The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on unlawful gaming.

No, they weren't personally in attendance, however the world-famous celebs were conspicuously included in a slide presentation on social and sweepstakes gambling establishments - the controversial websites providing both complimentary casino-style games and financially rewarding prizes, 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 websites are simply two cogs in the multibillion-dollar industry that now finds itself besieged by suits. In the eyes of lots of video gaming corporations, not to point out suit plaintiffs and state regulators, sweepstakes casinos act as conventional casinos, only without the oversight, consumer securities and tax laws. So not only can they avoid the high 24-percent federal gambling levy, but sweepstakes operators aren't subject to regulative obstacles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the company faces allegations of illegal gaming in a New York lawsuit that claims VGW utilizes celeb endorsers to 'create a veneer of legitimacy' around its item. (See VGW's statement below)

'I'm unsure" if you don't trust us, you can rely on Paris Hilton" is a winning message for business running 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, told DailyMail.com.

Sweepstakes endorsers include a series of stars from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom provide any distinctions between conventional gambling and sweepstakes play.

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

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

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

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Instead, advertisements typically focus around the social aspect of the casinos, while omitting the potential for real gaming losses.

Others lure consumers with guarantees of rewards. One such operator, Stake, ran a social media advertisement displaying Drake's cars, airplanes and mansions before pivoting to footage of the rap artist playing online casino-style games.

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

Another caption discussed: 'Because I never ever offered up.'

The inconsistency in between gambling websites and social or sweepstakes casinos is a bit intricate, however operators of the latter insist they're not involved with the previous.

A representative for an industry trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA information, the majority of the players on social-sweepstakes casinos are sports betting complimentary.

'Most social sweeps clients never purchase,' the SPGA representative 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 gaming sites.'

Social casinos use customers a chance to play casino-style games with buddies. Players have the alternative to purchase worthless currency frequently referred to as 'gold coins,' which can not be exchanged for real money, but can be used to open various features within the video games.

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

And therein lies the capacity for financial losses, like the ones declared 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 an International Poker occasion

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake's automobiles, aircrafts and estates

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

Traditional online gambling establishments are prohibited in all however 7 states, which has actually assisted to sustain the appeal of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, allow clients to submit mail-in ask for free sweeps coins, provided the gamers follow painfully particular instructions. What's more, players are frequently rewarded with sweeps coins just for registering, thus offering them a factor to attempt their hands at any number of casino video games for a chance to win - or lose - real money.

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

According to the stakeholders, their product is the complimentary casino-style gaming, and the real-stakes competitors is just a means of promoting their bread and butter.

'Social sweepstakes games are merely 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 prizes. Consumers never have to pay for an opportunity to win rewards. That lack of a purchase requirement - or" factor to consider" - is a crucial difference between social sweeps and standard online sports betting sites like gambling establishments.'

Consider the manner in which McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to bet, but rather they're buying hamburgers and fries that offer them the possibility to win lucrative rewards, such as a $1 million prize.

And without a purchase requirement, or 'factor to consider', the video game itself doesn't fulfill the meaning of gambling in the US.

'Sweepstakes are an enduring method for promoting all sort of daily services in the United States, whatever from burgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are routinely utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling industry experts, that argument does not cut it.

For starters, gaming lawyer Daniel Wallach explains, McDonald's Monopoly game does not run forever. Rather, it has a distinct start and end, consequently recommending the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being utilized to promote genuine items like fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're typically not tied to casino-style games of chance,' Wallach told DailyMail.com. 'They're just cash free gifts.

'The sweepstakes [casinos] possess none of the qualities typically related to McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments use" casino-like" payments, generally 80 percent or more of earnings, whereas the normal payment percentage for a temporary marketing sweepstakes is an unimportant share of the profits earned by the business [usually less than one percent]'

Wallach is fast to liken the online social sweeps gambling establishments to the web coffee shops that sprang up in Florida, using customers the chance to play casino-style video games for real prizes. A number of those brick-and-mortar establishments have actually given that been shuttered over accusations of unlawful gaming.

DJ Khaled is amongst a number of celebrity spokespeople for VGW's Global Poker brand name

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

'These distinctions are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have repeatedly been cited by courts and state lawyer generals as key factors in determining that a sweepstakes promo remained in truth a guise for illegal sports betting.'

Among the gambling establishment industry's leading trade organizations, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, sometimes, enact brand-new legislation on the concern.

'Consumers are being deprived of protections and states are passing up considerable tax and profits opportunities as this gaming replaces that carried out through regulated channels,' read a well-circulated AGA memo.

And after that there are the plaintiffs who have taken legal action against social casinos in more than a dozen states.

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

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

In the latest suit, which is mostly 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 described in the filing as an 'unlawful gambling enterprise. '

Apple and Google have actually likewise been called as offenders in claims for hosting the sweepstakes websites. But unlike VGW, neither tech business responded to DailyMail.com's request for remark.

'We normally don't discuss matters before the courts,' a VGW representative told DailyMail.com through email. '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 self-confidence in our compliance with all laws and regulations where we operate, and remain positive about the future,' the representative continued. 'We continue to offer our free-to-play video games throughout most of The United States and Canada, as we have for more than a years, producing not just terrific games, user experiences and entertainment, however likewise guaranteeing 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 market (and the US more broadly), and our standard practice is that we intend to vigorously defend any claim which may be brought versus us.'

The issues in between traditional online gambling and sweepstakes gambling establishments could show bothersome for some celeb 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 conventional gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking illegal sports betting wagering 'sweeps' sites while at the exact same time the leagues wish to predict a strong stance versus prohibited sports betting - particularly when attempting to tamp down the occasional gaming 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 bettors. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes gambling establishments.

Along with VGW, Apple and Google are being sued for hosting presumably unlawful gambling websites

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

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

Neither an NBA spokesman nor the gamers' representatives reacted to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise ignored to react to DailyMail.com emails.

Asked if their star endorsers have a duty to discuss to consumers the distinctions and similarities in between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that needs to be done.

'We have full self-confidence in our influencer and collaborations, and our company practices more broadly,' the representative said. 'A few of our worths 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 opponent of sweepstakes websites, sees things in a different way.
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'Celebrities who provide their names to dubious prohibited sports betting websites are, at a minimum, putting their reputations at danger in addition to courting civil and class actions by consumers who declare harm,' Glaser said. 'There is likewise some threat that state regulators and state chief law officers rope star endorsers into enforcement efforts for assisting in unlawful gambling.'

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