The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on illegal sports betting.
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No, they weren't personally in participation, however the world-famous stars were conspicuously included in a slide discussion on social and sweepstakes casinos - the controversial websites using both free casino-style games and profitable prizes, such as cash, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet complimentary,' 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 market that now discovers itself besieged by lawsuits. In the eyes of many gaming corporations, not to discuss lawsuit complainants and state regulators, sweepstakes gambling establishments function as traditional gambling establishments, only without the oversight, consumer defenses and tax laws. So not only can they avoid the steep 24-percent federal gambling levy, but sweepstakes operators aren't subject to regulatory hurdles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the business faces allegations of illegal gambling in a New york city lawsuit that claims VGW utilizes celeb endorsers to 'develop a veneer of authenticity' around its product. (See VGW's declaration below)

'I'm not 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 places 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 variety of celebs 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 distinctions in between traditional gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among lots of sweepstakes casinos found online

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

Drake has a deal with social sweeps casino, Stake, that he frequently promotes on social media

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Instead, ads generally center around the social aspect of the casinos, while leaving out the capacity for actual gaming losses.

Others lure consumers with promises of rewards. One such operator, Stake, ran a social networks ad displaying Drake's cars, airplanes and mansions before rotating to video of the rap artist playing online casino-style games.

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

Another caption described: 'Because I never provided up.'

The discrepancy in between sports betting websites and social or sweepstakes casinos is a bit complex, but operators of the latter insist they're not included with the previous.

A spokesperson 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 data, the majority of the gamers on social-sweepstakes gambling establishments are sports betting free.

'Most social sweeps consumers never ever make a purchase,' the SPGA representative informed DailyMail.com. 'The minority of clients who make purchases do so in quantities far smaller than the common deposit or wager size at real-money online gambling sites.'

Social gambling establishments use customers a chance to play casino-style video games with friends. Players have the alternative to buy valueless currency often referred to as 'gold coins,' which can not be exchanged genuine cash, however can be utilized to unlock different features within the video games.

But within the world of social gambling establishments exists sweepstakes gaming, enabling consumers to obtain other currency referred to as 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the capacity for financial losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York. One player informed 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 money and other things of value.

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

Social sweeps casino Stake ran an advertisement displaying Drake's cars, planes and mansions

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

Traditional online casinos are prohibited in all however seven states, which has actually assisted to sustain the appeal of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, allow consumers to send mail-in requests for free sweeps coins, offered the gamers follow painfully specific guidelines. What's more, gamers are often rewarded with sweeps coins just for registering, therefore providing a reason to try their hands at any variety of casino video games for a chance to win - or lose - real money.

So why are sweepstakes websites permitted to operate in 48 states, while online gambling establishments are prohibited in all however 7?

According to the stakeholders, their product is the totally free casino-style video gaming, and the real-stakes competitors is just a means of promoting their support.

'Social sweepstakes games are simply a kind of online home entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is needed to play at social casinos with sweepstakes prizes. Consumers never need to spend for an opportunity to win prizes. That absence of a purchase requirement - or" consideration" - is a crucial distinction in between social sweeps and standard online gambling sites like gambling establishments.'

Think about the manner in which McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and french fries that provide them the opportunity to win profitable rewards, such as a $1 million jackpot.

And without a purchase requirement, or 'factor to consider', the video game itself does not meet the definition of sports betting in the US.

'Sweepstakes are a long-standing approach for promoting all kinds of everyday companies in the United States, everything from burgers to magazine subscriptions to coffee and home improvement 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 gambling industry insiders, that argument does not cut it.

For beginners, gaming attorney Daniel Wallach points out, McDonald's Monopoly video game doesn't run forever. Rather, it has a distinct beginning and end, therefore suggesting 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 connected to casino-style games of possibility,' Wallach informed DailyMail.com. 'They're just cash free gifts.

'The sweepstakes [casinos] have none of the qualities frequently related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments provide" casino-like" payouts, normally 80 percent or more of earnings, whereas the typical payout portion for a short-lived marketing sweepstakes is a trivial share of the profits made by the business [normally less than one percent]'

Wallach is fast to liken the online social sweeps gambling establishments to the web coffee shops that sprang up in Florida, providing customers the opportunity to play casino-style video games for real prizes. A number of those brick-and-mortar facilities have actually considering that been shuttered over claims of illegal gaming.

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

Now, Wallach argues, social sweeps casinos must face comparable analysis.

'These distinctions are not approximate,' Wallach stated of social sweeps casinos. 'They have actually repeatedly been cited by courts and state chief law officer as essential consider identifying that a sweepstakes promo was in reality a guise for prohibited sports betting.'

Among the gambling establishment industry's leading trade organizations, the American Gaming Association, is now pressing lawmakers to investigate sweepstakes operators and, in some cases, enact new legislation on the concern.

'Consumers are being deprived of protections and states are passing up substantial tax and earnings opportunities as this gambling changes that performed through regulated channels,' read a well-circulated AGA memo.

And then there are the plaintiffs who have taken legal action against social gambling establishments in more than a dozen states.

Sweepstakes casino operators paid a combined $14.2 million in four different cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile 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 newest lawsuit, which is mostly comparable to its predecessors, New York state homeowners Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'unlawful gambling business. '

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

'We normally do not discuss matters before the courts,' a VGW spokesperson informed DailyMail.com through e-mail. 'However, we note that this claim has actually only simply been filed with the court and VGW has actually not been formally served.

'We have full confidence in our compliance with all laws and regulations where we operate, and stay positive about the future,' the representative continued. 'We continue to offer our free-to-play video games throughout the majority of The United States and Canada, as we have for more than a decade, creating not just terrific video games, user experiences and home entertainment, however likewise guaranteeing this is done safely, responsibly and at the highest level of standards.

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

The concerns in between traditional online gaming and sweepstakes casinos could show 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 traditional video gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking unlawful sports betting wagering 'sweeps' websites while at the same time the leagues wish to predict a strong position versus unlawful gaming - particularly when trying to tamp down the occasional sports betting scandal,' Glaser informed DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter received a lifetime ban from the NBA over claims he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes casinos.

Together with VGW, Apple and Google are being demanded hosting supposedly prohibited sports betting websites

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

'I 'd expect that a league crackdown on professional athletes backing sweepstakes sites is a matter of when, not if,' Glaser included.

Neither an NBA spokesperson nor the players' agents reacted to DailyMail.com's requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also disregarded to react to DailyMail.com emails.

Asked if their celebrity endorsers have an obligation to describe to clients the distinctions and similarities between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that requires to be done.

'We have full self-confidence in our influencer and ambassadorial collaborations, and our service practices more broadly,' the representative said. 'Some of our values are" our gamers precede" and" we do what's right", and we put our values at the core of everything we do.'

Glaser, an outspoken opponent of sweepstakes sites, sees things in a different way.

'Celebrities who lend their names to shady illegal gambling sites are, at a minimum, putting their credibilities at danger along with courting civil and class actions by consumers who allege damage,' Glaser stated. 'There is also some risk that state regulators and state chief law officers rope star endorsers into enforcement efforts for facilitating unlawful sports betting.'

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