The smiling faces of Paris Hilton and Ryan Seacrest made surprise looks before the Louisiana Senate for Friday's hearing on unlawful sports betting.
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No, they weren't personally in participation, however the world-famous celebrities were notably consisted of in a slide presentation on social and sweepstakes casinos - the controversial sites providing both complimentary casino-style games and financially rewarding prizes, such as money, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are just 2 cogs in the multibillion-dollar industry that now finds itself besieged by lawsuits. In the eyes of lots of video gaming corporations, not to discuss suit plaintiffs and state regulators, sweepstakes gambling establishments serve as standard gambling establishments, just without the oversight, customer defenses and tax laws. So not only can they prevent the steep 24-percent federal sports betting levy, but sweepstakes operators aren't subject to regulative obstacles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits last year alone. Now the business faces allegations of illegal gaming in a New York lawsuit that declares VGW uses celeb endorsers to 'produce a veneer of authenticity' around its product. (See VGW's statement below)

'I'm uncertain" if you do not trust us, you can trust Paris Hilton" is a winning message for companies running multibillion-dollar unlawful operations out of locations 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 consist of a variety of stars from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions between standard gambling and sweepstakes play.

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

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

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

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Instead, ads normally focus around the social element of the gambling establishments, while leaving out the potential for real gambling losses.

Others tempt customers with promises of prizes. One such operator, Stake, ran a social networks advertisement showing off Drake's automobiles, airplanes and estates before rotating to video of the rap artist playing online casino-style games.

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

Another caption discussed: 'Because I never quit.'

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.
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A representative for a market 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, most of the gamers on social-sweepstakes gambling establishments are sports betting free.

'Most social sweeps consumers never buy,' the SPGA spokesperson told DailyMail.com. 'The minority of customers who make purchases do so in amounts far smaller sized than the typical deposit or bet size at real-money online gaming websites.'

Social casinos use clients an opportunity to play casino-style games with good friends. Players have the option to buy worthless currency typically described as 'gold coins,' which can not be exchanged for real cash, but can be utilized to unlock different functions within the video games.

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

And therein lies the potential for financial 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 past 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 casino Stake ran an advertisement flaunting Drake's cars, airplanes and estates

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

Traditional online casinos are prohibited in all however 7 states, which has helped to sustain the appeal of .

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

Many sites, like the crypto-compatible Stake, allow consumers to submit mail-in ask for free sweeps coins, provided the gamers follow painfully particular directions. What's more, players are frequently rewarded with sweeps coins merely for registering, thus providing a reason to try their hands at any variety of gambling establishment games for a chance to win - or lose - real money.

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 product is the free casino-style gaming, and the real-stakes competition is simply a method of promoting their support.

'Social sweepstakes games are simply a form of online home entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is required to dip into social gambling establishments with sweepstakes rewards. Consumers never ever need to pay for an opportunity to win prizes. That lack of a purchase requirement - or" factor to consider" - is an important distinction in between social sweeps and conventional online gaming websites like casinos.'

Consider the method that McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and fries that offer them the possibility to win lucrative rewards, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the game itself doesn't satisfy the meaning of sports betting in the US.

'Sweepstakes are a long-standing technique for promoting all type of daily services in the United States, whatever from burgers to magazine subscriptions to coffee and home enhancement shops,' the SPGA spokesperson 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 many sports betting market insiders, that argument does not cut it.

For beginners, gaming lawyer Daniel Wallach points out, McDonald's Monopoly video game does not run indefinitely. Rather, it has a well-defined beginning and end, thereby recommending the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being used to promote real products like fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're normally not connected to casino-style games of opportunity,' Wallach informed DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [gambling establishments] have none of the attributes frequently associated with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos offer" casino-like" payouts, generally 80 percent or more of revenues, whereas the normal payment percentage for a temporary promotional sweepstakes is a minor share of the profits made by the company [typically less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the web coffee shops that emerged in Florida, using clients the opportunity to play casino-style games for genuine rewards. Much of those brick-and-mortar facilities have actually given that been shuttered over accusations of illegal gaming.

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

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

'These distinctions are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have actually repeatedly been mentioned by courts and state chief law officer as essential factors in figuring out that a sweepstakes promotion was in reality a guise for prohibited gambling.'

Among the casino market's leading trade companies, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, sometimes, enact new legislation on the issue.

'Consumers are being deprived of securities and states are passing up substantial tax and profits opportunities as this gambling changes that conducted through managed channels,' checked out a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in four separate cases in Kentucky without admitting any misbehavior, according to the Washington Post. Meanwhile VGW concurred 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 signed an offer with the VGW Group, which owns Global Poker

In the current claim, which is mainly comparable to its predecessors, New york city 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 'prohibited sports betting business. '

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

'We usually do not comment on matters before the courts,' a VGW representative informed DailyMail.com by means of e-mail. 'However, we keep in mind that this claim has actually only simply been filed with the court and VGW has not been officially served.
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'We have complete confidence in our compliance with all laws and guidelines where we operate, and remain confident about the future,' the representative continued. 'We continue to offer our free-to-play video games across many of The United States and Canada, as we have for more than a decade, developing not only excellent video games, user experiences and home entertainment, however likewise ensuring this is done securely, properly and at the highest level of standards.

'More broadly, we 'd restate that class actions and other litigations and arbitrations are relatively common across the online social video games industry (and the US more broadly), and our standard practice is that we intend to strongly protect any claim which might be brought versus us.'

The issues in between conventional online gambling and sweepstakes casinos could show problematic for some star 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 prohibited sports betting 'sweeps' websites while at the very same time the leagues wish to project a strong position versus illegal gaming - especially when trying to tamp down the periodic gambling scandal,' Glaser told DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter got a life time ban from the NBA over allegations he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes casinos.
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Along with VGW, Apple and Google are being demanded hosting apparently unlawful sports betting websites

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

'I 'd anticipate 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 requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to react to DailyMail.com e-mails.

Asked if their star endorsers have a duty to discuss to customers the differences and similarities in between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that requires to be done.
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'We have full confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the representative stated. 'Some of our values are" our gamers come first" 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 in a different way.
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'Celebrities who lend their names to shady illegal gaming websites are, at a minimum, putting their credibilities at danger in addition to courting civil and class actions by consumers who declare harm,' Glaser stated. 'There is likewise some threat that state regulators and state chief law officers rope celebrity endorsers into enforcement efforts for helping with prohibited gambling.'

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