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

No, they weren't personally in attendance, however the world-famous celebrities were conspicuously consisted of in a slide discussion on social and sweepstakes gambling establishments - the questionable websites using both free casino-style video games and rewarding rewards, such as cash, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are just two cogs in the multibillion-dollar industry that now finds itself besieged by suits. In the eyes of lots of video gaming corporations, not to point out suit plaintiffs and state regulators, sweepstakes casinos function as traditional gambling establishments, only without the oversight, consumer securities and tax laws. So not just can they avoid the high 24-percent federal sports betting levy, however sweepstakes operators aren't subject to regulatory hurdles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits last year alone. Now the company faces accusations of unlawful gambling in a New york city suit that claims VGW uses celeb endorsers to 'develop a veneer of legitimacy' around its product. (See VGW's statement below)

'I'm unsure" 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 consist of a variety of stars from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions in between conventional sports betting and sweepstakes play.

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

Ryan Seacrest prompts fans to play at Chumba Casino, where lots of - but not all - video games are free

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

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Instead, advertisements usually focus around the social element of the casinos, while leaving out the capacity for real gambling losses.
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Others tempt clients with guarantees of rewards. One such operator, Stake, ran a social media ad flaunting Drake's automobiles, planes and estates before rotating to footage 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 discussed: 'Because I never quit.'

The discrepancy between gambling sites and social or sweepstakes gambling establishments is a bit complex, but operators of the latter insist they're not included with the previous.

A representative 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, the majority of the gamers on social-sweepstakes casinos are playing for complimentary.

'Most social sweeps consumers never ever buy,' the SPGA spokesperson informed DailyMail.com. 'The minority of consumers who make purchases do so in quantities far smaller sized than the typical deposit or bet size at real-money online sports betting sites.'

Social casinos offer customers a chance to play casino-style games with friends. Players have the alternative to purchase valueless currency often described as 'gold coins,' which can not be exchanged genuine cash, however can be utilized to open various functions within the games.

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

And therein lies the capacity for monetary losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York City. One gamer 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 value.

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

Social sweeps gambling establishment Stake ran an advertisement displaying Drake's vehicles, planes and estates

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

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

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

Many websites, like the crypto-compatible Stake, allow clients to send mail-in requests for totally free sweeps coins, provided the gamers follow painfully particular guidelines. What's more, players are frequently rewarded with sweeps coins simply for signing up, thus providing them a factor to try their hands at any variety of casino video games for a possibility to win - or lose - real cash.

So why are sweepstakes websites enabled to run in 48 states, while online casinos are prohibited in all however 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 support.

'Social sweepstakes video games are merely a form of online home entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is required to dip into social casinos with sweepstakes prizes. Consumers never ever have to pay for an opportunity to win rewards. That absence of a purchase requirement - or" consideration" - is a vital distinction in between social sweeps and conventional online sports betting sites like gambling establishments.'

Consider the manner in which McDonald's uses its yearly Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and french fries that use them the chance to win profitable rewards, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the video game itself doesn't satisfy the meaning of gambling in the US.

'Sweepstakes are an enduring approach for promoting all sort of everyday organizations in the United States, everything from hamburgers to publication memberships to coffee and home improvement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are regularly used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling market experts, that argument doesn't cut it.
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For starters, video gaming lawyer Daniel Wallach points out, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a well-defined start and end, thus recommending the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being utilized to promote genuine products like fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're typically not tied to casino-style games of chance,' Wallach told DailyMail.com. 'They're simply cash giveaways.

'The sweepstakes [casinos] possess none of the attributes commonly connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments use" casino-like" payments, generally 80 percent or more of incomes, whereas the typical payout portion for a short-lived promotional sweepstakes is an insignificant share of the earnings earned by the company [typically less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the internet coffee shops that sprang up in Florida, providing consumers the possibility to play casino-style video games for real rewards. Much of those brick-and-mortar establishments have since been shuttered over allegations of unlawful gaming.

DJ Khaled is among several celebrity spokespeople for VGW's Global Poker brand

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

'These distinctions are not approximate,' Wallach said of social sweeps casinos. 'They have consistently been cited by courts and state chief law officer as essential consider figuring out that a sweepstakes promotion was in reality a guise for unlawful gambling.'

One of the gambling establishment industry's leading trade companies, the American Gaming Association, is now pushing lawmakers to examine sweepstakes operators and, in many cases, enact brand-new legislation on the issue.

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

And after that there are the plaintiffs who have sued social casinos in more than a dozen states.

Sweepstakes casino operators paid a combined $14.2 million in 4 separate cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action claim, stating the settlement was made to avoid legal expenses and continued lawsuits.

Michael Phelps has signed a handle the VGW Group, which owns Global Poker
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In the most recent claim, which is mainly similar to its predecessors, New York state homeowners Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is described in the filing as an 'unlawful gambling enterprise. '

Apple and Google have actually also been called as accuseds in suits for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's demand for remark.

'We usually don't discuss matters before the courts,' a VGW spokesperson told DailyMail.com by means of e-mail. 'However, we keep in mind that this claim has actually only just been submitted with the court and VGW has not been formally served.

'We have full self-confidence in our compliance with all laws and regulations where we run, and remain confident about the future,' the spokesperson continued. 'We continue to use our free-to-play games across the majority of The United States and Canada, as we have for more than a years, not just terrific video games, user experiences and home entertainment, however likewise ensuring this is done securely, responsibly and at the highest level of requirements.

'More broadly, we 'd restate that class actions and other litigations and arbitrations are fairly common throughout the online social games market (and the US more broadly), and our standard practice is that we plan to vigorously defend any claim which might be brought versus us.'

The problems in between conventional 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 while the NBA is partnered with traditional video gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking prohibited sports betting wagering 'sweeps' websites while at the very same time the leagues wish to forecast a strong position versus prohibited sports betting - particularly when attempting to tamp down the periodic gambling 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 claims he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes casinos.
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In addition to VGW, Apple and Google are being sued for hosting supposedly illegal sports betting websites

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

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

Neither an NBA representative nor the gamers' representatives reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise ignored to react to DailyMail.com emails.

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

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

Glaser, an outspoken opponent of sweepstakes websites, sees things in a different way.
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'Celebrities who provide their names to dubious illegal sports betting sites are, at a minimum, putting their credibilities at risk along with courting civil and class actions by customers who declare damage,' Glaser stated. 'There is also some danger that state regulators and state attorneys general rope celeb endorsers into enforcement efforts for assisting in unlawful gambling.'

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