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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 gambling.

No, they weren’t personally in participation, but the world-famous celebrities were conspicuously consisted of in a slide presentation on social and sweepstakes gambling establishments - the controversial sites providing both complimentary casino-style games and lucrative rewards, such as money, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can ‘play for complimentary,’ 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 finds itself besieged by lawsuits. In the eyes of lots of gaming corporations, not to discuss suit complainants and state regulators, sweepstakes gambling establishments serve as conventional gambling establishments, just without the oversight, customer securities and tax laws. So not just can they avoid the steep 24-percent federal gaming levy, however sweepstakes operators aren’t based on regulatory difficulties like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the business faces accusations of unlawful gaming in a New York lawsuit that declares VGW utilizes celeb endorsers to ‘develop a veneer of authenticity’ 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 business operating multibillion-dollar unlawful 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 range of stars from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom provide any distinctions in between conventional gambling and sweepstakes play.

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

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

Drake has a handle social sweeps casino, Stake, that he routinely touts on social networks
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Instead, advertisements usually focus around the social element of the gambling establishments, while omitting the potential for real sports betting losses.

Others tempt consumers with pledges of rewards. One such operator, Stake, ran a social networks advertisement flaunting Drake’s vehicles, airplanes and mansions before rotating to footage of the rapper playing online casino-style video games.

'Daddy, why do we have a lot cash?’ check out the very first caption on the screen.

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

The discrepancy in between gaming sites and social or sweepstakes gambling establishments is a bit intricate, but 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), explained its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, the majority of the players on social-sweepstakes casinos are sports betting free.
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'Most social sweeps clients never purchase,’ the SPGA spokesperson informed DailyMail.com. ‘The minority of consumers who make purchases do so in quantities far smaller sized than the common deposit or wager size at real-money online sports betting websites.‘

Social casinos provide customers a chance to play casino-style games with pals. Players have the alternative to buy worthless currency often referred to as ‘gold coins,’ which can not be exchanged for genuine cash, however can be used to open different functions within the video games.

But within the world of social casinos exists sweepstakes video gaming, enabling consumers to get other currency known as ‘sweeps coins’ that can be exchanged for cash or other rewards.

And therein lies the potential for financial losses, like the ones declared by complainants 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 past year after continuing to purchase more coins in pursuit of money and other things of value.

The Philadelphia 76ers’ Paul George is seen promoting a Global Poker event

Social sweeps gambling establishment Stake ran an advertisement displaying Drake’s vehicles, airplanes 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 seven states, which has helped to sustain the popularity of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes sites, which don’t require generally require identification. However, sites like Chumba will ask for IDs from gamers attempting to withdraw any funds.
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Many sites, like the crypto-compatible Stake, allow consumers to send mail-in ask for complimentary sweeps coins, provided the gamers follow painfully particular instructions. What’s more, gamers are often rewarded with sweeps coins merely for signing up, therefore providing a reason to attempt their hands at any variety of gambling establishment games for an opportunity to win - or lose - real cash.

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

According to the stakeholders, their item 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 entertainment,’ an SPGA representative informed DailyMail.com by email. ‘No purchase is required to play at social gambling establishments with sweepstakes prizes. Consumers never ever need to pay for a chance to win rewards. That lack of a purchase requirement - or” consideration” - is a vital difference in between social sweeps and conventional online gambling sites like gambling establishments.‘

Consider the method that McDonald’s utilizes 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 provide them the opportunity to win rewarding prizes, such as a $1 million jackpot.

And without a purchase requirement, or ‘factor to consider’, the game itself does not satisfy the definition of sports betting in the US.

'Sweepstakes are a long-standing method for promoting all type of daily organizations in the United States, whatever from hamburgers to publication memberships to coffee and home improvement shops,’ the SPGA representative informed DailyMail.com. ‘Sweepstakes promotions are routinely used by a who’s who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.‘

But to many gambling industry experts, that argument doesn’t cut it.

For beginners, gaming lawyer Daniel Wallach explains, McDonald’s Monopoly video game doesn’t run indefinitely. Rather, it has a well-defined beginning and end, thereby suggesting the sweepstakes is not the fast-food giant’s main item. Instead, the sweepstakes is being utilized to promote genuine products like fries, shakes, and the Filet-O-Fish.
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'They do not last permanently and they’re usually not tied to casino-style video games of opportunity,’ Wallach informed DailyMail.com. ‘They’re simply money giveaways.

'The sweepstakes [casinos] possess none of the attributes commonly associated with McDonald’s-style sweepstakes promotions,’ Wallach continued. ‘Besides running in perpetuity, the sweepstakes gambling establishments use” casino-like” payouts, generally 80 percent or more of profits, whereas the typical payment portion for a momentary promotional sweepstakes is an insignificant share of the profits earned by the business [typically less than one percent]‘

Wallach fasts to compare the online social sweeps casinos to the web cafes that sprang up in Florida, offering clients the chance to play casino-style games for genuine prizes. Many of those brick-and-mortar establishments have actually considering that been shuttered over claims of prohibited gambling.

DJ Khaled is amongst a number of star spokespeople for VGW’s Global Poker brand name

Now, Wallach argues, social sweeps gambling establishments should face comparable scrutiny.

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

One of the gambling establishment industry’s leading trade companies, the American Gaming Association, is now pushing lawmakers to examine sweepstakes operators and, sometimes, enact brand-new legislation on the concern.

'Consumers are being denied of securities and states are passing up considerable tax and profits chances as this gaming changes that performed through managed channels,’ read a well-circulated AGA memo.

And after that there are the complainants who have sued social casinos in more than a dozen states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in four different cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW concurred 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 an offer with the VGW Group, which owns Global Poker

In the most recent suit, which is mostly comparable to its predecessors, New York state citizens Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is described in the filing as an ‘prohibited sports betting business. ‘

Apple and Google have actually likewise been named as accuseds in claims for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com’s ask for remark.

'We usually don’t talk about 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 submitted with the court and VGW has actually not been officially served.

'We have complete self-confidence in our compliance with all laws and guidelines where we run, and remain positive about the future,’ the representative continued. ‘We continue to use our free-to-play games across most of North America, as we have for more than a years, developing not only fantastic video games, user experiences and home entertainment, but also ensuring this is done safely, properly and at the highest level of standards.

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

The concerns in between conventional online gambling and sweepstakes casinos might prove bothersome for some celebrity endorsers.

Towns, a star center with the Knicks, and the 76ers’ George both back VGW’s Global Poker brand name while the NBA is partnered with conventional gaming titans like FanDuel and DraftKings.
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'It’s paradoxical that professional athletes are hawking illegal sports betting ‘sweeps’ websites while at the exact same time the leagues wish to project a strong stance versus illegal sports betting - especially when attempting to tamp down the occasional sports betting 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 including social or sweepstakes gambling establishments.

Along with VGW, Apple and Google are being demanded hosting apparently prohibited gambling sites

Regardless, Glaser sees sweepstakes casinos as a significant concern for leagues such as the NBA.

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

Neither an NBA spokesperson nor the players’ agents reacted to DailyMail.com’s ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to react to DailyMail.com emails.
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Asked if their celebrity endorsers have a duty to discuss to clients the differences 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 service practices more broadly,’ the representative said. ‘Some of our values are” our gamers come initially” and” we do what’s right”, and we put our values at the core of whatever we do.‘

Glaser, an outspoken opponent of sweepstakes websites, sees things differently.

'Celebrities who their names to dubious unlawful gaming websites are, at a minimum, putting their track records at threat as well as courting civil and class actions by consumers who allege harm,’ Glaser said. ‘There is also some danger that state regulators and state chief law officers rope star endorsers into enforcement efforts for helping with prohibited gambling.‘

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