The smiling faces of Paris Hilton and Ryan Seacrest made surprise looks before the Louisiana Senate for Friday's hearing on illegal gambling.
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No, they weren't personally in presence, however the world-famous celebrities were conspicuously included in a slide presentation on social and sweepstakes casinos - the questionable sites providing both totally free casino-style games and lucrative rewards, such as money, gift cards or cryptocurrency. In one ad, 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 websites are just 2 cogs in the multibillion-dollar industry that now finds itself besieged by claims. In the eyes of lots of video gaming corporations, not to discuss suit complainants and state regulators, sweepstakes gambling establishments function as conventional casinos, only without the oversight, consumer protections and tax laws. So not just can they avoid the high 24-percent federal gaming levy, but sweepstakes operators aren't subject to 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 revenue in 2015 alone. Now the company faces allegations of prohibited gambling in a New york city suit that declares VGW utilizes star endorsers to 'produce a veneer of authenticity' around its product. (See VGW's statement below)

'I'm unsure" if you don't trust us, you can trust Paris Hilton" is a winning message for companies operating multibillion-dollar unlawful operations out of places like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of video gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers consist of a series of stars 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 offer any differences between traditional gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of numerous sweepstakes gambling establishments found online

Ryan Seacrest prompts fans to dip into Chumba Casino, where numerous - but not all - games are complimentary

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

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Instead, ads normally focus around the social aspect of the gambling establishments, while omitting the potential for actual gambling losses.

Others tempt consumers with promises of rewards. One such operator, Stake, ran a social networks advertisement displaying Drake's automobiles, planes and estates before pivoting to video footage of the rap artist playing online casino-style games.
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'Daddy, why do we have so much money?' check out the first caption on the screen.

Another caption discussed: 'Because I never quit.'

The inconsistency between gambling websites and social or sweepstakes casinos is a bit complex, however 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), discussed its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, many of the gamers on social-sweepstakes casinos are sports betting complimentary.

'Most social sweeps consumers never ever purchase,' the SPGA representative 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 gambling sites.'

Social casinos offer customers a chance to play casino-style games with buddies. Players have the alternative to purchase valueless currency typically referred to as 'gold coins,' which can not be exchanged for genuine cash, however can be utilized to open different features within the games.

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

And therein lies the capacity for monetary losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York. One gamer told the Washington Post he lost more than $100,000 on sweepstakes casinos in the previous year after continuing to buy more coins in pursuit of cash and other things of worth.

The Philadelphia 76ers' Paul George is seen promoting an International Poker occasion

Social sweeps gambling establishment Stake ran an ad flaunting Drake's automobiles, airplanes and mansions

Karl-Anthony Towns of the New York City 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 fuel the appeal of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, allow customers to send mail-in demands for totally free sweeps coins, supplied the players follow painfully specific guidelines. What's more, players are typically rewarded with sweeps coins simply for signing up, consequently providing them a reason to try their hands at any number of casino video games for a possibility to win - or lose - real money.

So why are sweepstakes sites allowed 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 video gaming, and the real-stakes competitors is simply a means of promoting their bread and butter.

'Social sweepstakes video games are merely a kind of online home entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is required to play at social casinos with sweepstakes prizes. Consumers never ever have to spend for a chance to win rewards. That absence of a purchase requirement - or" consideration" - is an essential distinction in between social sweeps and standard online gaming sites like gambling establishments.'

Think of the method that McDonald's utilizes its annual Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're buying hamburgers and french fries that offer them the possibility to win profitable rewards, such as a $1 million jackpot.

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

'Sweepstakes are an enduring method for promoting all sort of everyday organizations in the United States, everything from burgers to publication memberships to coffee and home improvement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos 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 sports betting industry experts, that argument does not cut it.

For starters, gaming lawyer Daniel Wallach mentions, McDonald's Monopoly game does not run forever. Rather, it has a distinct beginning and end, therefore 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 forever and they're usually not tied to casino-style games of possibility,' Wallach informed DailyMail.com. 'They're simply cash giveaways.

'The sweepstakes [casinos] possess none of the qualities commonly related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos offer" casino-like" payments, normally 80 percent or more of incomes, whereas the typical payment percentage for a short-lived promotional sweepstakes is a trivial share of the revenue made by the business [usually less than one percent]'

is quick to liken the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, offering clients the chance to play casino-style video games for real prizes. Much of those brick-and-mortar facilities have actually because been shuttered over allegations of illegal gambling.

DJ Khaled is amongst numerous celebrity spokespeople for VGW's Global Poker brand name
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Now, Wallach argues, social sweeps gambling establishments ought to deal with comparable examination.

'These distinctions are not arbitrary,' Wallach said of social sweeps casinos. 'They have actually consistently been pointed out by courts and state attorney generals as key consider identifying that a sweepstakes promotion remained in reality a guise for unlawful gaming.'

Among the gambling establishment market's leading trade organizations, the American Gaming Association, is now pushing lawmakers to examine sweepstakes operators and, sometimes, enact new legislation on the problem.

'Consumers are being deprived of securities and states are passing up significant tax and income opportunities as this gaming changes that performed 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 casino operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing 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 avoid legal costs and continued lawsuits.

Michael Phelps has actually signed a deal with the VGW Group, which owns Global Poker

In the current lawsuit, 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 explained in the filing as an 'prohibited gaming business. '

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

'We generally do not discuss matters before the courts,' a VGW representative told DailyMail.com via email. 'However, we note that this claim has actually only just been filed with the court and VGW has actually not been officially served.

'We have complete confidence in our compliance with all laws and regulations where we operate, and remain confident about the future,' the representative continued. 'We continue to provide our free-to-play video games across the majority of North America, as we have for more than a years, producing not only terrific games, user experiences and entertainment, however also ensuring this is done safely, properly and at the greatest level of requirements.

'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are reasonably common across the online social games industry (and the US more broadly), and our basic practice is that we intend to strongly safeguard any claim which might be brought versus us.'

The problems in between standard 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 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 wagering 'sweeps' websites while at the very same time the leagues desire to predict a strong stance versus illegal gambling - especially when trying to tamp down the periodic sports betting scandal,' Glaser informed DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter received a life time restriction from the NBA over allegations he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes casinos.

Along 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 issue for leagues such as the NBA.

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

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

Asked if their star endorsers have a duty to explain to clients the differences and similarities between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is absolutely nothing more that requires to be done.

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our service practices more broadly,' the spokesperson stated. 'A few of our values are" our gamers precede" and" we do what's right", and we put our worths at the core of everything we do.'

Glaser, an outspoken challenger of sweepstakes websites, sees things differently.
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'Celebrities who provide their names to dubious illegal gaming sites are, at a minimum, putting their track records at danger in addition to courting civil and class actions by consumers 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 sports betting.'

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