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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 unlawful gaming.
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No, they weren't personally in presence, however the world-famous celebs were conspicuously consisted of in a slide discussion on social and sweepstakes casinos - the questionable sites offering both complimentary casino-style video games and financially rewarding rewards, such as money, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet totally free,' 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 industry that now finds itself besieged by claims. In the eyes of many gaming corporations, not to discuss lawsuit plaintiffs and state regulators, sweepstakes casinos function as traditional gambling establishments, just without the oversight, consumer securities and tax laws. So not only can they prevent the high 24-percent federal gambling levy, however sweepstakes operators aren't based on regulatory difficulties 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 prohibited sports betting in a New York suit that claims VGW utilizes celeb endorsers to 'produce a veneer of authenticity' around its product. (See VGW's declaration below)

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

Sweepstakes endorsers include a range of celebs from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom offer any differences between conventional gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among many sweepstakes gambling establishments found online

Ryan Seacrest advises fans to play at Chumba Casino, where many - but not all - video games are complimentary

Drake has a handle social sweeps casino, Stake, that he routinely touts on social media

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Instead, advertisements normally center around the social aspect of the gambling establishments, while leaving out the capacity for real gaming losses.

Others tempt consumers with guarantees of prizes. One such operator, Stake, ran a social networks ad showing off Drake's cars and trucks, planes and mansions before rotating to footage of the rap artist playing online casino-style games.

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

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

The discrepancy in between gaming sites and social or sweepstakes casinos is a bit complex, but operators of the latter insist they're not included with the former.

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

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

Social casinos provide consumers a possibility to play casino-style games with good friends. Players have the option to buy worthless currency often referred to as 'gold coins,' which can not be exchanged genuine cash, however can be used to unlock different functions within the games.

But within the world of social casinos exists sweepstakes video gaming, permitting customers to acquire other currency known as 'sweeps coins' that can be exchanged for cash or other rewards.

And therein lies the potential for financial losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York City. One player told the Washington Post he lost more than $100,000 on sweepstakes casinos 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 a Global Poker event

Social sweeps casino Stake ran an advertisement displaying Drake's vehicles, aircrafts 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 7 states, which has helped to sustain the popularity of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, permit consumers to send mail-in ask for complimentary sweeps coins, supplied the gamers follow painfully particular guidelines. What's more, players are typically rewarded with sweeps coins merely for signing up, thus providing a reason to try their hands at any number of gambling establishment video games for an opportunity to win - or lose - genuine money.

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

According to the stakeholders, their product is the complimentary casino-style gaming, and the real-stakes competitors is just a method of promoting their bread and butter.

'Social sweepstakes games are merely a type of online entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is required to play at social casinos with sweepstakes rewards. Consumers never ever have to pay for an opportunity to win rewards. That absence of a purchase requirement - or" consideration" - is an essential difference in between social sweeps and standard online sports betting websites like .'

Think of the method that McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and fries that offer them the chance to win rewarding prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the video game itself does not meet the meaning of gaming in the US.
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'Sweepstakes are an enduring technique for promoting all kinds of daily companies in the United States, everything from burgers to publication memberships to coffee and home enhancement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are frequently utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling industry experts, that argument doesn't cut it.

For starters, video gaming lawyer Daniel Wallach points out, McDonald's Monopoly video game does not run forever. Rather, it has a well-defined start and end, therefore recommending the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being utilized to promote real products like fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're typically not connected to casino-style games of chance,' Wallach told DailyMail.com. 'They're just money free gifts.

'The sweepstakes [casinos] possess none of the characteristics frequently related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos use" casino-like" payments, usually 80 percent or more of earnings, whereas the typical payment portion for a short-lived promotional sweepstakes is a trivial share of the income earned by the company [normally less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the web coffee shops that sprang up in Florida, providing customers the opportunity to play casino-style video games for real rewards. A lot of those brick-and-mortar establishments have given that been shuttered over accusations of illegal gaming.

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

Now, Wallach argues, social sweeps casinos need to face comparable scrutiny.

'These differences are not arbitrary,' Wallach stated of social sweeps casinos. 'They have consistently been cited by courts and state attorney general of the United States as crucial consider identifying that a sweepstakes promotion was in truth a guise for illegal gambling.'

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

'Consumers are being deprived of securities and states are forgoing substantial tax and earnings opportunities as this gaming replaces that carried out through managed channels,' read a well-circulated AGA memo.

And then there are the plaintiffs 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 concurred to pay $11.75 million in one class-action lawsuit, stating the settlement was made to prevent legal expenses and continued lawsuits.
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Michael Phelps has signed a deal with the VGW Group, which owns Global Poker

In the current lawsuit, which is largely similar to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited gambling business. '

Apple and Google have actually also been called as defendants in claims for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com's request for comment.

'We usually do not discuss matters before the courts,' a VGW spokesperson told DailyMail.com through e-mail. 'However, we keep in mind that this claim has only simply been submitted with the court and VGW has actually not been officially 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 offer our free-to-play games throughout the majority of North America, as we have for more than a years, developing not only excellent games, user experiences and entertainment, however also ensuring this is done securely, responsibly and at the greatest level of standards.

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

The issues between standard online gaming and sweepstakes gambling establishments might prove troublesome for some star 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 conventional gaming titans like FanDuel and DraftKings.

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

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

Together with VGW, Apple and Google are being taken legal action against for hosting apparently unlawful gambling websites

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

'I 'd anticipate that a league crackdown on athletes backing sweepstakes websites refers when, not if,' Glaser included.

Neither an NBA spokesperson nor the gamers' representatives reacted to DailyMail.com's requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise disregarded to react to DailyMail.com e-mails.

Asked if their celeb endorsers have a duty to describe to consumers the distinctions and similarities between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that requires to be done.

'We have full 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 challenger of sweepstakes sites, sees things in a different way.

'Celebrities who lend their names to shady illegal gaming sites are, at a minimum, putting their reputations at threat in addition to courting civil and class actions by consumers who declare harm,' Glaser said. 'There is likewise some risk that state regulators and state attorneys general rope celeb endorsers into enforcement efforts for facilitating unlawful gaming.'

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