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The smiling faces of Paris Hilton and made surprise looks before the Louisiana Senate for Friday's hearing on unlawful gaming.
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No, they weren't personally in attendance, but the world-famous celebs were conspicuously consisted of in a slide discussion on social and sweepstakes gambling establishments - the controversial websites using both free casino-style video games and lucrative prizes, such as cash, 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 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 plaintiffs and state regulators, sweepstakes gambling establishments function as standard gambling establishments, only without the oversight, consumer securities and tax laws. So not only can they prevent the high 24-percent federal gambling levy, but sweepstakes operators aren't subject to regulatory difficulties like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the company deals with accusations of illegal sports betting in a New york city lawsuit that declares VGW uses star endorsers to 'produce a veneer of authenticity' around its product. (See VGW's statement listed below)

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

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

Paris Hilton is seen plugging Wow Vegas, one of numerous sweepstakes casinos discovered online

Ryan Seacrest urges fans to play at Chumba Casino, where many - but not all - games are free

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

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Instead, advertisements typically focus around the social aspect of the casinos, while leaving out the potential for actual sports betting losses.

Others lure clients with promises of rewards. One such operator, Stake, ran a social networks ad flaunting Drake's automobiles, planes and estates before rotating to video footage of the rap artist playing online casino-style video games.

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

Another caption discussed: 'Because I never quit.'

The disparity in between gaming websites and social or sweepstakes casinos is a bit intricate, however 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), discussed its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, most of the gamers on social-sweepstakes casinos are playing for free.

'Most social sweeps clients never purchase,' the SPGA representative informed DailyMail.com. 'The minority of clients who make purchases do so in quantities far smaller sized than the common deposit or bet size at real-money online gambling sites.'

Social casinos use clients a chance to play casino-style games with friends. Players have the choice to buy worthless currency typically referred to as 'gold coins,' which can not be exchanged genuine cash, however can be used to open different functions within the video games.

But within the world of social casinos exists sweepstakes gaming, enabling clients to obtain other currency called 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the potential for monetary losses, like the ones claimed by plaintiffs 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 cash and other things of value.

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

Social sweeps casino Stake ran an ad displaying Drake's vehicles, 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 prohibited in all however seven states, which has helped to fuel the appeal of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, permit customers to submit mail-in ask for totally free sweeps coins, supplied the players follow painfully particular guidelines. What's more, players are often rewarded with sweeps coins just for signing up, consequently offering them a factor to try their hands at any variety of gambling establishment games for a possibility to win - or lose - genuine money.

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

According to the stakeholders, their item is the complimentary casino-style gaming, and the real-stakes competitors is just a way of promoting their support.

'Social sweepstakes video games are simply a form of online entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is needed to dip into social gambling establishments with sweepstakes prizes. Consumers never need to pay for a chance to win rewards. That absence of a purchase requirement - or" factor to consider" - is an important difference in between social sweeps and standard online gambling sites like casinos.'

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 buying hamburgers and fries that use them the chance to win lucrative prizes, such as a $1 million prize.

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

'Sweepstakes are an enduring method for promoting all kinds of everyday companies in the United States, whatever from hamburgers to magazine memberships to coffee and home enhancement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are routinely utilized by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For beginners, video gaming attorney Daniel Wallach points out, McDonald's Monopoly game doesn't run forever. Rather, it has a well-defined beginning and end, thus suggesting 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 do not last forever and they're usually not connected to casino-style video games of chance,' Wallach told DailyMail.com. 'They're simply money free gifts.

'The sweepstakes [casinos] possess none of the characteristics commonly related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes casinos use" casino-like" payments, usually 80 percent or more of earnings, whereas the common payout portion for a short-lived promotional sweepstakes is a minor share of the earnings earned by the business [generally less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the internet coffee shops that emerged in Florida, using clients the opportunity to play casino-style games for genuine rewards. Much of those brick-and-mortar facilities have because been shuttered over accusations of unlawful sports betting.

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

Now, Wallach argues, social sweeps gambling establishments should deal with similar analysis.

'These differences are not approximate,' Wallach said of social sweeps gambling establishments. 'They have repeatedly been mentioned by courts and state attorney generals as key consider figuring out that a sweepstakes promotion was in truth a guise for prohibited sports betting.'

One of the gambling establishment market'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 forgoing considerable tax and profits opportunities as this gaming replaces that conducted through regulated channels,' read a well-circulated AGA memo.

And after that there are the complainants who have taken legal action against social gambling establishments in more than a dozen states.

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

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

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

Apple and Google have likewise been called as defendants in suits for hosting the sweepstakes sites. But unlike VGW, neither tech company responded to DailyMail.com's request for remark.

'We usually do not discuss matters before the courts,' a VGW representative told DailyMail.com through e-mail. 'However, we keep in mind that this claim has only just been filed with the court and VGW has actually not been formally served.

'We have full self-confidence in our compliance with all laws and regulations where we run, and stay positive about the future,' the representative continued. 'We continue to provide 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 home entertainment, but also guaranteeing this is done securely, properly and at the greatest level of standards.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are reasonably common across the online social games industry (and the US more broadly), and our basic practice is that we mean to strongly safeguard any claim which might be brought versus us.'

The concerns between conventional online gaming and sweepstakes gambling establishments could prove problematic for some star 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 illegal sports betting 'sweeps' websites while at the exact same time the leagues wish to predict a strong stance versus prohibited gambling - particularly when attempting to tamp down the occasional gambling scandal,' Glaser told DailyMail.com.

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

In addition to VGW, Apple and Google are being sued for hosting apparently illegal gambling sites

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

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

Neither an NBA spokesperson nor the gamers' agents reacted to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise overlooked to react to DailyMail.com emails.

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

'We have full confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the representative stated. 'A few of our values are" our players come initially" and" we do what's right", and we put our values at the core of whatever 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 shady unlawful gambling sites are, at a minimum, putting their credibilities at danger along with courting civil and class actions by consumers who declare damage,' Glaser said. 'There is likewise some danger that state regulators and state attorneys general rope star endorsers into enforcement efforts for facilitating illegal sports betting.'

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