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The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on illegal gambling.

No, they weren't personally in attendance, however the world-famous celebs were conspicuously consisted of in a slide discussion on social and sweepstakes casinos - the questionable websites providing both totally free casino-style 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 'play for free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are simply two cogs in the multibillion-dollar market that now discovers itself besieged by suits. In the eyes of many video gaming corporations, not to point out claim complainants and state regulators, sweepstakes gambling establishments serve as traditional gambling establishments, only without the oversight, consumer securities and tax laws. So not only can they avoid the steep 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 earnings last year alone. Now the company faces allegations of illegal sports betting in a New york city lawsuit 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 trust Paris Hilton" is a winning message for companies operating 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 consist of a range of celebs 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 provide any distinctions between standard gambling and sweepstakes play.

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

Ryan Seacrest advises fans to play at Chumba Casino, where numerous - but not all - video games are totally free

Drake has a deal with social sweeps gambling establishment, Stake, that he frequently promotes on social media

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

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

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

Another caption described: 'Because I never gave up.'

The disparity between sports betting websites and social or sweepstakes casinos is a bit complex, 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), explained its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA data, most of the players on social-sweepstakes casinos are sports betting totally free.

'Most social sweeps customers never buy,' the SPGA representative told DailyMail.com. 'The minority of consumers who make purchases do so in quantities far smaller than the typical deposit or wager size at real-money online gambling sites.'

Social gambling establishments use consumers a possibility to play casino-style games with pals. Players have the option to purchase valueless currency typically referred to as 'gold coins,' which can not be exchanged for genuine money, but can be utilized to unlock various functions within the games.

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

And therein lies the potential 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 casinos 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 sweeps casino Stake ran an advertisement displaying Drake's cars and trucks, airplanes and mansions

Karl-Anthony Towns of the New York Knicks is another NBA star plugging VGW's Global Poker

Traditional online gambling establishments are prohibited in all however 7 states, which has assisted to sustain the appeal of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes websites, which don't need typically require recognition. However, websites like Chumba will ask for IDs from gamers attempting to withdraw any funds.

Many websites, like the crypto-compatible Stake, allow consumers to submit mail-in demands for complimentary sweeps coins, supplied the players follow painfully specific directions. What's more, gamers are often rewarded with sweeps coins just for registering, thereby offering them a factor to try their hands at any number of gambling establishment video games for a possibility to win - or lose - genuine cash.

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

According to the stakeholders, their product is the totally free casino-style gaming, and the real-stakes competition is simply a means of promoting their support.

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

Consider the way that McDonald's uses its yearly Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're and fries that provide them the opportunity to win rewarding prizes, 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 sports betting in the US.

'Sweepstakes are a long-standing technique for promoting all type of daily companies in the United States, everything from hamburgers to magazine subscriptions to coffee and home improvement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promos 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 sports betting market insiders, that argument does not cut it.

For starters, gaming attorney Daniel Wallach mentions, McDonald's Monopoly video game does not run forever. 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 real items like fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're generally not tied to casino-style video games of opportunity,' Wallach informed DailyMail.com. 'They're just money free gifts.

'The sweepstakes [casinos] possess none of the attributes typically associated 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 revenues, whereas the common payout portion for a short-lived promotional sweepstakes is an unimportant share of the income made by the business [normally less than one percent]'

Wallach is quick to compare the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, offering customers the possibility to play casino-style video games for real prizes. A number of those brick-and-mortar facilities have actually because been shuttered over claims of illegal gambling.

DJ Khaled is amongst a number of celeb spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps casinos ought to face similar analysis.

'These differences are not approximate,' Wallach said of social sweeps gambling establishments. 'They have actually repeatedly been pointed out by courts and state attorney general of the United States as key factors in determining that a sweepstakes promo was in fact a guise for illegal sports betting.'

Among the gambling establishment market's leading trade companies, the American Gaming Association, is now pressing legislators to investigate sweepstakes operators and, in some cases, enact new legislation on the problem.

'Consumers are being deprived of protections and states are forgoing substantial tax and revenue opportunities as this sports betting changes that carried out through controlled channels,' checked out a well-circulated AGA memo.

And after that there are the plaintiffs who have taken legal action against social casinos in more than a lots states.

Sweepstakes casino operators paid a combined $14.2 million in 4 separate cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action claim, saying the settlement was made to avoid legal expenses and continued lawsuits.

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

In the current suit, which is largely comparable to its predecessors, New york city state locals 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 also been called as offenders in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for remark.

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

'We have full confidence in our compliance with all laws and regulations where we run, and remain positive about the future,' the spokesperson continued. 'We continue to use our free-to-play games across the majority of The United States and Canada, as we have for more than a decade, producing not just excellent video games, user experiences and entertainment, however likewise guaranteeing this is done securely, responsibly and at the highest level of standards.

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

The problems between traditional online gaming and sweepstakes casinos might show bothersome for some celeb 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 gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking illegal sports betting wagering 'sweeps' sites while at the same time the leagues wish to predict a strong position against illegal gambling - especially when trying to tamp down the periodic sports betting scandal,' Glaser informed DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter received a lifetime restriction from the NBA over allegations he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes casinos.

Together with VGW, Apple and Google are being demanded hosting presumably unlawful gambling websites

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 representative nor the players' representatives reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also overlooked to respond to DailyMail.com e-mails.

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

'We have complete confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the spokesperson said. 'Some of our worths are" our gamers 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.
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'Celebrities who lend their names to dubious unlawful sports betting sites are, at a minimum, putting their reputations at risk in addition to courting civil and class actions by customers who allege harm,' Glaser said. 'There is likewise some risk that state regulators and state lawyers general rope celebrity endorsers into enforcement efforts for assisting in prohibited sports betting.'

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