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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.

No, they weren't personally in presence, but the world-famous celebs were notably consisted of in a slide discussion on social and sweepstakes casinos - the questionable sites offering both totally free casino-style video games and rewarding prizes, such as money, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can ‘bet free,’ 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 industry that now discovers itself besieged by claims. In the eyes of many video gaming corporations, not to point out lawsuit plaintiffs and state regulators, sweepstakes casinos act as standard casinos, only without the oversight, and tax laws. So not only can they avoid the steep 24-percent federal gambling levy, however sweepstakes operators aren't subject to regulatory hurdles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the company deals with allegations of unlawful gambling in a New york city suit that claims VGW uses star endorsers to ‘produce a veneer of legitimacy’ around its item. (See VGW's statement below)

'I'm not 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 video gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers include a variety of stars from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom use any differences in between conventional sports betting and sweepstakes play.

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

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

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

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Instead, ads normally center around the social aspect of the casinos, while omitting the potential for actual sports betting losses.

Others tempt customers with guarantees of rewards. One such operator, Stake, ran a social networks advertisement revealing off Drake's cars, airplanes and mansions before rotating to footage of the rapper playing online casino-style games.

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

Another caption explained: ‘Because I never provided up.‘

The disparity between sports betting sites and social or sweepstakes gambling establishments is a bit complicated, however operators of the latter insist they're not involved with the previous.

A spokesperson for a market 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 casinos are sports betting totally free.

'Most social sweeps clients never buy,’ the SPGA spokesperson told DailyMail.com. ‘The minority of customers who make purchases do so in amounts far smaller sized than the normal deposit or wager size at real-money online gambling sites.‘

Social gambling establishments provide customers an opportunity to play casino-style video games with good friends. Players have the option to purchase valueless currency frequently referred to as ‘gold coins,’ which can not be exchanged for genuine money, however can be utilized to open different functions within the video games.

But within the world of social casinos exists sweepstakes gaming, permitting consumers to acquire other currency known as ‘sweeps coins’ that can be exchanged for cash or other rewards.

And therein lies the potential for financial losses, like the ones claimed by plaintiffs 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 vehicles, planes and estates

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 helped to sustain the popularity of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, permit consumers to submit mail-in requests for free sweeps coins, supplied the players follow painfully specific directions. What's more, gamers are frequently rewarded with sweeps coins merely for registering, thereby offering them a factor to attempt their hands at any number of gambling establishment video games for an opportunity to win - or lose - genuine cash.

So why are sweepstakes websites enabled to run in 48 states, while online casinos are banned in all but 7?

According to the stakeholders, their item is the complimentary casino-style gaming, and the real-stakes competitors is just a way of promoting their support.

‘Social sweepstakes video games are merely a kind of online entertainment,’ an SPGA spokesperson informed DailyMail.com by email. ‘No purchase is needed to dip into social casinos with sweepstakes prizes. Consumers never ever need to spend for a chance to win prizes. That lack of a purchase requirement - or” factor to consider” - is an important difference in between social sweeps and traditional online gaming websites like gambling establishments.‘
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Consider the way that McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and french fries that provide them the possibility to win rewarding prizes, such as a $1 million prize.

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

'Sweepstakes are a long-standing technique for promoting all type of everyday organizations in the United States, whatever from burgers to publication subscriptions to coffee and home improvement stores,’ the SPGA representative informed DailyMail.com. ‘Sweepstakes promos are routinely utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.‘

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

For beginners, video gaming attorney Daniel Wallach points out, McDonald's Monopoly video game does not run indefinitely. Rather, it has a distinct start and end, consequently recommending the sweepstakes is not the fast-food giant's main 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 normally not tied to casino-style video games of chance,’ Wallach informed DailyMail.com. ‘They're just money free gifts.

'The sweepstakes [casinos] possess none of the qualities commonly connected with McDonald's-style sweepstakes promos,’ Wallach continued. ‘Besides running in all time, the sweepstakes casinos provide” casino-like” payouts, usually 80 percent or more of revenues, whereas the common payment portion for a short-lived marketing sweepstakes is an insignificant share of the profits made by the business [usually less than one percent]‘

Wallach fasts to liken the online social sweeps casinos to the web coffee shops that sprang up in Florida, using customers the possibility to play casino-style games for genuine rewards. A number of those brick-and-mortar facilities have considering that been shuttered over accusations of prohibited sports betting.

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

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

‘These differences are not approximate,’ Wallach stated of social sweeps casinos. ‘They have actually consistently been cited by courts and state attorney generals as essential aspects in figuring out that a sweepstakes promo remained in truth a guise for prohibited sports betting.‘

One of the casino market's leading trade companies, the American Gaming Association, is now pushing lawmakers to examine sweepstakes operators and, in some cases, enact new legislation on the issue.

'Consumers are being denied of securities and states are forgoing significant tax and income opportunities as this gambling replaces 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 four different cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action lawsuit, saying the settlement was made to avoid legal expenses and continued litigation.

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

In the latest suit, which is mostly similar 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 explained in the filing as an ‘illegal gambling enterprise. ‘

Apple and Google have actually likewise been called as defendants in suits for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's request for comment.

'We typically do not comment on matters before the courts,’ a VGW spokesperson informed DailyMail.com via email. ‘However, we note that this claim has actually only simply been submitted with the court and VGW has not been formally served.

'We have full confidence in our compliance with all laws and guidelines where we operate, and stay confident about the future,’ the spokesperson continued. ‘We continue to use our free-to-play video games across the majority of The United States and Canada, as we have for more than a years, developing not only fantastic games, user experiences and home entertainment, however likewise ensuring 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 market (and the US more broadly), and our standard practice is that we intend to vigorously defend any claim which may be brought against us.‘

The problems between traditional online gambling and sweepstakes gambling establishments might show bothersome 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 traditional gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking illegal sports betting ‘sweeps’ sites while at the same time the leagues desire to predict a strong position against prohibited gaming - specifically when attempting to tamp down the occasional gambling scandal,’ Glaser informed DailyMail.com.

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

In addition to VGW, Apple and Google are being sued for hosting apparently unlawful 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 professional 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 also ignored to respond to DailyMail.com e-mails.

Asked if their celeb endorsers have a duty to explain to customers the distinctions and resemblances in between iGaming and sweepstakes casinos, VGW firmly insisted there is absolutely nothing more that needs to be done.

'We have full self-confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,’ the representative stated. ‘A few of our values 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 opponent of sweepstakes sites, sees things in a different way.
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'Celebrities who provide their names to dubious illegal gambling sites are, at a minimum, putting their reputations at danger along with courting civil and class actions by customers who allege harm,’ Glaser said. ‘There is also some threat that state regulators and state chief law officers rope star endorsers into enforcement efforts for helping with prohibited gambling.‘

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