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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 prohibited gaming.
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No, they weren't personally in attendance, however the world-famous celebrities were notably consisted of in a slide discussion on social and sweepstakes casinos - the questionable websites providing both complimentary casino-style video games and financially rewarding prizes, such as cash, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The websites are simply 2 cogs in the multibillion-dollar market that now discovers itself besieged by lawsuits. In the eyes of lots of gaming corporations, not to point out claim plaintiffs and state regulators, sweepstakes gambling establishments serve as conventional casinos, just without the oversight, consumer defenses and tax laws. So not just can they prevent the steep 24-percent federal gambling levy, however sweepstakes operators aren't subject to regulatory difficulties like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the business faces allegations of prohibited sports betting in a New York claim that declares VGW utilizes celebrity endorsers to 'produce a veneer of authenticity' around its item. (See VGW's declaration listed below)

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

Sweepstakes endorsers consist of a series of celebrities 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 differences in between standard gambling and sweepstakes play.

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

Ryan Seacrest advises fans to play at Chumba Casino, where many - however not all - games are complimentary

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

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

Others tempt consumers with promises of prizes. One such operator, Stake, ran a social networks ad displaying Drake's vehicles, planes and mansions before pivoting to video footage of the rap artist playing online casino-style video games.

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

Another caption explained: 'Because I never offered up.'

The inconsistency in between gaming sites 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), described its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, most of the players on social-sweepstakes casinos are playing for totally free.

'Most social sweeps clients never ever purchase,' the SPGA representative informed DailyMail.com. 'The minority of customers who make purchases do so in amounts far smaller than the common deposit or wager size at real-money online sports betting websites.'

Social gambling establishments offer clients a possibility to play casino-style games with buddies. Players have the alternative to buy worthless currency often referred to as 'gold coins,' which can not be exchanged genuine money, but can be utilized to open numerous functions within the video games.

But within the world of social casinos exists sweepstakes video gaming, enabling consumers to get other currency understood 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. One gamer told the Washington Post he lost more than $100,000 on sweepstakes casinos in the previous year after continuing to buy more coins in pursuit of money and other things of worth.

The Philadelphia 76ers' Paul George is seen promoting a Global Poker event

Social sweeps casino Stake ran an ad displaying Drake's cars, planes and mansions

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

Traditional online casinos are prohibited in all but 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 normally need recognition. However, websites like Chumba will request for IDs from players trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, allow clients to submit mail-in ask for complimentary sweeps coins, provided the gamers follow painfully specific guidelines. What's more, gamers are frequently rewarded with sweeps coins merely for registering, thereby giving them a factor to attempt their hands at any number of gambling establishment games for an opportunity to win - or lose - real cash.

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

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

'Social sweepstakes games are simply a type of online home entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is required to dip into social gambling establishments with sweepstakes rewards. Consumers never have to spend for an opportunity to win rewards. That absence of a purchase requirement - or" factor to consider" - is a vital difference in between social sweeps and standard online sports betting sites like gambling establishments.'

Think about the way that McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and fries that offer them the possibility to win rewarding prizes, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the video game itself doesn't satisfy the definition of gambling in the US.

'Sweepstakes are a long-standing technique for promoting all sort of everyday services in the United States, everything from burgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are frequently used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting market insiders, that argument doesn't cut it.

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

'They don't last permanently and they're normally not connected to casino-style video games of chance,' Wallach informed DailyMail.com. 'They're just cash free gifts.

'The sweepstakes [gambling establishments] have none of the attributes frequently connected with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments provide" casino-like" payments, normally 80 percent or more of earnings, whereas the typical payment portion for a short-lived marketing sweepstakes is an unimportant share of the revenue earned by the company [generally less than one percent]'

Wallach is quick to liken the online social sweeps gambling establishments to the internet coffee shops that emerged in Florida, offering consumers the possibility to play casino-style games for genuine rewards. A lot of those brick-and-mortar facilities have considering that been shuttered over allegations of unlawful gambling.

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

Now, Wallach argues, social sweeps casinos ought to face comparable scrutiny.

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

One of the casino industry's leading trade companies, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, sometimes, enact new legislation on the concern.

'Consumers are being denied of defenses and states are giving up substantial tax and income opportunities as this gaming changes that carried out through controlled channels,' read a well-circulated AGA memo.

And after that there are the complainants who have actually sued social casinos in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without confessing any misdeed, 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 expenses and continued lawsuits.

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

In the most recent suit, 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 explained in the filing as an 'illegal gaming business. '

Apple and Google have actually also been named as defendants in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com's request for comment.

'We generally don't talk about matters before the courts,' a VGW spokesperson told DailyMail.com via e-mail. 'However, we keep in mind that this claim has actually only simply been submitted with the court and VGW has actually not been formally served.

'We have complete confidence in our compliance with all laws and policies where we operate, and stay confident about the future,' the spokesperson continued. 'We continue to offer our free-to-play video games across most of North America, as we have for more than a years, producing not only terrific video games, user experiences and entertainment, but also ensuring this is done safely, properly and at the highest level of requirements.

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

The issues in between conventional online gaming and sweepstakes casinos could show troublesome for some celebrity 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 traditional gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking illegal sports betting 'sweeps' websites while at the same time the leagues desire to predict a strong stance versus illegal gaming - particularly when attempting to tamp down the occasional sports betting scandal,' Glaser told DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter received a lifetime ban 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.

In addition to VGW, Apple and Google are being taken legal action against for hosting allegedly unlawful gambling websites

Regardless, Glaser sees sweepstakes casinos as a significant concern for leagues such as the NBA.

'I 'd expect that a league crackdown on athletes endorsing sweepstakes websites refers when, not if,' Glaser added.

Neither an NBA spokesman nor the players' agents reacted to DailyMail.com's demands for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to react to DailyMail.com emails.

Asked if their star endorsers have a responsibility to describe to clients the distinctions and resemblances in between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that needs to be done.

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the representative stated. 'A few of our values are" our gamers precede" and" we do what's right", and we put our worths at the core of everything we do.'

Glaser, an outspoken challenger of sweepstakes websites, sees things differently.

'Celebrities who provide their names to dubious unlawful sports betting sites are, at a minimum, putting their credibilities at threat in addition to courting civil and class actions by consumers who allege harm,' Glaser said. 'There is also some danger that state regulators and state chief law officers rope celeb endorsers into enforcement efforts for facilitating unlawful sports betting.'

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