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, but the world-famous stars were conspicuously included in a slide presentation on social and sweepstakes casinos - the questionable sites using both free casino-style video games and lucrative rewards, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for complimentary,' 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 numerous video gaming corporations, not to point out suit complainants and state regulators, sweepstakes casinos serve as standard gambling establishments, only without the oversight, consumer defenses and tax laws. So not only can they avoid the high 24-percent federal gambling levy, but sweepstakes operators aren't based on regulatory obstacles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the business faces accusations of unlawful sports betting in a New york city lawsuit that declares VGW uses celebrity endorsers to 'create a veneer of authenticity' around its product. (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 business running multibillion-dollar prohibited operations out of places like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of video gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a range of celebs from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom provide any distinctions in between conventional gaming and sweepstakes play.

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

Ryan Seacrest advises fans to play at Chumba Casino, where lots of - however not all - games are totally free

Drake has a deal with social sweeps gambling establishment, Stake, that he frequently touts on social networks

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Instead, ads typically focus around the social element of the gambling establishments, while omitting the potential for real gaming losses.

Others lure consumers with guarantees of rewards. One such operator, Stake, ran a social media advertisement displaying Drake's automobiles, airplanes and estates before pivoting to footage of the rapper playing online casino-style video games.

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

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

The discrepancy between gambling websites and social or sweepstakes gambling establishments is a bit complicated, 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), discussed its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA data, the majority of the gamers on social-sweepstakes casinos are playing for complimentary.

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

Social casinos offer clients a chance to play casino-style games with buddies. Players have the option to buy worthless currency often referred to as 'gold coins,' which can not be exchanged for real money, but can be utilized to unlock various features within the video games.

But within the world of social gambling establishments exists sweepstakes gaming, permitting consumers to get other currency called 'sweeps coins' that can be exchanged for cash or other rewards.

And therein lies the capacity for monetary losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York. 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 value.

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

Social sweeps gambling establishment Stake ran an ad displaying Drake's vehicles, 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 banned in all but 7 states, which has actually helped to sustain the appeal of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, allow customers to submit mail-in demands for totally free sweeps coins, supplied the players follow painfully specific directions. What's more, players are typically rewarded with sweeps coins just for signing up, therefore providing a factor to try their hands at any number of casino video games for a possibility to win - or lose - real cash.

So why are sweepstakes websites enabled 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 competition is merely a means of promoting their bread and butter.

'Social sweepstakes video games are simply a type of online entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is needed to play at social casinos with sweepstakes rewards. Consumers never have to spend for an opportunity to win prizes. That absence of a purchase requirement - or" consideration" - is a crucial distinction between social sweeps and standard online gambling websites like casinos.'

Consider the method that McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're buying hamburgers 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 meet the meaning of sports betting in the US.

'Sweepstakes are an enduring technique for promoting all type of everyday services in the United States, everything from hamburgers to magazine subscriptions to coffee and home improvement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are regularly utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of gambling market experts, that argument doesn't cut it.

For beginners, video gaming attorney Daniel Wallach points out, McDonald's Monopoly game does not run indefinitely. Rather, it has a well-defined start and end, therefore recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote genuine products like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [gambling establishments] possess none of the qualities frequently connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments offer" casino-like" payments, typically 80 percent or more of revenues, whereas the typical payout portion for a momentary promotional sweepstakes is an unimportant share of the profits made by the business [usually less than one percent]'

Wallach is fast to compare the online social sweeps gambling establishments to the web cafes that emerged in Florida, using customers the possibility to play casino-style video games for real prizes. A number of those brick-and-mortar establishments have since been shuttered over claims of prohibited gambling.

DJ Khaled is among a number of celebrity spokespeople for VGW's Global Poker brand

Now, Wallach argues, social sweeps gambling establishments need to deal with similar examination.

'These distinctions are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have actually consistently been pointed out by courts and state chief law officer as key consider determining that a sweepstakes promotion was in fact a guise for unlawful sports betting.'

Among the casino market's leading trade organizations, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, in many cases, enact new legislation on the concern.

'Consumers are being deprived of defenses and states are giving up significant tax and profits chances as this gambling changes that performed through regulated channels,' read a well-circulated AGA memo.

And after that there are the complainants who have actually 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 confessing any misdeed, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action lawsuit, saying 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 current lawsuit, which is largely similar to its predecessors, New York state citizens Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is explained in the filing as an 'illegal sports betting enterprise. '

Apple and Google have actually likewise been named as accuseds in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech business responded to DailyMail.com's request for comment.

'We usually do not discuss matters before the courts,' a VGW spokesperson told 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 actually not been formally served.

'We have full self-confidence in our compliance with all laws and policies where we operate, and remain confident about the future,' the representative continued. 'We continue to offer our free-to-play video games across the majority of The United States and Canada, as we have for more than a years, developing not just excellent video games, user experiences and home entertainment, however also ensuring this is done securely, properly and at the greatest level of standards.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are relatively common throughout the online social video games market (and the US more broadly), and our basic practice is that we mean to strongly protect any claim which might be brought against us.'

The concerns between gaming and sweepstakes gambling establishments might prove troublesome for some celebrity 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 standard gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking unlawful sports betting wagering 'sweeps' sites while at the same time the leagues wish to predict a strong stance against illegal gambling - particularly when trying to tamp down the occasional gaming scandal,' Glaser told 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 unassociated to anything including social or sweepstakes casinos.

In addition to VGW, Apple and Google are being demanded hosting presumably illegal gambling sites

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

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

Neither an NBA spokesman nor the players' representatives responded to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also overlooked to react to DailyMail.com emails.

Asked if their celeb endorsers have an obligation to explain to consumers the distinctions and similarities in between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that requires to be done.

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

Glaser, an outspoken challenger of sweepstakes sites, sees things in a different way.
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'Celebrities who provide their names to dubious unlawful sports betting websites are, at a minimum, putting their track records at threat as well as courting civil and class actions by customers who declare damage,' Glaser stated. 'There is likewise some risk that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for facilitating prohibited gaming.'

New YorkNBADrakeParis Hilton
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