The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on unlawful gambling.
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No, they weren't personally in attendance, however the world-famous stars were conspicuously consisted of in a slide discussion on social and sweepstakes gambling establishments - the controversial websites offering both complimentary casino-style 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 complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are just two cogs in the multibillion-dollar market that now finds itself besieged by claims. In the eyes of lots of video gaming corporations, not to mention suit complainants and state regulators, sweepstakes gambling establishments function as conventional gambling establishments, only without the oversight, consumer securities and tax laws. So not just can they prevent the high 24-percent federal gaming levy, however sweepstakes operators aren't based on regulatory obstacles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits last year alone. Now the company deals with allegations of prohibited gaming in a New York claim that declares VGW utilizes celeb endorsers to 'produce a veneer of authenticity' around its item. (See VGW's declaration listed below)

'I'm not exactly sure" if you do not trust us, you can trust Paris Hilton" is a winning message for business running multibillion-dollar illegal operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of video gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers include a series of stars from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions in between conventional gambling and sweepstakes play.

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

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

Drake has a handle social sweeps casino, Stake, that he routinely promotes on social media

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

Others tempt consumers with promises of rewards. One such operator, Stake, ran a social media advertisement showing off Drake's cars and trucks, airplanes and mansions before rotating to video 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 discussed: 'Because I never gave up.'

The disparity between sports betting sites and social or sweepstakes gambling establishments is a bit intricate, but operators of the latter insist they're not included with the former.

A representative 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 information, most of the players on social-sweepstakes gambling establishments are playing for complimentary.

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

Social gambling establishments offer clients a possibility to play casino-style video games with pals. Players have the option to buy valueless currency often referred to as 'gold coins,' which can not be exchanged for genuine cash, however can be utilized to open numerous features within the games.

But within the world of social gambling establishments exists sweepstakes gaming, permitting consumers to acquire other currency called 'sweeps coins' that can be exchanged for cash or other rewards.

And therein lies the capacity for monetary losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York City. One player informed the Washington Post he lost more than $100,000 on sweepstakes casinos in the past year after continuing to purchase more coins in pursuit of cash and other things of value.

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

Social sweeps casino Stake ran an advertisement displaying Drake's cars and trucks, 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 prohibited in all however 7 states, which has helped to sustain the popularity of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, permit clients to submit mail-in demands for free sweeps coins, supplied the gamers follow painfully specific instructions. What's more, gamers are frequently rewarded with sweeps coins merely for signing up, therefore offering them a factor to try their hands at any number of casino games for an opportunity to win - or lose - real cash.
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So why are sweepstakes websites permitted to run in 48 states, while online casinos are banned in all but 7?

According to the stakeholders, their product is the complimentary casino-style gaming, and the real-stakes competition is merely a method of promoting their support.

'Social sweepstakes video games are simply a type of online home entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is required to dip into social gambling establishments with sweepstakes rewards. Consumers never need to spend for a chance to win prizes. That absence of a purchase requirement - or" consideration" - is an essential distinction between social sweeps and standard online sports betting websites 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 purchasing hamburgers and fries that provide them the possibility to win rewarding prizes, such as a $1 million prize.
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And without a purchase requirement, or 'factor to consider', the game itself doesn't meet the definition of sports betting in the US.

'Sweepstakes are a long-standing technique for promoting all kinds of daily organizations in the United States, whatever from hamburgers to magazine subscriptions to coffee and home improvement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are regularly 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 experts, that argument doesn't cut it.

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

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

'The sweepstakes [gambling establishments] have none of the attributes frequently associated with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments provide" casino-like" payouts, generally 80 percent or more of incomes, whereas the common payment percentage for a short-lived marketing sweepstakes is a trivial 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 cafes that sprang up in Florida, offering customers the opportunity to play casino-style video games for genuine rewards. Much of those brick-and-mortar facilities have since been shuttered over allegations of illegal sports betting.

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

Now, Wallach argues, social sweeps gambling establishments need to deal with similar scrutiny.

'These differences are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have repeatedly been mentioned by courts and state attorney general of the United States as crucial aspects in identifying that a sweepstakes promotion was in truth a guise for prohibited sports betting.'

One of the casino market's leading trade organizations, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, sometimes, enact new legislation on the issue.

'Consumers are being denied of securities and states are passing up significant tax and revenue chances as this gambling replaces that conducted through controlled channels,' checked out a well-circulated AGA memo.
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And then there are the plaintiffs who have 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 separate cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, saying the settlement was made to prevent legal costs and continued lawsuits.

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

In the most recent claim, which is mostly similar to its predecessors, New york city state citizens 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 'unlawful sports betting business. '

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

'We normally do not talk about matters before the courts,' a VGW spokesperson informed DailyMail.com through e-mail. 'However, we keep in mind that this claim has only simply been submitted with the court and VGW has not been officially served.
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'We have full self-confidence in our compliance with all laws and regulations where we operate, and remain positive 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 just great video games, user experiences and entertainment, but also ensuring this is done safely, responsibly and at the greatest level of requirements.
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'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are fairly common throughout the online social games industry (and the US more broadly), and our standard practice is that we plan to vigorously safeguard any claim which might be brought versus us.'

The issues in between standard online gambling and sweepstakes gambling establishments could prove problematic 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 standard gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking unlawful sports betting 'sweeps' sites while at the exact same time the leagues wish to predict a strong stance against unlawful gaming - particularly when trying to tamp down the occasional sports betting scandal,' Glaser told DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter got a lifetime restriction from the NBA over allegations 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 taken legal action against for hosting presumably unlawful sports betting websites

Regardless, Glaser sees sweepstakes gambling establishments as a major problem for leagues such as the NBA.
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'I 'd anticipate that a league crackdown on athletes backing sweepstakes sites refers when, not if,' Glaser added.

Neither an NBA representative nor the players' representatives responded to DailyMail.com's ask 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 star endorsers have a responsibility to describe to clients the distinctions and similarities between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that requires to be done.

'We have complete confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the spokesperson stated. 'A few of our worths are" our gamers come initially" 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.

'Celebrities who provide their names to shady prohibited gambling sites are, at a minimum, putting their credibilities at danger in addition to courting civil and class actions by customers who declare harm,' Glaser stated. 'There is also some threat that state regulators and state lawyers basic rope star endorsers into enforcement efforts for assisting in prohibited gambling.'

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