The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances 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 notably consisted of in a slide presentation on social and sweepstakes gambling establishments - the questionable websites offering both complimentary casino-style games and profitable prizes, such as cash, 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.
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The sites are simply 2 cogs in the multibillion-dollar industry that now finds itself besieged by suits. In the eyes of many gaming corporations, not to mention suit complainants and state regulators, sweepstakes casinos function as traditional gambling establishments, only without the oversight, consumer protections and tax laws. So not just can they prevent the steep 24-percent federal sports betting levy, however sweepstakes operators aren't subject to regulatory obstacles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings last year alone. Now the company deals with accusations of illegal sports betting in a New york city suit that claims VGW utilizes celebrity endorsers to 'develop a veneer of legitimacy' around its item. (See VGW's statement listed below)

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

Sweepstakes endorsers consist of a range 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 use any differences between traditional gaming and sweepstakes play.

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

Ryan Seacrest advises fans to dip into Chumba Casino, where numerous - but not all - games are totally free

Drake has an offer with social sweeps gambling establishment, Stake, that he frequently touts on social media

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Instead, advertisements typically center around the social element of the casinos, while leaving out the potential for real gaming losses.

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

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

Another caption described: 'Because I never ever gave up.'

The inconsistency in between sports betting websites and social or sweepstakes gambling establishments is a bit complicated, but operators of the latter insist they're not involved with the former.

A spokesperson for a market trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA information, most of the gamers on social-sweepstakes casinos are playing for totally free.

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

Social gambling establishments offer customers a possibility to play casino-style video games with good friends. Players have the alternative to buy valueless currency typically referred to as 'gold coins,' which can not be exchanged genuine money, but can be utilized to open different features within the video games.

But within the world of social casinos exists sweepstakes video gaming, enabling customers to obtain other currency called 'sweeps coins' that can be exchanged for cash or other prizes.

And therein lies the potential for monetary losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York City. One gamer informed 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 money and other things of worth.

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

Social sweeps casino Stake ran an advertisement flaunting Drake's cars and trucks, 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 banned in all but seven states, which has helped to sustain the appeal of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, permit consumers to send mail-in ask for totally free sweeps coins, supplied the gamers follow painfully particular directions. What's more, players are typically rewarded with sweeps coins merely for registering, thus providing a factor to attempt their hands at any variety of gambling establishment video games for a chance to win - or lose - genuine cash.

So why are sweepstakes sites allowed to operate in 48 states, while online casinos are prohibited in all however 7?

According to the stakeholders, their item is the free casino-style video gaming, and the real-stakes competitors is just a way of promoting their bread and butter.

'Social sweepstakes games are merely a form of online entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is required to dip into social casinos with sweepstakes prizes. Consumers never have to spend for a chance to win rewards. That absence of a purchase requirement - or" consideration" - is an important difference in between social sweeps and traditional online sports betting sites like casinos.'

Consider the way that McDonald's uses its yearly Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're buying hamburgers and fries that use them the opportunity to win profitable prizes, such as a $1 million prize.

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

'Sweepstakes are an enduring method for promoting all type of everyday services in the United States, whatever from hamburgers to publication memberships to coffee and home enhancement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are regularly used by a who's who of family 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 lawyer Daniel Wallach points out, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a well-defined start and end, consequently suggesting the sweepstakes is not the fast-food giant's primary product. 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 tied to casino-style games of chance,' Wallach told DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [gambling establishments] have none of the attributes typically associated with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments offer" casino-like" payouts, normally 80 percent or more of profits, whereas the typical payout percentage for a momentary advertising sweepstakes is an unimportant share of the income earned by the company [generally less than one percent]'

Wallach is fast to liken the online social sweeps casinos to the web cafes that sprang up in Florida, offering clients the chance to play casino-style games for real prizes. A number of those brick-and-mortar establishments have considering that been shuttered over accusations of prohibited gambling.

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

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

'These distinctions are not approximate,' Wallach said of social sweeps gambling establishments. 'They have actually repeatedly been mentioned by courts and state chief law officer as key elements in identifying that a sweepstakes promo remained in reality a guise for illegal gambling.'

One of the casino industry's leading trade organizations, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, in many cases, enact brand-new legislation on the concern.

'Consumers are being deprived of defenses and states are passing up significant tax and earnings chances as this gambling changes that performed through managed channels,' read a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in four different cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW accepted 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 most recent suit, which is mostly similar to its predecessors, New York state homeowners Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is explained in the filing as an 'illegal sports betting business. '

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

'We generally do not discuss matters before the courts,' a VGW spokesperson 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 formally served.

'We have complete self-confidence in our compliance with all laws and regulations where we run, and stay confident about the future,' the representative continued. 'We continue to offer our free-to-play games across the majority of North America, as we have for more than a decade, producing not only terrific video games, user experiences and home entertainment, but also ensuring this is done securely, responsibly and at the greatest level of requirements.

'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are fairly common across the online social games market (and the US more broadly), and our basic practice is that we plan to strongly protect any claim which may be brought against us.'

The problems in between conventional online gambling and sweepstakes gambling establishments could show bothersome for some celeb 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 conventional video gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking unlawful sports betting 'sweeps' websites while at the exact same time the leagues wish to predict a strong stance versus prohibited sports betting - particularly when trying to tamp down the periodic sports betting scandal,' Glaser informed DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter got a lifetime restriction from the NBA over allegations he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes gambling establishments.

Together with VGW, Apple and Google are being taken legal action against for hosting allegedly prohibited gambling sites

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

'I 'd expect that a league crackdown on athletes endorsing sweepstakes sites refers when, not if,' Glaser added.

Neither an NBA spokesperson nor the players' agents reacted to DailyMail.com's demands for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also disregarded to respond to DailyMail.com e-mails.

Asked if their celeb endorsers have a duty to discuss to clients the differences and resemblances in between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that needs to be done.

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

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

'Celebrities who provide their names to shady illegal are, at a minimum, putting their credibilities at danger along with courting civil and class actions by customers who allege damage,' Glaser said. 'There is likewise some threat that state regulators and state lawyers general rope celeb endorsers into enforcement efforts for facilitating illegal gambling.'

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