The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on prohibited sports betting.

No, they weren't personally in attendance, however the world-famous celebrities were conspicuously consisted of in a slide presentation on social and sweepstakes gambling establishments - the controversial websites offering both totally free casino-style video 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 anybody can 'play for complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The websites are just 2 cogs in the multibillion-dollar market that now discovers itself besieged by lawsuits. In the eyes of numerous video gaming corporations, not to mention lawsuit complainants and state regulators, sweepstakes casinos serve as conventional casinos, just without the oversight, customer defenses and tax laws. So not just can they prevent the steep 24-percent federal sports betting levy, but sweepstakes operators aren't subject to regulatory obstacles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings last year alone. Now the company faces allegations of prohibited gaming in a New york city suit that declares VGW utilizes star endorsers to 'produce a veneer of authenticity' around its item. (See VGW's declaration listed below)
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'I'm uncertain" if you don't trust us, you can trust Paris Hilton" is a winning message for companies operating multibillion-dollar illegal operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers include a variety of celebrities 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 offer any distinctions between standard gambling and sweepstakes play.

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

Ryan Seacrest urges fans to dip into Chumba Casino, where many - but not all - games are free

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

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Instead, ads normally center around the social aspect of the casinos, while leaving out the capacity for real gambling losses.

Others tempt clients with pledges of prizes. One such operator, Stake, ran a social media advertisement displaying Drake's cars, planes and estates before pivoting to video footage of the rap artist playing online casino-style video games.

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

Another caption discussed: 'Because I never ever quit.'

The discrepancy in between sports betting sites and social or sweepstakes gambling establishments 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), explained its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA information, most of the gamers on social-sweepstakes gambling establishments are playing for complimentary.

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

Social casinos use customers a possibility to play casino-style video games with good friends. Players have the option to buy worthless currency typically referred to as 'gold coins,' which can not be exchanged for genuine cash, however can be used to unlock numerous features within the games.

But within the world of social gambling establishments exists sweepstakes video gaming, permitting consumers to get other currency known as 'sweeps coins' that can be exchanged for cash 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. 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 a Global Poker occasion

Social sweeps gambling establishment Stake ran an advertisement revealing off Drake's vehicles, aircrafts and mansions
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Karl-Anthony Towns of the New York Knicks is another NBA star plugging VGW's Global Poker

Traditional online gambling establishments are banned in all however 7 states, which has assisted to fuel the popularity of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes websites, which do not require generally require recognition. However, websites like Chumba will request IDs from players trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, allow consumers to send mail-in demands for totally free sweeps coins, offered the players follow painfully specific guidelines. What's more, gamers are typically rewarded with sweeps coins just for signing up, thus offering them a factor to attempt their hands at any variety of gambling establishment video games for a chance to win - or lose - real cash.

So why are sweepstakes websites enabled to operate 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 competitors is just a means of promoting their support.

'Social sweepstakes video games are merely a form of online home entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is needed to play at social gambling establishments with sweepstakes rewards. Consumers never have to pay for an opportunity to win rewards. That lack of a purchase requirement - or" consideration" - is an essential distinction in between social sweeps and conventional online gaming websites like gambling establishments.'

Think about the method that McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're buying hamburgers and fries that use them the opportunity to win profitable prizes, such as a $1 million jackpot.
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And without a purchase requirement, or 'consideration', the game itself doesn't meet the meaning of sports betting in the US.

'Sweepstakes are an enduring approach for promoting all sort of everyday companies in the United States, whatever from hamburgers to publication subscriptions to coffee and home improvement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions 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 sports betting market experts, that argument doesn't cut it.

For starters, gaming attorney Daniel Wallach explains, McDonald's Monopoly game doesn't run forever. Rather, it has a distinct start and end, thus suggesting the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being used to promote real products like french fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're typically not connected to casino-style games of opportunity,' Wallach informed DailyMail.com. 'They're just cash free gifts.

'The sweepstakes [gambling establishments] have none of the characteristics frequently associated with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments provide" casino-like" payments, generally 80 percent or more of incomes, whereas the normal payment percentage for a short-lived advertising sweepstakes is a trivial share of the profits made by the business [normally less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the internet cafes that emerged in Florida, providing clients the possibility to play casino-style video games for genuine rewards. A lot of those brick-and-mortar facilities have actually considering that been shuttered over claims of prohibited gaming.

DJ Khaled is amongst numerous star spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps gambling establishments ought to face similar scrutiny.

'These differences are not approximate,' Wallach said of social sweeps gambling establishments. 'They have repeatedly been pointed out by courts and state attorney generals as crucial aspects in identifying that a sweepstakes promotion was in truth a guise for prohibited sports betting.'

One of the casino industry's leading trade companies, the American Gaming Association, is now pressing lawmakers to investigate sweepstakes operators and, sometimes, enact new legislation on the issue.

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

And after that there are the plaintiffs who have actually taken legal action against social casinos in more than a dozen states.
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Sweepstakes casino operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action lawsuit, saying the settlement was made to prevent legal expenses and continued litigation.

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

In the current lawsuit, which is largely comparable to its predecessors, New York state residents Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'unlawful gambling enterprise. '

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

'We generally don't comment on matters before the courts,' a VGW spokesperson informed DailyMail.com through 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 spokesperson continued. 'We continue to use our free-to-play video games across many of The United States and Canada, as we have for more than a decade, producing not just excellent video games, user experiences and home entertainment, but also guaranteeing this is done safely, properly and at the greatest level of requirements.

'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 basic practice is that we mean to vigorously defend any claim which may be brought against us.'
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The concerns in between traditional online gambling and sweepstakes gambling establishments 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 while the NBA is partnered with standard gaming titans like FanDuel and DraftKings.

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

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

In addition to VGW, Apple and Google are being demanded hosting presumably illegal gambling sites

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

'I 'd expect that a league crackdown on athletes endorsing sweepstakes websites refers when, not if,' Glaser included.
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Neither an NBA representative nor the players' agents 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 emails.

Asked if their celebrity endorsers have a responsibility to describe to customers the distinctions and similarities in between iGaming and sweepstakes gambling establishments, 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 said. 'Some of our worths are" our players come first" and" we do what's right", and we put our worths at the core of whatever we do.'

Glaser, an outspoken opponent of sweepstakes sites, sees things differently.

'Celebrities who provide their names to shady illegal gambling websites are, at a minimum, putting their reputations at danger in addition to courting civil and class actions by customers who allege damage,' Glaser stated. 'There is likewise some danger that state regulators and state lawyers general rope star endorsers into enforcement efforts for helping with prohibited sports betting.'

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