The smiling faces of Paris Hilton and Ryan Seacrest made surprise looks before the Louisiana Senate for Friday's hearing on illegal sports betting.
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No, they weren't personally in participation, however the world-famous celebs were conspicuously consisted of in a slide discussion on social and sweepstakes casinos - the questionable sites providing both free casino-style video games and financially rewarding rewards, such as cash, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are just 2 cogs in the multibillion-dollar market that now discovers itself besieged by suits. In the eyes of numerous video gaming corporations, not to discuss claim complainants and state regulators, sweepstakes casinos act as standard casinos, only without the oversight, consumer securities and tax laws. So not only can they prevent the high 24-percent federal gaming levy, however sweepstakes operators aren't subject to regulative hurdles 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 deals with allegations of unlawful sports betting in a New york city lawsuit that claims VGW utilizes celeb endorsers to 'create a veneer of legitimacy' around its product. (See VGW's statement below)

'I'm not exactly sure" if you do not 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 video gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a range of stars from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom provide any differences in between standard gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among lots of sweepstakes gambling establishments found online
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Ryan Seacrest urges fans to dip into Chumba Casino, where many - but not all - video games are complimentary

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

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Instead, advertisements normally focus around the social element of the gambling establishments, while leaving out the potential for actual sports betting losses.

Others lure consumers with guarantees of prizes. One such operator, Stake, ran a social networks advertisement displaying Drake's cars, planes and estates before rotating to footage of the rapper playing online casino-style games.

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

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

The inconsistency between sports betting websites and social or sweepstakes casinos is a bit intricate, 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), discussed its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, the majority of the gamers on social-sweepstakes gambling establishments are sports betting complimentary.

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

Social casinos offer clients a chance to play casino-style games with friends. Players have the alternative to buy valueless currency often referred to as 'gold coins,' which can not be exchanged for real money, but can be used to unlock various features within the games.

But within the world of social casinos exists sweepstakes video gaming, permitting consumers 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 complainants in Florida, Georgia, New Jersey and New York City. One player told 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 worth.

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

Social Stake ran an advertisement displaying Drake's vehicles, airplanes 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 helped to fuel the popularity of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, allow consumers to submit mail-in requests for free sweeps coins, provided the players follow painfully specific instructions. What's more, players are often rewarded with sweeps coins just for registering, thus providing a factor to try their hands at any variety of gambling establishment games for a chance to win - or lose - genuine cash.

So why are sweepstakes sites allowed to run in 48 states, while online gambling establishments are prohibited in all but 7?

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

'Social sweepstakes video games are simply a type of online entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is required to dip into social casinos with sweepstakes prizes. Consumers never ever have to pay for a chance to win rewards. That absence of a purchase requirement - or" consideration" - is an important difference in between social sweeps and conventional online gaming websites like casinos.'

Think about the manner in which McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and fries that provide them the possibility to win profitable rewards, such as a $1 million prize.

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

'Sweepstakes are an enduring approach for promoting all sort of everyday organizations in the United States, whatever from burgers to publication subscriptions to coffee and home enhancement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are frequently utilized by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many sports betting market experts, that argument does not cut it.

For starters, gaming lawyer Daniel Wallach points out, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a distinct start and end, therefore recommending the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being used to promote real items like fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're generally not tied to casino-style video games of opportunity,' Wallach informed DailyMail.com. 'They're just cash free gifts.
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'The sweepstakes [gambling establishments] have none of the attributes frequently connected with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments use" casino-like" payments, usually 80 percent or more of profits, whereas the typical payout portion for a short-term marketing sweepstakes is a minor share of the earnings made by the company [typically less than one percent]'

Wallach is fast to liken the online social sweeps casinos to the internet cafes that sprang up in Florida, offering clients the opportunity to play casino-style games for real rewards. A number of those brick-and-mortar establishments have actually given that been shuttered over allegations of illegal gaming.

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

Now, Wallach argues, social sweeps gambling establishments should face comparable analysis.

'These differences are not approximate,' Wallach stated of social sweeps casinos. 'They have consistently been mentioned by courts and state chief law officer as key consider identifying that a sweepstakes promotion remained in fact a guise for prohibited gambling.'

Among 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 concern.

'Consumers are being deprived of securities and states are forgoing considerable tax and income chances as this gambling changes that performed through managed channels,' checked out a well-circulated AGA memo.

And then there are the complainants who have taken legal action against social casinos in more than a dozen states.

Sweepstakes gambling establishment 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 suit, saying the settlement was made to prevent legal costs and continued litigation.

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

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

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

'We normally do not talk about matters before the courts,' a VGW representative told DailyMail.com by means of e-mail. 'However, we keep in mind that this claim has actually only simply been filed with the court and VGW has actually not been formally served.

'We have complete self-confidence in our compliance with all laws and guidelines where we run, and stay confident about the future,' the spokesperson continued. 'We continue to offer our free-to-play games throughout the majority of The United States and Canada, as we have for more than a decade, creating not just terrific video games, user experiences and entertainment, but likewise guaranteeing this is done safely, responsibly and at the highest level of requirements.

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

The issues in between conventional online sports betting and sweepstakes gambling establishments could show troublesome for some celebrity 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 standard gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking prohibited sports betting 'sweeps' sites while at the exact same time the leagues wish to project a strong stance versus unlawful sports betting - specifically when trying to tamp down the occasional gaming scandal,' Glaser told DailyMail.com.
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It was just eight months ago that Toronto Raptors forward Jontay Porter got a life time restriction from the NBA over claims he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes casinos.

Together with VGW, Apple and Google are being demanded hosting apparently prohibited sports betting sites

Regardless, Glaser sees sweepstakes gambling establishments as a significant problem for leagues such as the NBA.
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'I 'd anticipate that a league crackdown on professional athletes endorsing sweepstakes sites is a matter of when, not if,' Glaser added.
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Neither an NBA representative nor the players' representatives reacted to DailyMail.com's requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also ignored to respond to DailyMail.com emails.

Asked if their celeb endorsers have a duty to explain to customers the distinctions and similarities in between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that requires to be done.

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the spokesperson stated. 'Some of our worths are" our players come first" and" we do what's right", and we put our worths at the core of whatever we do.'

Glaser, an outspoken opponent of sweepstakes sites, sees things in a different way.

'Celebrities who provide their names to dubious unlawful gaming websites are, at a minimum, putting their reputations at risk in addition to courting civil and class actions by consumers who allege harm,' Glaser stated. 'There is likewise some danger that state regulators and state attorneys general rope celebrity endorsers into enforcement efforts for helping with prohibited gaming.'

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