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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 celebs were notably consisted of in a on social and sweepstakes gambling establishments - the questionable sites providing both totally free casino-style games and rewarding rewards, such as money, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are just two cogs in the multibillion-dollar industry that now finds itself besieged by lawsuits. In the eyes of many gaming corporations, not to point out lawsuit complainants and state regulators, sweepstakes casinos function as conventional gambling establishments, just without the oversight, customer securities and tax laws. So not only can they avoid the high 24-percent federal gambling levy, but sweepstakes operators aren't based on regulatory hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income last year alone. Now the business faces accusations of prohibited gaming in a New York claim that declares VGW utilizes celeb endorsers to 'create a veneer of authenticity' around its product. (See VGW's declaration listed below)

'I'm not exactly sure" if you don't trust us, you can rely on 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 presenter, Howard Glaser of video gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers consist of a variety of stars 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 offer any differences in between standard sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among many sweepstakes casinos discovered online

Ryan Seacrest advises fans to dip into Chumba Casino, where many - however not all - games are free

Drake has a deal with social sweeps gambling establishment, Stake, that he routinely touts on social media

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Instead, ads generally center around the social aspect of the gambling establishments, while leaving out the capacity for real sports betting losses.

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

'Daddy, why do we have a lot money?' read the first caption on the screen.

Another caption described: 'Because I never quit.'

The disparity in between gambling sites and social or sweepstakes gambling establishments is a bit intricate, however operators of the latter insist they're not involved with the previous.

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, the majority of the players on social-sweepstakes gambling establishments are sports betting totally free.

'Most social sweeps consumers never buy,' the SPGA spokesperson informed DailyMail.com. 'The minority of consumers who make purchases do so in amounts far smaller sized than the typical deposit or wager size at real-money online gaming sites.'

Social gambling establishments use customers a possibility to play casino-style games with pals. Players have the choice to buy valueless currency frequently described as 'gold coins,' which can not be exchanged for real cash, but can be used to open different features within the games.

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

And therein lies the capacity 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 casinos in the previous 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 Global Poker event

Social sweeps casino Stake ran an advertisement displaying Drake's cars and trucks, planes and estates

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 however seven states, which has assisted to fuel the appeal of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes websites, which don't require usually require identification. However, websites like Chumba will request IDs from players trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, enable customers to submit mail-in demands for free sweeps coins, provided the players follow painfully particular guidelines. What's more, gamers are typically rewarded with sweeps coins merely for registering, therefore providing them a factor to try their hands at any number of gambling establishment video games for a possibility to win - or lose - genuine money.

So why are sweepstakes websites allowed to run in 48 states, while online casinos are prohibited in all but 7?

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

'Social sweepstakes games are simply a kind of online home entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is required to play at social casinos with sweepstakes rewards. Consumers never need to pay for an opportunity to win prizes. That absence of a purchase requirement - or" factor to consider" - is an important distinction in between social sweeps and traditional online gambling sites like gambling establishments.'

Consider the method that McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and fries that offer them the chance to win profitable prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the game itself doesn't fulfill the meaning of sports betting in the US.

'Sweepstakes are an enduring approach for promoting all kinds of daily services in the United States, everything from burgers to magazine subscriptions to coffee and home improvement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are regularly utilized 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 insiders, that argument does not cut it.
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For beginners, gaming lawyer Daniel Wallach explains, McDonald's Monopoly video game does not run indefinitely. Rather, it has a distinct beginning and end, consequently recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote genuine items like french fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're normally not connected to casino-style games of chance,' Wallach informed DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [casinos] possess none of the attributes typically associated with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos use" casino-like" payouts, generally 80 percent or more of earnings, whereas the common payout portion for a temporary marketing sweepstakes is an unimportant share of the earnings earned by the business [usually less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the internet coffee shops that sprang up in Florida, offering consumers the possibility to play casino-style games for real prizes. Much of those brick-and-mortar facilities have actually given that been shuttered over claims of prohibited gaming.

DJ Khaled is amongst a number of celebrity spokespeople for VGW's Global Poker brand name
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Now, Wallach argues, social sweeps gambling establishments ought to face similar examination.

'These distinctions are not arbitrary,' Wallach said of social sweeps casinos. 'They have actually repeatedly been mentioned by courts and state attorney general of the United States as crucial elements in figuring out that a sweepstakes promo was in truth a guise for unlawful gambling.'

One of the casino market's leading trade companies, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, in many cases, enact new legislation on the concern.
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'Consumers are being denied of securities and states are giving up significant tax and revenue opportunities as this sports betting replaces that performed through controlled channels,' read a well-circulated AGA memo.

And then there are the complainants who have sued social casinos in more than a dozen states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action claim, stating the settlement was made to prevent legal costs and continued lawsuits.

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

In the most current lawsuit, which is largely comparable to its predecessors, New York state residents 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 sports betting business. '

Apple and Google have actually likewise been named as accuseds in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com's demand for remark.
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'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 filed with the court and VGW has not been officially served.

'We have complete confidence in our compliance with all laws and guidelines where we operate, and remain confident about the future,' the representative continued. 'We continue to provide our free-to-play games across most of The United States and Canada, as we have for more than a decade, creating not only great video games, user experiences and entertainment, however also guaranteeing this is done safely, responsibly and at the highest level of standards.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are reasonably common throughout the online social video games market (and the US more broadly), and our standard practice is that we intend to vigorously defend any claim which might be brought against us.'

The problems in between traditional online gaming and sweepstakes casinos might show problematic for some star endorsers.

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 traditional video gaming titans like FanDuel and DraftKings.
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'It's ironic that professional athletes are hawking unlawful sports betting wagering 'sweeps' sites while at the same time the leagues wish to predict a strong position versus illegal sports betting - specifically when attempting to tamp down the occasional sports betting scandal,' Glaser informed DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter received 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 gambling establishments.

Along with VGW, Apple and Google are being taken legal action against for hosting allegedly unlawful sports betting sites

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

'I 'd expect that a league crackdown on professional athletes endorsing sweepstakes sites is a matter of when, not if,' Glaser included.

Neither an NBA spokesperson nor the players' agents responded to DailyMail.com's demands for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise ignored to respond to DailyMail.com emails.

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

'We have full confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the spokesperson stated. 'Some of our worths 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 challenger of sweepstakes websites, sees things in a different way.

'Celebrities who lend their names to shady prohibited gambling websites are, at a minimum, putting their credibilities at threat in addition to courting civil and class actions by customers who declare damage,' Glaser stated. 'There is also some danger that state regulators and state lawyers general rope celeb endorsers into enforcement efforts for helping with illegal gaming.'

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