The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on illegal gambling.
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No, they weren't personally in presence, but the world-famous celebrities were conspicuously consisted of in a slide discussion on social and sweepstakes casinos - the questionable websites providing both free casino-style games and rewarding rewards, such as cash, present cards or cryptocurrency. In one ad, 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.

The sites are just 2 cogs in the multibillion-dollar industry that now finds itself besieged by suits. In the eyes of numerous gaming corporations, not to point out suit plaintiffs and state regulators, sweepstakes gambling establishments act as conventional casinos, just without the oversight, customer defenses and tax laws. So not only can they prevent the high 24-percent federal gaming levy, but sweepstakes operators aren't based on regulatory hurdles like anti-money laundering and responsible-gaming protections.
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One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the business faces accusations of unlawful gaming in a New York suit that claims VGW uses celeb endorsers to 'create a veneer of authenticity' around its product. (See VGW's statement below)

'I'm uncertain" if you do not trust us, you can trust Paris Hilton" is a winning message for companies running multibillion-dollar prohibited operations out of places like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers include a variety of celebrities from gambling lovers 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 in between traditional gaming and sweepstakes play.

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

Ryan Seacrest prompts fans to play at Chumba Casino, where lots of - but not all - video games are free

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

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Instead, ads usually center around the social aspect of the casinos, while omitting the capacity for real gambling losses.

Others lure consumers with guarantees of rewards. One such operator, Stake, ran a social media advertisement revealing off Drake's vehicles, airplanes and mansions before rotating to video footage of the rap artist playing online casino-style games.

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

Another caption explained: 'Because I never ever gave up.'

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

A representative for an industry trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA information, the majority of the gamers on social-sweepstakes casinos are playing for complimentary.

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

Social gambling establishments provide customers a possibility to play casino-style video games with good friends. Players have the option to purchase worthless currency often described as 'gold coins,' which can not be exchanged genuine money, however can be used to unlock numerous functions within the video games.

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

And therein lies the potential for monetary losses, like the ones declared 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 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 an International Poker event

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake's cars, aircrafts and estates

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

Traditional online casinos are banned in all but 7 states, which has assisted to sustain the popularity of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, enable clients to send mail-in ask for complimentary sweeps coins, provided the players follow painfully particular instructions. What's more, gamers are typically rewarded with sweeps coins merely for registering, thereby providing a reason to attempt their hands at any variety of gambling establishment video games for a chance to win - or lose - genuine cash.

So why are sweepstakes sites allowed 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 gaming, and the real-stakes competition is just a means of promoting their support.

'Social sweepstakes games are merely a form of online home entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is required to dip into social gambling establishments with sweepstakes prizes. Consumers never ever need to pay for a chance to win prizes. That absence of a purchase requirement - or" consideration" - is an important difference in between social sweeps and traditional online gaming sites like gambling establishments.'

Think about the manner in which McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're buying hamburgers and french fries that provide them the opportunity to win profitable prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'factor to consider', the video game itself does not fulfill the definition of gaming in the US.

'Sweepstakes are a long-standing method for promoting all kinds of everyday businesses in the United States, everything from hamburgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are routinely utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For starters, gaming attorney Daniel Wallach explains, McDonald's Monopoly video game does not run forever. Rather, it has a distinct start and end, thus suggesting the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being used to promote genuine products like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [casinos] have none of the attributes typically associated with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos offer" casino-like" payouts, generally 80 percent or more of profits, whereas the normal payment percentage for a short-lived advertising sweepstakes is an unimportant share of the revenue made by the business [generally less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, providing clients the chance to play casino-style games for real rewards. Much of those brick-and-mortar facilities have actually given that been shuttered over claims of unlawful gambling.

DJ Khaled is amongst several celeb spokespeople for VGW's Global Poker brand
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Now, Wallach argues, social sweeps casinos must deal with similar examination.

'These distinctions are not approximate,' Wallach said of social sweeps gambling establishments. 'They have consistently been cited by courts and state lawyer generals as key consider identifying that a sweepstakes promotion remained in reality a guise for prohibited sports betting.'

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

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

And then there are the complainants who have sued social gambling establishments in more than a lots states.

Sweepstakes casino operators paid a combined $14.2 million in four separate cases in Kentucky without admitting any misbehavior, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, stating the settlement was made to prevent legal costs and continued litigation.

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 lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited sports betting enterprise. '

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

'We normally don't discuss matters before the courts,' a VGW spokesperson informed 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 not been officially served.

'We have complete self-confidence in our compliance with all laws and policies where we run, and remain confident about the future,' the spokesperson continued. 'We continue to offer our free-to-play games across many of The United States and Canada, as we have for more than a years, developing not only fantastic games, user experiences and home entertainment, but also ensuring this is done safely, properly and at the highest level of requirements.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are reasonably common across the online social video games market (and the US more broadly), and our standard practice is that we plan to strongly defend any claim which may be brought against us.'
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The concerns between traditional online gaming and sweepstakes casinos could prove troublesome for some celeb 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 video gaming titans like FanDuel and DraftKings.

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

It was simply eight months ago that Toronto Raptors forward Jontay Porter received a lifetime 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.
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Along with VGW, Apple and Google are being demanded hosting allegedly prohibited sports betting websites

Regardless, Glaser sees sweepstakes casinos as a major issue for leagues such as the NBA.

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

Neither an NBA spokesperson nor the gamers' agents reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise disregarded to respond to DailyMail.com e-mails.

Asked if their star endorsers have an obligation to describe to clients the distinctions and resemblances between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial collaborations, and our organization practices more broadly,' the representative said. 'Some of our worths are" our players precede" and" we do what's right", and we put our values at the core of whatever we do.'

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

'Celebrities who lend their names to dubious prohibited sports betting sites are, at a minimum, putting their track records at danger as well as courting civil and class actions by consumers who declare damage,' Glaser said. 'There is also some threat that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for assisting in unlawful sports betting.'

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