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

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 questionable websites offering both free casino-style video games and financially rewarding prizes, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are simply two cogs in the multibillion-dollar industry that now discovers itself besieged by lawsuits. In the eyes of numerous gaming corporations, not to point out claim complainants and state regulators, sweepstakes gambling establishments act as traditional gambling establishments, just without the oversight, consumer defenses and tax laws. So not only can they avoid the high 24-percent federal gambling levy, but sweepstakes operators aren't subject to regulative hurdles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the company faces accusations of unlawful gaming in a New York lawsuit that claims VGW uses celeb endorsers to 'create a veneer of legitimacy' around its item. (See VGW's statement below)

'I'm unsure" if you do not trust us, you can rely on Paris Hilton" is a winning message for business operating 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, informed DailyMail.com.

Sweepstakes endorsers include a variety of celebs from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom provide any distinctions in between conventional gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among lots of sweepstakes gambling establishments discovered online
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Ryan Seacrest prompts fans to play at Chumba Casino, where many - however not all - games are complimentary

Drake has an offer with social sweeps gambling establishment, Stake, that he routinely promotes on social media

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Instead, ads typically focus around the social element of the casinos, while leaving out the capacity for real gambling losses.

Others tempt customers with pledges of prizes. One such operator, Stake, ran a social media advertisement flaunting Drake's automobiles, airplanes and estates before pivoting to video of the rapper playing online casino-style games.

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

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

The discrepancy between sports betting sites and social or sweepstakes gambling establishments is a bit complicated, however 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), discussed its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA data, most of the players on social-sweepstakes casinos are sports betting totally free.

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

Social gambling establishments offer customers a possibility to play casino-style video games with friends. Players have the option to buy valueless currency typically described as 'gold coins,' which can not be exchanged for genuine money, however can be used to open different features within the games.
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But within the world of social gambling establishments exists sweepstakes gaming, allowing consumers to acquire other currency called '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 City. 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 value.

The Philadelphia 76ers' Paul George is seen promoting a Global Poker event
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Social sweeps casino Stake ran an ad flaunting Drake's automobiles, 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 however 7 states, which has helped to sustain the appeal of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, allow consumers to submit mail-in demands for free sweeps coins, supplied the gamers follow painfully particular guidelines. What's more, players are often rewarded with sweeps coins merely for up, therefore providing a reason to try their hands at any variety of casino games for a chance to win - or lose - real money.

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

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

'Social sweepstakes games are just a type of online entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is needed to dip into social gambling establishments with sweepstakes rewards. Consumers never ever need to spend for an opportunity to win rewards. That absence of a purchase requirement - or" factor to consider" - is a crucial difference in between social sweeps and traditional online gambling websites like gambling establishments.'

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

And without a purchase requirement, or 'factor to consider', the video game itself doesn't meet the meaning of sports betting in the US.

'Sweepstakes are a long-standing approach for promoting all sort of everyday companies in the United States, whatever from burgers to publication memberships to coffee and home improvement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are routinely used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting industry experts, that argument does not cut it.

For starters, video gaming attorney Daniel Wallach mentions, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a well-defined beginning and end, therefore recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote genuine items like fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're usually not tied to casino-style games of chance,' Wallach told DailyMail.com. 'They're just money giveaways.

'The sweepstakes [gambling establishments] have none of the qualities typically related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes casinos provide" casino-like" payments, usually 80 percent or more of revenues, whereas the common payout percentage for a momentary promotional sweepstakes is a trivial share of the income earned by the company [usually less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the web cafes that emerged in Florida, using clients the opportunity to play casino-style games for genuine prizes. A lot of those brick-and-mortar facilities have since been shuttered over claims of unlawful gaming.

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

Now, Wallach argues, social sweeps gambling establishments must face similar analysis.

'These differences are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have actually repeatedly been mentioned by courts and state lawyer generals as essential factors in figuring out that a sweepstakes promo was in reality a guise for prohibited gaming.'

One of the casino industry's leading trade organizations, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, in some cases, enact new legislation on the problem.

'Consumers are being denied of defenses and states are giving up considerable tax and revenue chances as this sports betting replaces that conducted through managed channels,' checked out a well-circulated AGA memo.

And then there are the complainants who have sued social gambling establishments in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action suit, saying the settlement was made to avoid legal costs and continued litigation.

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

In the most recent claim, which is mainly similar to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is described in the filing as an 'prohibited gambling business. '

Apple and Google have also 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 typically do not discuss matters before the courts,' a VGW spokesperson told DailyMail.com through e-mail. 'However, we note that this claim has only just been submitted with the court and VGW has actually not been officially 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 provide our free-to-play video games throughout most of North America, as we have for more than a years, producing not just terrific 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 repeat that class actions and other lawsuits and arbitrations are relatively common across the online social games industry (and the US more broadly), and our standard practice is that we intend to strongly safeguard any claim which may be brought versus us.'

The issues in between conventional online gambling and sweepstakes gambling establishments could prove bothersome for some celeb endorsers.

Towns, a star center with the Knicks, and the 76ers' George both endorse VGW's Global Poker brand 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' sites while at the exact same time the leagues wish to predict a strong stance versus illegal gaming - especially when attempting to tamp down the occasional gambling scandal,' Glaser informed DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter got a life time restriction from the NBA over claims he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes casinos.

Together with VGW, Apple and Google are being taken legal action against for hosting allegedly prohibited sports betting websites

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

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

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 overlooked to react to DailyMail.com emails.

Asked if their star endorsers have a responsibility to explain to customers the differences and similarities in between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that needs to be done.

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

Glaser, an outspoken opponent of sweepstakes sites, sees things differently.
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'Celebrities who lend their names to dubious prohibited sports betting websites are, at a minimum, putting their reputations at threat along with courting civil and class actions by consumers who allege damage,' Glaser stated. 'There is likewise some risk that state regulators and state chief law officers rope celebrity endorsers into enforcement efforts for helping with illegal gaming.'

New YorkNBADrakeParis Hilton
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