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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.

No, they weren't personally in presence, however the world-famous stars were conspicuously consisted of in a slide discussion on social and sweepstakes gambling establishments - the controversial websites offering both free casino-style games and rewarding prizes, such as money, 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.

The sites are simply 2 cogs in the multibillion-dollar industry that now finds itself besieged by suits. In the eyes of numerous video gaming corporations, not to discuss claim complainants and state regulators, sweepstakes gambling establishments function as traditional gambling establishments, just without the oversight, consumer protections and tax laws. So not only can they prevent the high 24-percent federal gaming levy, however sweepstakes operators aren't based on regulatory obstacles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the company faces accusations of unlawful sports betting in a New York suit that claims VGW uses celebrity endorsers to 'produce a veneer of legitimacy' around its item. (See VGW's declaration below)

'I'm uncertain" if you don't trust us, you can trust Paris Hilton" is a winning message for companies operating multibillion-dollar prohibited operations out of places 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 range of celebrities from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom provide any in between conventional gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of lots of sweepstakes gambling establishments discovered online
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Ryan Seacrest advises fans to dip into Chumba Casino, where numerous - however not all - video games are free

Drake has a handle social sweeps gambling establishment, Stake, that he routinely promotes on social networks

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Instead, ads generally center around the social element of the gambling establishments, while omitting the capacity for real sports betting losses.

Others tempt consumers with guarantees of rewards. One such operator, Stake, ran a social media advertisement displaying Drake's vehicles, 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?' read the very first caption on the screen.

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

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

A representative for an industry trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competitors with online gambling establishments 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 buy,' the SPGA representative told DailyMail.com. 'The minority of clients who make purchases do so in quantities far smaller than the normal deposit or bet size at real-money online sports betting websites.'

Social gambling establishments offer consumers an opportunity to play casino-style video games with buddies. Players have the option to purchase worthless currency often referred to as 'gold coins,' which can not be exchanged for real money, however can be used to unlock numerous functions within the video games.

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

And therein lies the capacity for financial losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York City. One player informed the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the previous year after continuing to purchase more coins in pursuit of cash and other things of value.

The Philadelphia 76ers' Paul George is seen promoting a Global Poker occasion
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Social sweeps gambling establishment Stake ran an ad revealing off 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 gambling establishments are banned in all but seven states, which has actually helped to sustain the popularity of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, permit clients to submit mail-in ask for free sweeps coins, offered the players follow painfully particular guidelines. What's more, gamers are frequently rewarded with sweeps coins simply for registering, thereby offering them a reason to try their hands at any variety of casino video games for a chance to win - or lose - genuine money.

So why are sweepstakes sites permitted to operate in 48 states, while online gambling establishments are banned in all however 7?

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

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

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

And without a purchase requirement, or 'factor to consider', the video game itself doesn't fulfill the definition of gambling in the US.

'Sweepstakes are an enduring technique for promoting all type of daily businesses in the United States, everything from hamburgers to publication memberships to coffee and home improvement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are regularly utilized by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous sports betting industry experts, that argument does not cut it.
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For starters, gaming lawyer Daniel Wallach points out, McDonald's Monopoly video game does not run indefinitely. Rather, it has a distinct beginning and end, therefore suggesting the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being utilized to promote real items like french fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [gambling establishments] possess none of the qualities frequently connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments use" casino-like" payouts, typically 80 percent or more of earnings, whereas the typical payout percentage for a short-lived advertising sweepstakes is a trivial share of the revenue earned by the business [generally less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the web coffee shops that sprang up in Florida, offering consumers the chance to play casino-style games for genuine prizes. Much of those brick-and-mortar facilities have because been shuttered over allegations of prohibited gaming.

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

Now, Wallach argues, social sweeps casinos need to deal with comparable analysis.

'These differences are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been mentioned by courts and state chief law officer as crucial consider figuring out that a sweepstakes promo was in truth a guise for prohibited gaming.'

One of the gambling establishment industry's leading trade companies, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, in some cases, enact new legislation on the problem.

'Consumers are being deprived of defenses and states are giving up considerable tax and profits chances as this gaming replaces that conducted 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 casino operators paid a combined $14.2 million in four separate cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW consented 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 most current suit, which is mostly comparable to its predecessors, New York state locals 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 'illegal gambling business. '

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

'We generally do not comment on matters before the courts,' a VGW representative told DailyMail.com via e-mail. 'However, we keep in mind that this claim has only just been submitted with the court and VGW has actually not been officially served.

'We have complete self-confidence in our compliance with all laws and policies where we operate, and remain positive 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 years, creating not only excellent video games, user experiences and entertainment, however also ensuring this is done safely, responsibly and at the greatest level of requirements.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are reasonably typical across the online social games industry (and the US more broadly), and our basic practice is that we intend to vigorously protect any claim which may be brought against us.'

The issues between standard online sports betting and sweepstakes gambling establishments could prove problematic for some celeb endorsers.
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Towns, a star center with the Knicks, and the 76ers' George both endorse VGW's Global Poker brand name while the NBA is partnered with standard gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking illegal sports betting wagering 'sweeps' sites while at the exact same time the leagues desire to forecast a strong position versus prohibited gambling - specifically when trying to tamp down the periodic gambling scandal,' Glaser informed DailyMail.com.

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

Together with VGW, Apple and Google are being sued for hosting allegedly unlawful gambling websites

Regardless, Glaser sees sweepstakes gambling establishments as a significant problem for leagues such as the NBA.

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

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

Asked if their celebrity endorsers have a responsibility to describe to clients the differences and resemblances between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is absolutely nothing more that requires to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the spokesperson stated. 'Some of our values 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 challenger of sweepstakes websites, sees things differently.

'Celebrities who lend their names to dubious prohibited gaming websites are, at a minimum, putting their credibilities at danger as well as courting civil and class actions by consumers who declare damage,' Glaser stated. 'There is likewise some risk that state regulators and state lawyers general rope celebrity endorsers into enforcement efforts for assisting in unlawful sports betting.'

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