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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 unlawful gaming.
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No, they weren't personally in presence, but the world-famous celebs were conspicuously included in a slide discussion on social and sweepstakes gambling establishments - the questionable sites using both free casino-style video games and financially rewarding prizes, such as cash, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone 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 2 cogs in the multibillion-dollar industry that now discovers itself besieged by suits. In the eyes of many video gaming corporations, not to point out lawsuit complainants and state regulators, sweepstakes gambling establishments serve as standard gambling establishments, just without the oversight, consumer defenses and tax laws. So not only can they avoid the steep 24-percent federal gaming levy, however sweepstakes operators aren't subject to regulatory obstacles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the business faces allegations of unlawful gaming in a New York claim that claims VGW uses celebrity endorsers to 'create a veneer of authenticity' around its product. (See VGW's declaration below)

'I'm not exactly sure" if you do not trust us, you can trust 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 video gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers consist of a series of celebs from gambling enthusiasts 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 gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of lots of sweepstakes casinos discovered online

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

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

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Instead, ads generally focus around the social element of the gambling establishments, while leaving out the potential for actual sports betting losses.

Others tempt clients with guarantees of rewards. One such operator, Stake, ran a social networks ad revealing off Drake's cars, planes and estates before rotating to video of the rap artist playing online casino-style games.

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

Another caption discussed: 'Because I never gave up.'

The inconsistency in between gaming 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 an industry trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, most of the players on social-sweepstakes gambling establishments are sports betting complimentary.

'Most social sweeps consumers never ever purchase,' the SPGA spokesperson informed DailyMail.com. 'The minority of consumers who make purchases do so in quantities far smaller sized than the common deposit or wager size at real-money online sports betting websites.'

Social casinos provide consumers an opportunity to play casino-style games with pals. Players have the option to purchase worthless currency typically referred to as 'gold coins,' which can not be exchanged genuine money, but can be used to open various functions within the games.

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

And therein lies the potential for monetary losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York City. One gamer told 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 cash and other things of worth.

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

Social sweeps gambling establishment Stake ran an ad revealing off Drake's cars and trucks, airplanes and estates

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

Traditional online gambling establishments are prohibited in all but seven states, which has actually assisted to sustain 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, sites like Chumba will ask for IDs from players attempting to withdraw any funds.

Many websites, like the crypto-compatible Stake, permit customers to submit mail-in requests for complimentary sweeps coins, supplied the gamers follow painfully particular directions. What's more, players are often rewarded with sweeps coins merely for signing up, therefore giving them a factor to try their hands at any number of casino games for a possibility to win - or lose - real cash.

So why are sweepstakes sites allowed to operate in 48 states, while online casinos are banned in all but 7?

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

'Social sweepstakes games are simply a type of online home entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is required to dip into social gambling establishments with sweepstakes prizes. Consumers never need to spend for an opportunity to win prizes. That absence of a purchase requirement - or" factor to consider" - is a crucial difference between social sweeps and standard online gaming sites like casinos.'

Think of the manner in which McDonald's uses its yearly Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're buying hamburgers and fries that offer them the opportunity to win profitable rewards, such as a $1 million prize.

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

'Sweepstakes are a long-standing method for promoting all sort of daily services in the United States, whatever from hamburgers to publication subscriptions to coffee and home improvement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are regularly 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 insiders, that argument does not cut it.

For starters, gaming attorney Daniel Wallach explains, McDonald's Monopoly video game does not run indefinitely. Rather, it has a distinct start and end, consequently suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote real products like french fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're typically not connected to casino-style video games of possibility,' Wallach told DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [gambling establishments] possess none of the attributes commonly associated with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos use" casino-like" payments, generally 80 percent or more of profits, whereas the common payment percentage for a temporary advertising sweepstakes is an unimportant share of the profits made by the business [generally less than one percent]'

Wallach is quick to compare the online social sweeps casinos to the internet coffee shops that emerged in Florida, providing clients the possibility to video games for genuine rewards. Many of those brick-and-mortar establishments have because been shuttered over accusations of prohibited sports betting.

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

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

'These differences are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have actually repeatedly been cited by courts and state attorney generals as essential consider determining that a sweepstakes promotion remained in fact a guise for illegal gambling.'

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

'Consumers are being deprived of protections and states are passing up considerable tax and earnings opportunities as this gaming changes that conducted through regulated channels,' checked out a well-circulated AGA memo.

And after that there are the complainants who have actually taken legal action against social casinos in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action lawsuit, saying the settlement was made to avoid legal costs and continued litigation.

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

In the newest claim, which is mostly similar to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited sports betting enterprise. '

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

'We normally don't talk about matters before the courts,' a VGW representative told DailyMail.com by means of e-mail. 'However, we keep in mind that this claim has only just been filed with the court and VGW has not been officially served.

'We have complete self-confidence in our compliance with all laws and regulations where we run, and stay positive about the future,' the representative continued. 'We continue to use our free-to-play games across most of North America, as we have for more than a years, developing not only great video games, user experiences and entertainment, however also guaranteeing this is done securely, responsibly and at the highest level of standards.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are relatively typical across the online social video games industry (and the US more broadly), and our basic practice is that we mean to intensely protect any claim which might be brought against us.'

The concerns between conventional online gaming and sweepstakes casinos might prove bothersome for some celeb 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 traditional gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking illegal sports betting wagering 'sweeps' sites while at the exact same time the leagues desire to forecast a strong stance versus unlawful sports betting - specifically when trying 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 lifetime ban from the NBA over accusations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes casinos.

Together with VGW, Apple and Google are being sued for hosting presumably illegal gambling websites

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

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

Neither an NBA spokesperson nor the players' 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 emails.

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

'We have full self-confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the representative stated. 'Some of our worths are" our players precede" 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 lend their names to shady prohibited gaming websites are, at a minimum, putting their reputations at risk in addition to courting civil and class actions by consumers who declare harm,' Glaser said. 'There is likewise some risk that state regulators and state chief law officers rope celeb endorsers into enforcement efforts for helping with illegal sports betting.'

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