensely defend any claim which might be brought against us.'

The problems between conventional online gambling and sweepstakes casinos could prove problematic 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 standard gaming titans like FanDuel and DraftKings.
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'It's paradoxical that expert athletes are hawking unlawful sports betting 'sweeps' sites while at the exact same time the leagues wish to predict a strong stance versus illegal sports betting - specifically when attempting to tamp down the periodic gambling scandal,' Glaser informed DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter received a lifetime ban from the NBA over accusations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes gambling establishments.

Together with VGW, Apple and Google are being demanded hosting presumably illegal sports betting sites

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

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

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

Asked if their celebrity endorsers have an obligation to describe to customers the distinctions and resemblances between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that needs to be done.

'We have full confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the representative stated. 'Some of our values are" our players precede" and" we do what's right", and we put our worths at the core of whatever we do.'

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

'Celebrities who lend their names to shady prohibited sports betting sites are, at a minimum, putting their credibilities at danger in addition to courting civil and class actions by consumers who allege harm,' Glaser said. 'There is also some threat that state regulators and state chief law officers rope celebrity endorsers into enforcement efforts for assisting in prohibited gambling.'

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