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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, but the world-famous celebs were notably consisted of in a slide discussion on social and sweepstakes casinos - the controversial sites using both complimentary casino-style games and profitable prizes, such as money, gift 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 industry that now discovers itself besieged by suits. In the eyes of lots of gaming corporations, not to mention suit complainants and state regulators, sweepstakes gambling establishments function as standard gambling establishments, only without the oversight, consumer securities and tax laws. So not only can they prevent the steep 24-percent federal sports betting levy, but sweepstakes operators aren't subject to regulatory hurdles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the business deals with allegations of unlawful gaming in a New York claim that declares VGW uses celebrity endorsers to 'create a veneer of legitimacy' around its item. (See VGW's statement below)

'I'm unsure" if you do not trust us, you can rely on Paris Hilton" is a winning message for companies running multibillion-dollar illegal 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 include a range of celebrities from gambling lovers 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 standard gambling and sweepstakes play.

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

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

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

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Instead, advertisements typically focus around the social element of the casinos, while omitting the potential for real gambling losses.

Others lure consumers with pledges of prizes. One such operator, Stake, ran a social media ad displaying Drake's cars and trucks, airplanes and estates before pivoting to video of the rap artist playing online casino-style video games.
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'Daddy, why do we have so much money?' check out the first caption on the screen.

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

The inconsistency between gambling sites and social or sweepstakes casinos is a bit complicated, but operators of the latter insist they're not included with the former.

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, many of the players on social-sweepstakes gambling establishments are sports betting free.

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

Social casinos provide consumers an opportunity to play casino-style video games with friends. Players have the alternative to purchase worthless currency typically referred to as 'gold coins,' which can not be exchanged for real money, however can be used to open different functions within the video games.

But within the world of social gambling establishments exists sweepstakes video gaming, enabling consumers to acquire other currency known as 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the capacity for financial losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York. One gamer informed 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 cash and other things of worth.

The Philadelphia 76ers' Paul George is seen promoting a Worldwide Poker occasion

Social sweeps casino Stake ran an advertisement flaunting Drake's vehicles, planes and estates

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

Traditional online gambling establishments are banned in all however 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 need typically need recognition. However, sites like Chumba will request IDs from gamers trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, allow customers to send mail-in ask for complimentary sweeps coins, provided the gamers follow painfully particular directions. What's more, players are typically rewarded with sweeps coins merely for registering, thereby providing them a reason to try their hands at any number of gambling establishment video games for a chance to win - or lose - genuine money.

So why are sweepstakes websites allowed to operate in 48 states, while online gambling establishments are prohibited in all however 7?

According to the stakeholders, their item is the complimentary casino-style video gaming, and the real-stakes competition is just a way of promoting their bread and butter.

'Social sweepstakes games are just a form of online entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is required to dip into social casinos with sweepstakes prizes. Consumers never ever have to spend for a chance to win prizes. That absence of a purchase requirement - or" consideration" - is a vital distinction between social sweeps and traditional online sports betting sites like gambling establishments.'

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

And without a purchase requirement, or 'consideration', the game itself doesn't fulfill the meaning of gambling in the US.

'Sweepstakes are an enduring technique for promoting all kinds of daily businesses 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 regularly 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 industry insiders, that argument doesn't cut it.

For starters, video gaming attorney Daniel Wallach explains, McDonald's Monopoly game does not run indefinitely. Rather, it has a distinct start and end, thus recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote real items like fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're normally not connected to casino-style games of chance,' Wallach informed DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [casinos] possess none of the attributes commonly associated with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos provide" casino-like" payments, normally 80 percent or more of incomes, whereas the typical payout percentage for a momentary promotional sweepstakes is an unimportant share of the revenue earned by the business [normally less than one percent]'

Wallach is quick to compare the online social sweeps casinos to the internet cafes that sprang up in Florida, providing clients the opportunity to play casino-style games for real rewards. A lot of those brick-and-mortar establishments have actually considering that been shuttered over accusations of unlawful gaming.

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

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

'These distinctions are not approximate,' Wallach said of social sweeps casinos. 'They have consistently been pointed out by courts and state attorney general of the United States as crucial elements in identifying that a sweepstakes promo remained in fact 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, sometimes, enact new legislation on the concern.

'Consumers are being denied of securities and states are giving up significant tax and revenue chances as this gambling replaces that performed through controlled channels,' checked out a well-circulated AGA memo.

And after that there are the plaintiffs who have taken legal action against social gambling establishments in more than a lots states.
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Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action suit, stating the settlement was made to avoid legal expenses and continued litigation.

Michael Phelps has signed a handle the VGW Group, which owns Global Poker
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In the current claim, which is mostly comparable 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 'prohibited sports betting business. '

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

'We typically do not talk about matters before the courts,' a VGW representative told DailyMail.com by means of e-mail. 'However, we keep in mind that this claim has actually only just 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 positive about the future,' the spokesperson continued. 'We continue to use our free-to-play video games across the majority of The United States and Canada, as we have for more than a decade, producing not only fantastic video games, user experiences and entertainment, but likewise ensuring this is done securely, responsibly and at the greatest level of standards.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are relatively typical across the online social video games industry (and the US more broadly), and our standard practice is that we plan to intensely safeguard any claim which might be brought against us.'
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The concerns in between standard online gambling and sweepstakes gambling establishments could show bothersome for some star 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 standard video gaming titans like FanDuel and DraftKings.
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'It's paradoxical that expert athletes are hawking prohibited sports betting wagering 'sweeps' sites while at the very same time the leagues wish to predict a strong position versus illegal gambling - particularly when attempting to tamp down the periodic gaming scandal,' Glaser told DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter got a life time restriction from the NBA over claims he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes casinos.

In addition to VGW, Apple and Google are being taken legal action against for hosting presumably illegal sports betting sites
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Regardless, Glaser sees sweepstakes casinos as a significant problem for leagues such as the NBA.

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

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 also neglected to react to DailyMail.com e-mails.

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

'We have full self-confidence in our influencer and ambassadorial collaborations, and our organization practices more broadly,' the representative said. 'A few of our worths are" our gamers come initially" and" we do what's right", and we put our worths at the core of whatever we do.'

Glaser, an outspoken opponent of sweepstakes websites, sees things in a different way.
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'Celebrities who provide their names to dubious illegal gaming websites are, at a minimum, putting their reputations at threat in addition to courting civil and class actions by consumers who allege harm,' Glaser said. 'There is likewise some danger that state regulators and state chief law officers rope star endorsers into enforcement efforts for helping with unlawful gaming.'

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