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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 gambling.
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No, they weren't personally in presence, however the world-famous celebrities were conspicuously included in a slide discussion on social and sweepstakes gambling establishments - the questionable websites providing both free casino-style games and lucrative prizes, such as cash, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet 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 claims. In the eyes of numerous gaming corporations, not to discuss lawsuit complainants and state regulators, sweepstakes casinos function as standard casinos, just without the oversight, customer securities and tax laws. So not only can they prevent the high 24-percent federal sports betting levy, however sweepstakes operators aren't subject to regulatory hurdles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the business faces allegations of illegal gambling in a New York claim that declares VGW uses celebrity endorsers to 'develop a veneer of legitimacy' around its product. (See VGW's statement below)

'I'm not sure" if you do not trust us, you can rely on Paris Hilton" is a winning message for companies 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, told DailyMail.com.

Sweepstakes endorsers consist of a range of celebs 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 distinctions between standard gambling and sweepstakes play.

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

Ryan Seacrest prompts fans to dip into Chumba Casino, where lots of - but not all - video games are totally free

Drake has a handle social sweeps casino, Stake, that he frequently touts on social networks

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Instead, ads generally center around the social element of the casinos, while omitting the potential for real sports betting losses.

Others tempt customers with pledges of rewards. One such operator, Stake, ran a social media ad flaunting Drake's vehicles, aircrafts and mansions before pivoting to footage of the rap artist playing online casino-style games.

'Daddy, why do we have so much money?' check out the first caption on the screen.

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

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

A representative for an industry 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 data, the majority of the players on social-sweepstakes casinos are playing for totally free.

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

Social casinos use consumers an opportunity to play casino-style video games with good friends. Players have the option to purchase valueless currency typically described as 'gold coins,' which can not be exchanged for real cash, however can be used to open numerous functions within the games.

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

And therein lies the capacity for monetary losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York City. One gamer told 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 money and other things of value.

The Philadelphia 76ers' Paul George is seen promoting a Worldwide 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 however 7 states, which has actually assisted to fuel the popularity of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, allow clients to submit mail-in ask for free sweeps coins, offered the gamers follow painfully specific instructions. What's more, players are typically rewarded with sweeps coins merely for registering, consequently providing a factor to attempt their hands at any variety of gambling establishment games for a possibility to win - or lose - genuine cash.

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

According to the stakeholders, their product is the free casino-style video gaming, and the real-stakes competitors is just a means of promoting their support.

'Social sweepstakes video games are just a type of online entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is required to dip into social casinos with sweepstakes prizes. Consumers never need to pay for an opportunity to win rewards. That lack of a purchase requirement - or" factor to consider" - is an essential difference between social sweeps and standard online gambling websites like casinos.'

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

And without a purchase requirement, or 'factor to consider', the video game itself doesn't satisfy the meaning of gaming in the US.

'Sweepstakes are a long-standing technique for promoting all kinds of daily businesses in the United States, whatever from burgers to magazine memberships to coffee and home improvement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are regularly used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many sports betting market experts, that argument doesn't cut it.

For starters, video gaming lawyer Daniel Wallach points out, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a well-defined beginning and end, thereby suggesting the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being utilized to promote genuine items like fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're typically not tied to casino-style video games of chance,' Wallach told DailyMail.com. 'They're simply cash giveaways.

'The sweepstakes [gambling establishments] have none of the qualities commonly connected with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments provide" casino-like" payments, generally 80 percent or more of profits, whereas the normal payout portion for a short-term promotional sweepstakes is a minor share of the profits made by the company [usually less than one percent]'

Wallach is fast to liken the online social sweeps gambling establishments to the web cafes that emerged in Florida, offering customers the possibility to play casino-style games for genuine rewards. A lot of those brick-and-mortar facilities have given that been shuttered over claims of unlawful sports betting.

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

Now, Wallach argues, social sweeps casinos must deal with similar examination.

'These distinctions are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have actually repeatedly been cited by courts and state lawyer generals as essential aspects in identifying that a sweepstakes promo was in reality a guise for illegal gaming.'

Among the casino industry's leading trade companies, the American Gaming Association, is now pushing legislators to examine sweepstakes operators and, in many cases, enact brand-new legislation on the concern.

'Consumers are being deprived of protections and states are forgoing significant tax and earnings chances as this sports betting replaces that carried out through controlled channels,' read a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in 4 different cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW consented to 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 current suit, which is mostly similar to its predecessors, New york city 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 'prohibited gambling enterprise. '

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

'We typically do not discuss matters before the courts,' a VGW spokesperson informed DailyMail.com by means of e-mail. 'However, we keep in mind that this claim has actually only just been submitted with the court and VGW has not been formally served.

'We have complete confidence in our compliance with all laws and policies where we run, and stay confident about the future,' the spokesperson continued. 'We continue to provide our free-to-play games throughout many of The United States and Canada, as we have for more than a decade, developing not just great games, user experiences and home entertainment, however also guaranteeing this is done safely, properly and at the highest level of requirements.

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

The problems in between conventional online gambling and sweepstakes casinos might prove problematic 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 traditional gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking illegal sports betting 'sweeps' websites while at the same time the leagues want to project a strong position versus prohibited sports betting - especially when trying to tamp down the occasional gaming scandal,' Glaser told DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter got a life time ban from the NBA over allegations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes .

Along with VGW, Apple and Google are being taken legal action against for hosting presumably illegal sports betting websites

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

'I 'd anticipate that a league crackdown on professional athletes backing sweepstakes sites refers when, not if,' Glaser added.

Neither an NBA spokesman nor the players' agents responded to DailyMail.com's ask 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 celebrity endorsers have an obligation to describe to customers the differences 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 business practices more broadly,' the spokesperson stated. 'Some of our values are" our players precede" and" we do what's right", and we put our worths at the core of everything we do.'

Glaser, an outspoken opponent of sweepstakes sites, sees things in a different way.
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'Celebrities who provide their names to dubious unlawful gambling sites are, at a minimum, putting their track records at risk along with courting civil and class actions by customers who allege damage,' Glaser stated. 'There is also some threat that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for facilitating unlawful sports betting.'

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