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 notably consisted of in a slide discussion on social and sweepstakes gambling establishments - the questionable websites providing both free casino-style video games and lucrative prizes, such as money, present cards or cryptocurrency. In one advertisement, 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.


The websites are simply 2 cogs in the multibillion-dollar market that now discovers itself besieged by suits. In the eyes of numerous gaming corporations, not to discuss claim complainants and state regulators, sweepstakes casinos act as conventional casinos, 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 subject to regulatory difficulties like anti-money laundering and responsible-gaming defenses.


One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits last year alone. Now the business faces allegations of prohibited gambling in a New york city suit that declares VGW uses celeb endorsers to 'create a veneer of legitimacy' around its product. (See VGW's statement below)


'I'm not sure" if you do not trust us, you can trust Paris Hilton" is a winning message for business running multibillion-dollar unlawful 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 series of celebrities from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom provide any differences between traditional sports betting and sweepstakes play.


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


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


Drake has an offer with social sweeps casino, Stake, that he regularly promotes on social networks


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Instead, ads normally focus around the social aspect of the gambling establishments, while omitting the capacity for actual gaming losses.


Others tempt customers with pledges of prizes. One such operator, Stake, ran a social networks advertisement flaunting Drake's vehicles, planes and mansions before rotating to footage of the rap artist playing online casino-style video games.


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


Another caption described: 'Because I never quit.'


The disparity in between gambling sites and social or sweepstakes casinos is a bit complex, however operators of the latter insist they're not included with the previous.


A representative for an industry 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, many of the gamers 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 sized than the common deposit or bet size at real-money online gambling websites.'


Social casinos provide clients a possibility to play casino-style games with buddies. Players have the alternative to buy valueless currency typically referred to as 'gold coins,' which can not be exchanged for genuine cash, but can be used to unlock numerous functions within the video games.


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


And therein lies the capacity for financial losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York City. One player 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 money and other things of value.


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


Social sweeps gambling establishment Stake ran an ad showing off Drake's cars, aircrafts and estates


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


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


Anyone over the age of 18 can access the sweepstakes sites, which don't require normally require recognition. However, websites like Chumba will ask for IDs from gamers trying to withdraw any funds.


Many sites, like the crypto-compatible Stake, enable consumers to send mail-in ask for complimentary sweeps coins, supplied the players follow painfully particular guidelines. What's more, gamers are often rewarded with sweeps coins simply for registering, thereby providing a factor to attempt their hands at any number of casino video games for a chance to win - or lose - real cash.


So why are sweepstakes sites allowed to operate in 48 states, while online casinos are banned in all but 7?


According to the stakeholders, their item is the totally free casino-style video gaming, and the real-stakes competitors is simply a way of promoting their support.


'Social sweepstakes games are simply a form of online entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is needed to dip into social casinos with sweepstakes prizes. Consumers never ever need to spend for a chance to win rewards. That lack of a purchase requirement - or" consideration" - is a vital difference between social sweeps and conventional online sports betting sites like casinos.'


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


And without a purchase requirement, or 'consideration', the game itself does not fulfill the meaning of gaming in the US.


'Sweepstakes are an enduring technique for promoting all type of daily companies in the United States, everything from burgers to publication memberships to coffee and home enhancement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are regularly utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'


But to many gambling industry insiders, that argument doesn't cut it.


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


'They do not last forever and they're generally not connected to casino-style video games of possibility,' Wallach told DailyMail.com. 'They're simply money free gifts.


'The sweepstakes [casinos] possess none of the attributes frequently related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos provide" casino-like" payments, generally 80 percent or more of earnings, whereas the normal payment portion for a short-term promotional sweepstakes is a trivial share of the revenue made by the business [generally 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, using clients the opportunity to play casino-style games for real prizes. Much of those brick-and-mortar facilities have considering that been shuttered over accusations of unlawful gambling.


DJ Khaled is among numerous star spokespeople for VGW's Global Poker brand


Now, Wallach argues, social sweeps casinos must deal with comparable examination.


'These differences are not approximate,' Wallach stated of social sweeps casinos. 'They have actually consistently been mentioned by courts and state chief law officer as key factors in identifying that a sweepstakes promo was in fact a guise for illegal gaming.'
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One of the casino industry's leading trade organizations, the American Gaming Association, is now pressing legislators to examine sweepstakes operators and, in many cases, enact brand-new legislation on the problem.


'Consumers are being denied of securities and states are forgoing significant tax and earnings opportunities as this gambling changes that carried out through managed channels,' read a well-circulated AGA memo.


And then 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 agreed to pay $11.75 million in one class-action lawsuit, saying the settlement was made to prevent legal expenses and continued litigation.


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


In the most recent lawsuit, which is mainly similar to its predecessors, New york city state locals Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is described in the filing as an 'illegal gambling enterprise. '


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


'We normally don't comment on matters before the courts,' a VGW spokesperson informed DailyMail.com by means of e-mail. 'However, we keep in mind that this claim has only simply been filed with the court and VGW has not been formally 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 provide our free-to-play video games across the majority of The United States and Canada, as we have for more than a decade, developing not only terrific video games, user experiences and 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 litigations and arbitrations are relatively typical throughout the online social games market (and the US more broadly), and our basic practice is that we mean to intensely protect any claim which might be brought versus us.'


The concerns between standard online sports betting and sweepstakes gambling establishments could show problematic 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 video gaming titans like FanDuel and DraftKings.


'It's paradoxical that expert athletes are hawking unlawful sports betting 'sweeps' sites while at the same time the leagues wish to predict a strong position against prohibited sports betting - particularly when attempting to tamp down the occasional gambling scandal,' Glaser told DailyMail.com.


It was just 8 months ago that Toronto Raptors forward Jontay Porter received a lifetime ban from the NBA over claims he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes gambling establishments.


Together with VGW, Apple and Google are being sued for hosting supposedly prohibited gambling websites


Regardless, Glaser sees sweepstakes casinos as a major issue for leagues such as the NBA.




'I 'd anticipate that a league crackdown on professional athletes backing sweepstakes websites refers when, not if,' Glaser added.


Neither an NBA spokesman nor the players' agents reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also overlooked to respond to DailyMail.com emails.


Asked if their celeb endorsers have an obligation to describe to consumers the differences and resemblances between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that needs to be done.


'We have complete confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the spokesperson stated. 'Some of our values are" our players 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 in a different way.


'Celebrities who lend their names to dubious prohibited gaming websites are, at a minimum, putting their credibilities at danger in addition to courting civil and class actions by consumers who declare harm,' Glaser stated. 'There is likewise some threat that state regulators and state lawyers general rope celebrity endorsers into enforcement efforts for assisting in prohibited sports betting.'


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