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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 unlawful sports betting.

No, they weren't personally in attendance, but the world-famous celebrities were conspicuously included in a slide discussion on social and sweepstakes casinos - the controversial sites offering both complimentary casino-style video games and lucrative rewards, such as cash, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet 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 market that now finds itself besieged by claims. In the eyes of many video gaming corporations, not to discuss lawsuit plaintiffs and state regulators, sweepstakes casinos serve as conventional gambling establishments, just without the oversight, consumer defenses and tax laws. So not only can they prevent the steep 24-percent federal sports betting levy, but sweepstakes operators aren't based on regulatory hurdles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the company deals with allegations of prohibited gaming in a New York claim that claims VGW uses star endorsers to 'produce 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 operating multibillion-dollar unlawful operations out of locations 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 variety of celebs from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions in between conventional gambling and sweepstakes play.

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

Ryan Seacrest urges fans to dip into Chumba Casino, where lots of - however not all - video games are free

Drake has a handle social sweeps gambling establishment, Stake, that he routinely touts on social networks

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Instead, advertisements typically center around the social aspect of the gambling establishments, while leaving out the potential for real gambling losses.

Others tempt consumers with guarantees of prizes. One such operator, Stake, ran a social networks ad flaunting Drake's vehicles, planes and mansions before rotating to video footage of the rapper playing online casino-style video games.

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

Another caption explained: 'Because I never quit.'

The discrepancy between gaming sites and social or sweepstakes gambling establishments 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), described its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA information, many of the players on social-sweepstakes gambling establishments are sports betting totally free.

'Most social sweeps clients never ever make a purchase,' the SPGA representative informed DailyMail.com. 'The minority of consumers who make purchases do so in amounts far smaller sized than the normal deposit or wager size at real-money online gambling sites.'

Social casinos offer consumers a chance to play casino-style video games with friends. Players have the choice to purchase worthless currency frequently referred to as 'gold coins,' which can not be exchanged for real money, but can be utilized to open different functions within the video games.

But within the world of social casinos exists sweepstakes gaming, permitting consumers to obtain other currency referred to as 'sweeps coins' that can be exchanged for cash or other rewards.

And therein lies the potential for financial losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York City. One gamer told 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 cash and other things of worth.

The Philadelphia 76ers' Paul George is seen promoting an International Poker occasion

Social sweeps casino Stake ran an ad flaunting Drake's vehicles, airplanes and mansions

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

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

Anyone over the age of 18 can access the sweepstakes sites, which do not need normally require identification. However, websites like Chumba will ask for IDs from gamers attempting to withdraw any funds.

Many websites, like the crypto-compatible Stake, permit customers to send mail-in ask for totally free sweeps coins, supplied the gamers follow painfully particular instructions. What's more, players are frequently rewarded with sweeps coins merely for signing up, thereby providing a reason to attempt their hands at any number of casino video games for a chance to win - or lose - real cash.

So why are sweepstakes sites permitted to run in 48 states, while online gambling establishments are banned in all but 7?

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

games are just a form of online home entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is required to play at social casinos with sweepstakes prizes. Consumers never need to spend for a chance to win rewards. That lack of a purchase requirement - or" factor to consider" - is an essential distinction in between social sweeps and standard online sports betting 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 bet, however rather they're purchasing hamburgers and french fries that use them the opportunity to win financially rewarding prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the game itself does not fulfill the definition of sports betting in the US.
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'Sweepstakes are a long-standing method for promoting all sort of daily organizations in the United States, whatever from hamburgers to publication memberships to coffee and home enhancement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are routinely used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'
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But to lots of sports betting industry experts, that argument does not cut it.

For beginners, gaming lawyer Daniel Wallach mentions, McDonald's Monopoly game does not run indefinitely. Rather, it has a distinct beginning and end, thus recommending the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being used to promote real items like french fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're normally not connected to casino-style video games of possibility,' Wallach told DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [gambling establishments] have none of the qualities commonly connected with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos provide" casino-like" payouts, usually 80 percent or more of profits, whereas the typical payment portion for a short-term marketing sweepstakes is a minor share of the earnings made by the business [normally less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the web cafes that emerged in Florida, using customers the chance to play casino-style games for genuine prizes. Many of those brick-and-mortar facilities have actually since been shuttered over accusations of unlawful sports betting.

DJ Khaled is among numerous celebrity spokespeople for VGW's Global Poker brand

Now, Wallach argues, social sweeps casinos must face similar scrutiny.

'These differences are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have actually repeatedly been mentioned by courts and state chief law officer as crucial elements in determining that a sweepstakes promo was in fact a guise for unlawful sports betting.'

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

'Consumers are being deprived of protections and states are forgoing substantial tax and revenue chances as this sports betting replaces that conducted through managed channels,' read a well-circulated AGA memo.

And after that there are the plaintiffs who have actually sued social gambling establishments 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 misbehavior, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action lawsuit, stating the settlement was made to prevent legal expenses and continued lawsuits.

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

In the current lawsuit, which is mostly similar to its predecessors, New York state locals Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited gambling enterprise. '

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

'We typically don't talk about matters before the courts,' a VGW representative told DailyMail.com via email. 'However, we note that this claim has actually only simply been filed with the court and VGW has actually not been formally served.
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'We have full confidence in our compliance with all laws and guidelines where we run, and remain positive about the future,' the representative continued. 'We continue to offer our free-to-play games throughout most of North America, as we have for more than a years, producing not only excellent games, user experiences and entertainment, however also guaranteeing this is done securely, responsibly and at the highest level of requirements.

'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are relatively common throughout the online social games industry (and the US more broadly), and our basic practice is that we intend to vigorously protect any claim which may be brought against us.'

The concerns in between standard online sports betting and sweepstakes gambling establishments might prove troublesome for some celeb endorsers.

Towns, a star center with the Knicks, and the 76ers' George both back VGW's Global Poker brand while the NBA is partnered with conventional gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking unlawful sports betting 'sweeps' sites while at the very same time the leagues desire to predict a strong position versus prohibited gambling - specifically when trying to tamp down the occasional gambling scandal,' Glaser informed DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter received a life time 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 gambling establishments.
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In addition to VGW, Apple and Google are being taken legal action against for hosting presumably illegal sports betting sites

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

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

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

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

'We have complete confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the spokesperson stated. 'Some of our values 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 prohibited sports betting sites are, at a minimum, putting their credibilities at threat as well as courting civil and class actions by consumers who allege damage,' Glaser said. 'There is likewise some risk that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for assisting in unlawful gambling.'

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