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 stars were notably included in a slide presentation on social and sweepstakes gambling establishments - the controversial sites providing both complimentary casino-style 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 totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The sites are just 2 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 claim complainants and state regulators, sweepstakes gambling establishments act as standard casinos, only without the oversight, consumer protections and tax laws. So not just can they avoid the high 24-percent federal gambling levy, however sweepstakes operators aren't based on regulatory hurdles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income last year alone. Now the business faces allegations of unlawful gaming in a New york city lawsuit that claims VGW utilizes celeb endorsers to 'produce a veneer of legitimacy' around its item. (See VGW's declaration listed below)
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'I'm not exactly sure" 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 presenter, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers consist of a variety of celebrities from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom offer any differences between traditional gaming and sweepstakes play.

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

Ryan Seacrest prompts fans to dip into Chumba Casino, where numerous - however not all - video games are complimentary

Drake has an offer with social sweeps gambling establishment, Stake, that he regularly promotes on social media

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Instead, advertisements normally center around the social element of the gambling establishments, while omitting the capacity for real sports betting losses.
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Others lure customers with pledges of rewards. One such operator, Stake, ran a social media ad revealing off Drake's cars and trucks, planes and estates before rotating to video of the rap artist playing online casino-style games.

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

Another caption discussed: 'Because I never gave up.'

The discrepancy in between sports betting websites and social or sweepstakes casinos is a bit complex, however operators of the latter insist they're not included with the former.

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, the majority of the players on social-sweepstakes gambling establishments are sports betting free.

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

Social gambling establishments use clients an opportunity to play casino-style games with pals. Players have the alternative to buy worthless currency often described as 'gold coins,' which can not be exchanged for genuine cash, but can be used to open various features within the games.

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

And therein lies the capacity for monetary losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York City. One gamer told the Washington Post he lost more than $100,000 on sweepstakes casinos in the past 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 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 seven states, which has assisted to sustain the appeal of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes sites, which do not require generally need recognition. However, websites like Chumba will request for IDs from players trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, enable clients to submit mail-in ask for totally free sweeps coins, supplied the players follow painfully specific directions. What's more, gamers are typically rewarded with sweeps coins simply for signing up, consequently providing a reason to try their hands at any number of gambling establishment games for a possibility to win - or lose - real money.

So why are sweepstakes sites permitted to run in 48 states, while online casinos are prohibited in all but 7?

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

'Social sweepstakes games are merely 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 prizes. Consumers never ever have to spend for an opportunity to win prizes. That absence of a purchase requirement - or" factor to consider" - is an essential difference in between social sweeps and conventional online gaming sites like gambling establishments.'

Think of the method that McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to bet, but rather they're buying hamburgers and fries that provide them the possibility to win rewarding rewards, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the video game itself does not meet the definition of sports betting in the US.

'Sweepstakes are an enduring technique for promoting all kinds of daily organizations in the United States, everything from burgers to publication subscriptions to coffee and home improvement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are frequently utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting industry experts, that argument doesn't cut it.
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For beginners, gaming lawyer Daniel Wallach mentions, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a well-defined start and end, thereby recommending the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being used to promote real products 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 opportunity,' Wallach told DailyMail.com. 'They're simply money free gifts.

'The sweepstakes [gambling establishments] possess none of the attributes commonly with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments provide" casino-like" payments, usually 80 percent or more of profits, whereas the common payout portion for a temporary marketing sweepstakes is an insignificant share of the profits made by the company [typically less than one percent]'

Wallach is fast to liken the online social sweeps gambling establishments to the internet coffee shops that sprang up in Florida, providing clients the possibility to play casino-style video games for real rewards. Much of those brick-and-mortar facilities have actually given that been shuttered over claims of illegal sports betting.

DJ Khaled is amongst a number of celeb spokespeople for VGW's Global Poker brand name
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Now, Wallach argues, social sweeps casinos need to face similar examination.

'These differences are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have consistently been mentioned by courts and state lawyer generals as key consider determining that a sweepstakes promo remained in reality a guise for prohibited gaming.'

One of the gambling establishment market's leading trade companies, the American Gaming Association, is now pushing lawmakers to examine sweepstakes operators and, in many cases, enact brand-new legislation on the concern.

'Consumers are being deprived of defenses and states are giving up significant tax and earnings opportunities as this sports betting changes that carried out through controlled channels,' read a well-circulated AGA memo.

And then there are the plaintiffs who have actually taken legal action against 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 admitting any misdeed, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action suit, stating the settlement was made to prevent legal expenses and continued litigation.

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

In the current suit, which is mainly similar to its predecessors, New york city state homeowners Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'illegal gambling business. '

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

'We generally do not discuss matters before the courts,' a VGW spokesperson told DailyMail.com by means of email. 'However, we keep in mind that this claim has actually only simply been filed with the court and VGW has not been formally served.

'We have full self-confidence in our compliance with all laws and guidelines where we operate, and remain positive about the future,' the spokesperson continued. 'We continue to use our free-to-play games across the majority of North America, as we have for more than a years, creating not only fantastic games, user experiences and home entertainment, however likewise ensuring this is done securely, responsibly and at the greatest level of requirements.

'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are reasonably common across the online social video games industry (and the US more broadly), and our basic practice is that we mean to intensely safeguard any claim which may be brought versus us.'
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The problems between conventional online gambling and sweepstakes gambling establishments 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 name while the NBA is partnered with standard gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking prohibited sports betting 'sweeps' sites while at the same time the leagues desire to project a strong stance versus illegal gambling - especially when trying to tamp down the occasional sports betting scandal,' Glaser told DailyMail.com.

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

Together with VGW, Apple and Google are being taken legal action against for hosting allegedly unlawful sports betting websites

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

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

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

Asked if their celebrity endorsers have a duty to describe to customers the differences and resemblances in between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that requires to be done.

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

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

'Celebrities who provide their names to dubious prohibited gambling websites are, at a minimum, putting their credibilities at risk in addition to courting civil and class actions by customers who declare harm,' Glaser said. 'There is also some threat that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for facilitating unlawful gaming.'

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