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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, but the world-famous celebs were conspicuously included in a slide discussion on social and sweepstakes gambling establishments - the questionable sites offering both complimentary casino-style video games and financially rewarding rewards, such as money, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are simply 2 cogs in the multibillion-dollar industry that now discovers itself besieged by lawsuits. In the eyes of numerous video gaming corporations, not to point out suit plaintiffs and state regulators, sweepstakes casinos act as standard gambling establishments, just without the oversight, consumer securities and tax laws. So not only can they avoid the steep 24-percent federal sports betting levy, however 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 income in 2015 alone. Now the business faces accusations of illegal gambling in a New york city suit that claims VGW utilizes celeb endorsers to 'create a veneer of authenticity' around its item. (See VGW's statement listed below)

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

Sweepstakes endorsers consist of a series of celebs from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as 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, one of numerous sweepstakes gambling establishments discovered online

Ryan Seacrest prompts fans to play at Chumba Casino, where numerous - but not all - games are complimentary

Drake has an offer with social sweeps gambling establishment, Stake, that he frequently touts on social networks

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Instead, advertisements typically center 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 media ad displaying Drake's automobiles, planes and mansions before rotating to video of the rap artist playing online casino-style games.
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'Daddy, why do we have so much money?' read the very first caption on the screen.

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

The inconsistency in between gambling sites and social or sweepstakes casinos is a bit complicated, but operators of the latter insist they're not involved with the previous.

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

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

Social casinos provide customers an opportunity to play casino-style video games with pals. Players have the alternative to purchase worthless currency typically referred to as 'gold coins,' which can not be exchanged for genuine money, but can be utilized to open numerous functions within the video games.

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

And therein lies the potential for financial losses, like the ones claimed 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 past year after continuing to purchase 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 cars, aircrafts 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 but 7 states, which has assisted to sustain the popularity of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes sites, which don't require normally need identification. However, websites like Chumba will request IDs from gamers attempting to withdraw any funds.

Many sites, like the crypto-compatible Stake, allow consumers to submit mail-in requests for totally free sweeps coins, supplied the players follow painfully particular instructions. What's more, gamers are often rewarded with sweeps coins just for signing up, thereby offering them a reason to attempt their hands at any variety of gambling establishment video games for a possibility to win - or lose - real cash.

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

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

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

Think about the manner in which McDonald's uses its yearly Monopoly video game to promote its food: paying to gamble, but rather they're purchasing hamburgers and fries that offer them the chance to win financially rewarding prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the game itself does not satisfy the meaning of gambling in the US.

'Sweepstakes are an enduring method for promoting all sort of daily services in the United States, everything from hamburgers to publication memberships to coffee and home enhancement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are frequently utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For beginners, gaming attorney 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 primary product. Instead, the sweepstakes is being used to promote real products like fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're generally not connected to casino-style video games of opportunity,' Wallach told DailyMail.com. 'They're simply money free gifts.

'The sweepstakes [gambling establishments] possess none of the characteristics frequently connected with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos use" casino-like" payments, normally 80 percent or more of profits, whereas the typical payout portion for a momentary promotional sweepstakes is an unimportant share of the income made by the business [normally less than one percent]'

Wallach is fast to liken the online social sweeps casinos to the web coffee shops that emerged in Florida, using consumers the opportunity to play casino-style video games for genuine prizes. A lot of those brick-and-mortar establishments have actually because been shuttered over accusations of illegal gambling.

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

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

'These distinctions are not arbitrary,' Wallach said of social sweeps casinos. 'They have repeatedly been pointed out by courts and state lawyer generals as essential elements in identifying that a sweepstakes promotion was in truth a guise for prohibited sports betting.'

Among the casino market's leading trade companies, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, in many cases, enact new legislation on the issue.

'Consumers are being deprived of protections and states are giving up substantial tax and profits opportunities as this gaming changes 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 different cases in Kentucky without admitting any misbehavior, 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 costs and continued litigation.

Michael Phelps has actually signed an offer with the VGW Group, which owns Global Poker

In the current claim, which is largely similar to its predecessors, New york city state citizens 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 actually likewise been called as offenders in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for comment.

'We normally don't discuss matters before the courts,' a VGW representative told DailyMail.com via email. 'However, we note that this claim has only just been filed with the court and VGW has actually not been officially served.

'We have complete confidence in our compliance with all laws and policies where we operate, and stay confident about the future,' the representative continued. 'We continue to use our free-to-play video games throughout many of The United States and Canada, as we have for more than a years, developing not just excellent games, user experiences and home entertainment, however likewise ensuring this is done securely, responsibly and at the greatest level of requirements.

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

The problems between conventional online sports betting and sweepstakes gambling establishments could show problematic for some star 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 standard video gaming titans like FanDuel and DraftKings.

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

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

Along with VGW, Apple and Google are being taken legal action against for hosting presumably unlawful gambling sites

Regardless, Glaser sees sweepstakes casinos as a significant problem for leagues such as the NBA.
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'I 'd expect that a league crackdown on athletes endorsing sweepstakes websites refers when, not if,' Glaser added.

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 neglected to react to DailyMail.com e-mails.

Asked if their celebrity endorsers have an obligation to discuss to consumers the differences and similarities between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is absolutely nothing more that needs to be done.

'We have full self-confidence in our influencer and ambassadorial collaborations, and our organization practices more broadly,' the representative stated. 'A few 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 sites, sees things differently.

'Celebrities who lend their names to shady prohibited gambling websites are, at a minimum, putting their credibilities at risk along with courting civil and class actions by customers who declare harm,' Glaser said. 'There is likewise some risk that state regulators and state attorneys basic rope celeb endorsers into enforcement efforts for facilitating unlawful sports betting.'

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