The smiling faces of Paris Hilton and Ryan Seacrest made surprise looks before the Louisiana Senate for Friday’s hearing on illegal gambling.

No, they weren’t personally in attendance, however the world-famous stars were notably consisted of in a slide presentation on social and sweepstakes gambling establishments - the controversial websites using both totally free casino-style video games and rewarding prizes, such as money, present 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.

The websites are simply 2 cogs in the multibillion-dollar industry that now discovers itself besieged by claims. In the eyes of many video gaming corporations, not to mention lawsuit plaintiffs and state regulators, sweepstakes casinos function as conventional gambling establishments, just without the oversight, consumer defenses and tax laws. So not only can they avoid the steep 24-percent federal sports betting levy, however sweepstakes operators aren’t based on regulatory hurdles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the company faces allegations of prohibited sports betting 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 uncertain” if you don’t trust us, you can trust Paris Hilton” is a winning message for business operating multibillion-dollar illegal 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.
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Sweepstakes endorsers consist of a variety of celebs 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 offer any distinctions in 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 - but not all - games are complimentary

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

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Instead, advertisements normally focus around the social aspect of the gambling establishments, while leaving out the capacity for real gambling losses.

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

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

Another caption explained: ‘Because I never ever gave up.’

The discrepancy between sports betting websites and social or is a bit complex, 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 data, most of the players on social-sweepstakes casinos are sports betting complimentary.

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

Social casinos use customers a chance to play casino-style games with pals. Players have the choice to purchase worthless currency frequently referred to as ‘gold coins,’ which can not be exchanged genuine cash, but can be used to unlock numerous features within the video games.

But within the world of social gambling establishments exists sweepstakes video gaming, enabling clients to get other currency understood 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. One gamer informed the Washington Post he lost more than $100,000 on sweepstakes casinos in the previous year after continuing to purchase more coins in pursuit of cash and other things of worth.

The Philadelphia 76ers’ Paul George is seen promoting a Worldwide Poker occasion

Social sweeps gambling establishment Stake ran an ad flaunting Drake’s cars, airplanes and estates

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

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

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

Many websites, like the crypto-compatible Stake, allow customers to submit mail-in ask for free sweeps coins, offered the gamers follow painfully specific guidelines. What’s more, gamers are frequently rewarded with sweeps coins simply for signing up, consequently providing a factor to try their hands at any number of casino video games for a possibility 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 but 7?
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According to the stakeholders, their item is the totally free casino-style video gaming, and the real-stakes competitors is merely a means of promoting their support.

‘Social sweepstakes video games are just a type of online home entertainment,’ an SPGA representative told DailyMail.com by e-mail. ‘No purchase is required to dip into social gambling establishments with sweepstakes prizes. Consumers never ever need to pay for an opportunity to win prizes. That absence of a purchase requirement - or” consideration” - is a crucial difference in between social sweeps and standard online gaming websites like gambling establishments.’

Consider the way that McDonald’s uses its yearly Monopoly game to promote its food: Customers aren’t paying to gamble, but rather they’re purchasing hamburgers and french fries that use them the possibility to win financially rewarding prizes, such as a $1 million jackpot.

And without a purchase requirement, or ‘consideration’, the video game itself doesn’t meet the definition of sports betting in the US.

‘Sweepstakes are an enduring method for promoting all type of everyday businesses in the United States, whatever from burgers to magazine subscriptions to coffee and home improvement shops,’ the SPGA representative told DailyMail.com. ‘Sweepstakes promos are routinely used by a who’s who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.’

But to many sports betting market experts, that argument does not cut it.

For starters, video gaming attorney Daniel Wallach points out, McDonald’s Monopoly video game does not run indefinitely. Rather, it has a distinct beginning and end, thus recommending 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 don’t last forever and they’re usually not tied to casino-style video games of opportunity,’ Wallach told DailyMail.com. ‘They’re simply cash free gifts.

‘The sweepstakes [gambling establishments] have none of the attributes commonly connected with McDonald’s-style sweepstakes promos,’ Wallach continued. ‘Besides running in all time, the sweepstakes gambling establishments offer” casino-like” payments, normally 80 percent or more of earnings, whereas the typical payment percentage for a temporary marketing sweepstakes is an insignificant share of the income made by the company [normally less than one percent]’

Wallach fasts to liken the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, providing clients the possibility to play casino-style video games for real prizes. A lot of those brick-and-mortar establishments have since been shuttered over allegations of prohibited sports betting.

DJ Khaled is among several celebrity spokespeople for VGW’s Global Poker brand name

Now, Wallach argues, social sweeps casinos should face similar scrutiny.

‘These distinctions are not arbitrary,’ Wallach said of social sweeps casinos. ‘They have actually consistently been cited by courts and state attorney general of the United States as crucial aspects in determining that a sweepstakes promotion remained in truth a guise for prohibited gambling.’

Among the casino industry’s leading trade companies, the American Gaming Association, is now pushing lawmakers to examine sweepstakes operators and, in some cases, enact new legislation on the concern.
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‘Consumers are being denied of protections and states are forgoing considerable tax and income chances as this sports betting changes that performed through managed channels,’ checked out a well-circulated AGA memo.

And then there are the plaintiffs who have actually sued social casinos in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in four 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 claim, stating the settlement was made to avoid legal expenses and continued lawsuits.

Michael Phelps has signed an offer with the VGW Group, which owns Global Poker

In the most recent claim, which is largely similar to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an ‘unlawful gaming enterprise. ‘

Apple and Google have actually also been called as offenders in claims for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com’s request for remark.

‘We usually don’t comment on 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 submitted with the court and VGW has not been officially served.

‘We have complete confidence in our compliance with all laws and guidelines where we operate, and stay confident about the future,’ the spokesperson continued. ‘We continue to use our free-to-play games across the majority of North America, as we have for more than a years, creating not just terrific video games, user experiences and home entertainment, however likewise ensuring this is done securely, properly and at the highest level of standards.

‘More broadly, we ’d reiterate that class actions and other lawsuits and arbitrations are relatively typical throughout the online social video games industry (and the US more broadly), and our basic practice is that we intend to intensely safeguard any claim which might be brought against us.’

The issues between conventional online sports betting and sweepstakes gambling establishments might show problematic for some celeb endorsers.

Towns, a star center with the Knicks, and the 76ers’ George both endorse VGW’s Global Poker brand while the NBA is partnered with standard gaming titans like FanDuel and DraftKings.

‘It’s paradoxical that expert athletes are hawking prohibited sports betting wagering ‘sweeps’ websites while at the very same time the leagues wish to predict a strong stance against illegal gaming - particularly when trying to tamp down the occasional sports betting scandal,’ Glaser told DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter received 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 casinos.

In addition to VGW, Apple and Google are being taken legal action against for hosting apparently prohibited gambling websites

Regardless, Glaser sees sweepstakes casinos as a major problem for leagues such as the NBA.
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‘I ’d anticipate that a league crackdown on athletes endorsing sweepstakes websites is a matter of when, not if,’ Glaser included.

Neither an NBA spokesman nor the gamers’ agents responded to DailyMail.com’s requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise ignored to react to DailyMail.com e-mails.

Asked if their celebrity endorsers have an obligation to discuss to clients the distinctions and similarities between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is absolutely nothing more that requires to be done.

‘We have full self-confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,’ the spokesperson said. ‘Some 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 opponent of sweepstakes sites, sees things in a different way.

‘Celebrities who provide their names to dubious prohibited gambling sites are, at a minimum, putting their track records at danger in addition to courting civil and class actions by consumers who declare harm,’ Glaser stated. ‘There is also some danger that state regulators and state lawyers basic rope celebrity endorsers into enforcement efforts for facilitating unlawful gambling.’

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