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The smiling faces of Paris Hilton and Ryan Seacrest made surprise looks before the Louisiana Senate for Friday's hearing on prohibited sports betting.

No, they weren't personally in participation, however the world-famous celebrities were conspicuously included in a slide presentation on social and sweepstakes gambling establishments - the controversial websites offering both totally free casino-style games and profitable rewards, such as money, gift 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 simply two cogs in the multibillion-dollar industry that now finds itself besieged by lawsuits. In the eyes of many video gaming corporations, not to discuss claim plaintiffs and state regulators, sweepstakes gambling establishments function as standard gambling establishments, only without the oversight, customer defenses and tax laws. So not just can they avoid the high 24-percent federal gambling levy, however sweepstakes operators aren't subject to regulative 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 faces accusations of illegal sports betting in a New york city lawsuit that declares VGW utilizes celebrity endorsers to 'create a veneer of authenticity' around its item. (See VGW's declaration listed below)

'I'm not sure" if you do not trust us, you can rely on Paris Hilton" is a winning message for business operating multibillion-dollar unlawful operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of video gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a variety 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 offer any differences between standard gambling and sweepstakes play.

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

Ryan Seacrest advises fans to dip into Chumba Casino, where lots of - but not all - games are free

Drake has a handle social sweeps casino, Stake, that he regularly touts on social networks

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Instead, advertisements typically focus around the social aspect of the casinos, while leaving out the capacity for real gaming losses.

Others lure customers with pledges of rewards. One such operator, Stake, ran a social networks advertisement revealing off Drake's cars and trucks, aircrafts and mansions before rotating to video of the rap artist playing online casino-style games.

'Daddy, why do we have a lot cash?' read the first caption on the screen.

Another caption explained: 'Because I never quit.'

The disparity between sports betting websites 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), discussed its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA information, most of the players on social-sweepstakes casinos are playing for free.

'Most social sweeps clients never ever buy,' the SPGA spokesperson told DailyMail.com. 'The minority of consumers who make purchases do so in quantities far smaller sized than the typical deposit or wager size at real-money online sports betting sites.'

Social casinos use customers an opportunity to play casino-style video games with friends. Players have the choice to purchase worthless currency often referred to as 'gold coins,' which can not be exchanged for genuine money, however can be used to unlock numerous functions within the games.

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

And therein lies the capacity for financial 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 previous year after continuing to buy more coins in pursuit of money and other things of worth.
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The Philadelphia 76ers' Paul George is seen promoting a Global Poker event

Social sweeps gambling establishment Stake ran an ad flaunting Drake's cars, planes and mansions

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

Traditional online casinos are banned in all but 7 states, which has helped to fuel the popularity of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, enable consumers to submit mail-in requests for totally free sweeps coins, provided the gamers follow painfully specific directions. What's more, players are often rewarded with sweeps coins merely for registering, thus giving them a reason to try their hands at any variety of casino games for an opportunity to win - or lose - real money.

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

According to the stakeholders, their item is the free casino-style gaming, and the real-stakes competitors is merely a means of promoting their bread and butter.

'Social sweepstakes games are just a type of online home entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is required to dip into social casinos with sweepstakes rewards. Consumers never ever have to pay for an opportunity to win rewards. That lack of a purchase requirement - or" consideration" - is an essential distinction between social sweeps and conventional online sports betting websites like gambling establishments.'

Consider the manner in which McDonald's uses its yearly Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and french fries that use them the opportunity to win financially rewarding prizes, such as a $1 million prize.

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

'Sweepstakes are a long-standing technique for promoting all sort of daily companies in the United States, whatever from hamburgers to publication memberships to coffee and home enhancement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are frequently utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling market insiders, that argument doesn't cut it.

For starters, gaming lawyer Daniel Wallach points out, McDonald's Monopoly video game does not run indefinitely. Rather, it has a well-defined start and end, thus suggesting the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being utilized to promote real products like fries, shakes, and the .

'They do not last permanently and they're usually not connected to casino-style games of opportunity,' Wallach told DailyMail.com. 'They're just money giveaways.

'The sweepstakes [gambling establishments] possess none of the characteristics frequently associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos use" casino-like" payments, generally 80 percent or more of incomes, whereas the typical payout percentage for a short-term advertising sweepstakes is an unimportant share of the profits made by the company [typically less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the web cafes that sprang up in Florida, offering customers the opportunity to play casino-style video games for genuine rewards. A number of those brick-and-mortar establishments have actually considering that been shuttered over allegations of illegal sports betting.

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

'These differences are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have repeatedly been mentioned by courts and state lawyer generals as crucial elements in figuring out that a sweepstakes promotion was in fact a guise for unlawful gaming.'

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

'Consumers are being denied of protections and states are passing up substantial tax and revenue opportunities as this sports betting changes that conducted through managed 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 dozen states.
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Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without admitting any misbehavior, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action lawsuit, saying the settlement was made to avoid legal expenses and continued lawsuits.

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

In the most current claim, which is mainly comparable to its predecessors, New York state locals Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'illegal gaming enterprise. '

Apple and Google have actually likewise been named as offenders in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for comment.

'We typically don't 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 only just been filed with the court and VGW has actually not been officially served.

'We have full confidence in our compliance with all laws and regulations where we operate, and remain positive about the future,' the spokesperson continued. 'We continue to offer our free-to-play video games across many of North America, as we have for more than a years, producing not only fantastic games, user experiences and home entertainment, however also guaranteeing this is done securely, responsibly and at the highest level of requirements.

'More broadly, we 'd restate that class actions and other litigations and arbitrations are reasonably typical throughout the online social games market (and the US more broadly), and our basic practice is that we intend to intensely protect any claim which might be brought against us.'

The problems between traditional online gambling and sweepstakes casinos might prove problematic 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 standard gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking illegal sports betting 'sweeps' sites while at the exact same time the leagues want to predict a strong position against illegal sports betting - particularly when trying to tamp down the periodic gambling 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 gambling establishments.
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In addition to VGW, Apple and Google are being taken legal action against for hosting presumably prohibited 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 athletes backing sweepstakes sites is a matter of when, not if,' Glaser added.

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

Asked if their celeb 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 needs to be done.

'We have full confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the representative stated. 'A few of our worths 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 lend their names to dubious prohibited gambling sites are, at a minimum, putting their reputations at risk along with courting civil and class actions by consumers who declare harm,' Glaser stated. 'There is also some danger that state regulators and state attorneys general rope celeb endorsers into enforcement efforts for facilitating illegal gambling.'

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