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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 gambling.
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No, they weren’t personally in presence, however the world-famous celebrities were notably consisted of in a slide presentation on social and sweepstakes casinos - the controversial sites providing both free casino-style video games and rewarding rewards, such as cash, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone 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 websites are simply 2 cogs in the multibillion-dollar industry that now discovers itself besieged by suits. In the eyes of lots of video gaming corporations, not to discuss suit plaintiffs and state regulators, sweepstakes casinos act as standard casinos, just without the oversight, consumer protections and tax laws. So not only can they prevent the steep 24-percent federal sports betting levy, however 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 income in 2015 alone. Now the business deals with allegations of illegal sports betting in a New York claim that declares VGW uses celeb endorsers to ‘create a veneer of legitimacy’ around its product. (See VGW’s statement listed below)

'I’m not exactly sure” if you do not trust us, you can rely on Paris Hilton” is a winning message for business running multibillion-dollar illegal operations out of places 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 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 use any distinctions between traditional sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of lots of sweepstakes gambling establishments found online

Ryan Seacrest prompts fans to play at Chumba Casino, where lots of - however not all - video games are complimentary

Drake has a handle social sweeps casino, Stake, that he routinely promotes on social networks

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Instead, advertisements normally focus around the social aspect of the casinos, while omitting the capacity for actual gambling losses.

Others tempt consumers with promises of rewards. One such operator, Stake, ran a social media advertisement displaying Drake’s vehicles, aircrafts and estates before pivoting to 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 provided up.‘
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The disparity in between sports betting sites and social or sweepstakes casinos is a bit complex, however operators of the latter insist they’re not involved with the previous.

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 data, the majority of the gamers on social-sweepstakes casinos are sports betting totally free.

'Most social sweeps customers never purchase,’ the SPGA representative told DailyMail.com. ‘The minority of clients who make purchases do so in quantities far smaller sized than the normal deposit or bet size at real-money online gaming sites.‘

Social casinos use clients a to play casino-style games with good friends. Players have the alternative to buy valueless currency frequently described as ‘gold coins,’ which can not be exchanged for real cash, but can be utilized to unlock numerous functions within the games.

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

And therein lies the capacity for monetary losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York City. 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 Global Poker event

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake’s vehicles, airplanes and estates

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

Traditional online casinos are banned in all however 7 states, which has assisted to sustain the popularity of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, enable consumers to submit mail-in ask for complimentary sweeps coins, provided the gamers follow painfully particular directions. What’s more, players are often rewarded with sweeps coins just for registering, thereby providing a factor to attempt their hands at any variety of casino games for an opportunity to win - or lose - real cash.

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

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

'Social sweepstakes video games are simply a kind of online home entertainment,’ an SPGA spokesperson informed DailyMail.com by e-mail. ‘No purchase is required to dip into social casinos with sweepstakes rewards. Consumers never ever need to pay for a chance to win prizes. That absence of a purchase requirement - or” factor to consider” - is a crucial difference in between social sweeps and traditional online gaming websites like casinos.‘

Consider the manner in which McDonald’s utilizes its yearly Monopoly game to promote its food: Customers aren’t paying to gamble, but rather they’re buying hamburgers and fries that offer them the opportunity to win profitable rewards, such as a $1 million prize.

And without a purchase requirement, or ‘factor to consider’, the video game itself does not fulfill the definition of gaming in the US.

'Sweepstakes are an enduring approach for promoting all sort of everyday organizations in the United States, whatever from hamburgers to magazine memberships to coffee and home enhancement shops,’ the SPGA representative 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 insiders, that argument doesn’t cut it.

For starters, video gaming lawyer Daniel Wallach mentions, McDonald’s Monopoly game does not run indefinitely. Rather, it has a distinct beginning and end, therefore suggesting the sweepstakes is not the fast-food giant’s primary product. Instead, the sweepstakes is being utilized to promote genuine products like french fries, shakes, and the Filet-O-Fish.

'They don’t last forever and they’re usually not tied to casino-style video games of chance,’ Wallach told DailyMail.com. ‘They’re just money free gifts.

'The sweepstakes [casinos] possess none of the attributes frequently related to McDonald’s-design sweepstakes promotions,’ Wallach continued. ‘Besides running in eternity, the sweepstakes gambling establishments provide” casino-like” payouts, usually 80 percent or more of revenues, whereas the typical payout percentage for a short-lived marketing sweepstakes is a minor share of the earnings made by the business [generally less than one percent]‘

Wallach is quick to compare the online social sweeps casinos to the web coffee shops that emerged in Florida, offering consumers the chance to play casino-style games for genuine rewards. A number of those brick-and-mortar establishments have actually because been shuttered over claims of prohibited sports betting.

DJ Khaled is amongst numerous celebrity spokespeople for VGW’s Global Poker brand name

Now, Wallach argues, social sweeps casinos must face comparable examination.

'These differences are not approximate,’ Wallach stated of social sweeps casinos. ‘They have actually consistently been cited by courts and state attorney general of the United States as crucial elements in determining that a sweepstakes promo was in fact a guise for prohibited sports betting.‘

One of the gambling establishment market’s leading trade organizations, the American Gaming Association, is now pressing legislators to examine sweepstakes operators and, in some cases, enact brand-new legislation on the issue.

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

And then there are the complainants who have taken legal action against social casinos in more than a dozen states.

Sweepstakes casino operators paid a combined $14.2 million in 4 different cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, stating the settlement was made to prevent legal expenses and continued litigation.

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

In the most recent lawsuit, which is largely similar to its predecessors, New york city state homeowners Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is explained in the filing as an ‘unlawful sports betting business. ‘

Apple and Google have also been called as accuseds in claims for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com’s request for remark.
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'We typically don’t discuss matters before the courts,’ a VGW representative told DailyMail.com through e-mail. ‘However, we keep in mind that this claim has actually only just been filed with the court and VGW has not been officially served.

'We have full confidence in our compliance with all laws and policies where we run, and remain positive about the future,’ the representative continued. ‘We continue to provide our free-to-play video games throughout the majority of North America, as we have for more than a years, developing not just excellent games, user experiences and home entertainment, however also ensuring this is done safely, responsibly and at the greatest level of requirements.

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

The problems in between traditional online gaming 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.

'It’s paradoxical that expert athletes are hawking unlawful sports betting ‘sweeps’ sites while at the very same time the leagues want to project a strong stance against unlawful gambling - especially when attempting to tamp down the occasional sports betting scandal,’ Glaser told DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter got a life time ban 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.

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

Regardless, Glaser sees sweepstakes casinos as a significant problem 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 gamers’ agents reacted to DailyMail.com’s requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise overlooked to respond to DailyMail.com e-mails.

Asked if their celeb endorsers have a duty to discuss to consumers the differences and resemblances in between iGaming and sweepstakes casinos, VGW firmly insisted there is absolutely nothing more that requires to be done.

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,’ the spokesperson said. ‘A few of our values are” our gamers precede” and” we do what’s right”, and we put our values at the core of whatever we do.‘

Glaser, an outspoken challenger of sweepstakes sites, sees things differently.
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'Celebrities who lend their names to shady prohibited gaming sites are, at a minimum, putting their reputations at threat in addition to courting civil and class actions by consumers who allege damage,’ Glaser stated. ‘There is likewise some danger that state regulators and state chief law officers rope star endorsers into enforcement efforts for helping with illegal sports betting.‘

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