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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 illegal sports betting.
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No, they weren’t personally in participation, but the world-famous celebrities were notably consisted of in a slide on social and sweepstakes gambling establishments - the questionable sites offering both free casino-style games and rewarding rewards, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can ‘play for 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 just 2 cogs in the multibillion-dollar market that now discovers itself besieged by lawsuits. In the eyes of lots of video gaming corporations, not to mention claim plaintiffs and state regulators, sweepstakes gambling establishments act as standard gambling establishments, only without the oversight, customer defenses and tax laws. So not only can they avoid the high 24-percent federal gambling levy, however sweepstakes operators aren’t based on regulatory difficulties like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the company deals with allegations of unlawful gambling in a New York claim that declares VGW uses celeb endorsers to ‘produce a veneer of authenticity’ around its product. (See VGW’s statement listed below)

‘I’m not sure” if you do not 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 presenter, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers consist of a variety of celebs 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 traditional gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among many sweepstakes gambling establishments discovered online

Ryan Seacrest urges fans to dip into Chumba Casino, where lots of - but not all - games are free

Drake has an offer with social sweeps casino, Stake, that he frequently touts on social networks

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Instead, ads typically center around the social element of the casinos, while leaving out the potential for real gambling losses.

Others lure consumers with guarantees of prizes. One such operator, Stake, ran a social networks ad displaying Drake’s vehicles, aircrafts and estates before rotating to video footage of the rap artist playing online casino-style games.

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

Another caption discussed: ‘Because I never quit.’

The inconsistency between gambling websites 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), explained its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, the majority of the players on social-sweepstakes gambling establishments are playing for totally free.

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

Social casinos use consumers a chance to play casino-style games with pals. Players have the option to purchase valueless currency frequently described as ‘gold coins,’ which can not be exchanged for real money, but can be utilized to unlock numerous features within the games.

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

And therein lies the capacity for financial losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York. One gamer told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the previous year after continuing to buy more coins in pursuit of cash and other things of value.

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

Social sweeps casino Stake ran an advertisement revealing off Drake’s automobiles, planes and mansions
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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 seven states, which has assisted to sustain the popularity of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, enable clients to send mail-in demands for totally free sweeps coins, supplied the players follow painfully specific directions. What’s more, players are typically rewarded with sweeps coins simply for signing up, therefore providing a factor to attempt their hands at any number of casino games for an opportunity to win - or lose - genuine cash.

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

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

‘Social sweepstakes video games are simply a form of online entertainment,’ an SPGA spokesperson told DailyMail.com by email. ‘No purchase is required to play at social casinos with sweepstakes prizes. Consumers never ever need to pay for a chance to win prizes. That absence of a purchase requirement - or” factor to consider” - is an important difference between social sweeps and standard online sports betting websites like casinos.’

Think of the manner in which McDonald’s uses its annual Monopoly video game to promote its food: Customers aren’t paying to bet, but rather they’re buying hamburgers and french fries that offer 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 meet the meaning of sports betting in the US.

‘Sweepstakes are a long-standing method for promoting all type of everyday companies in the United States, everything from hamburgers to publication memberships to coffee and home enhancement shops,’ the SPGA spokesperson told DailyMail.com. ‘Sweepstakes promos are regularly utilized by a who’s who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.’

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

For starters, gaming attorney Daniel Wallach points out, McDonald’s Monopoly video game doesn’t run indefinitely. Rather, it has a distinct start and end, thereby suggesting the sweepstakes is not the fast-food giant’s main product. Instead, the sweepstakes is being used to promote genuine products like fries, shakes, and the Filet-O-Fish.

‘They don’t last permanently and they’re generally not tied to casino-style games of opportunity,’ Wallach informed DailyMail.com. ‘They’re just money giveaways.

‘The sweepstakes [gambling establishments] have none of the qualities frequently associated with McDonald’s-style sweepstakes promos,’ Wallach continued. ‘Besides running in perpetuity, the sweepstakes gambling establishments offer” casino-like” payments, usually 80 percent or more of profits, whereas the normal payout portion for a temporary marketing sweepstakes is a minor share of the income earned by the company [usually less than one percent]’

Wallach fasts to liken the online social sweeps casinos to the web cafes that sprang up in Florida, providing consumers the chance to play casino-style video games for genuine rewards. A number of those brick-and-mortar facilities have considering that been shuttered over allegations of prohibited gambling.

DJ Khaled is among numerous celeb spokespeople for VGW’s Global Poker brand

Now, Wallach argues, social sweeps casinos must deal with similar scrutiny.

‘These distinctions are not arbitrary,’ Wallach stated of social sweeps casinos. ‘They have actually consistently been pointed out by courts and state attorney generals as essential aspects in identifying that a sweepstakes promo remained in truth a guise for illegal gambling.’

One of the casino market’s leading trade organizations, the American Gaming Association, is now pushing legislators to examine sweepstakes operators and, in many cases, enact brand-new legislation on the problem.

‘Consumers are being deprived of securities and states are passing up considerable tax and profits opportunities as this gaming replaces that conducted through controlled channels,’ checked out a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in four separate cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action claim, saying the settlement was made to prevent legal costs and continued litigation.

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

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

Apple and Google have actually also been named as accuseds in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com’s request for comment.

‘We normally don’t comment on 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 not been formally served.

‘We have complete self-confidence in our compliance with all laws and guidelines where we run, and remain confident about the future,’ the representative 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 excellent video games, user experiences and home entertainment, however likewise ensuring this is done securely, responsibly and at the highest level of requirements.

‘More broadly, we ’d repeat that class actions and other litigations and arbitrations are fairly typical throughout the online social games industry (and the US more broadly), and our standard practice is that we plan to intensely protect any claim which may be brought versus us.’

The issues in between traditional online gambling and sweepstakes casinos 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 name while the NBA is partnered with standard video gaming titans like FanDuel and DraftKings.

‘It’s paradoxical that expert athletes are hawking illegal sports betting wagering ‘sweeps’ websites while at the very same time the leagues want to project a strong stance against unlawful sports betting - specifically when attempting to tamp down the periodic sports betting 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 including social or sweepstakes casinos.

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

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

‘I ’d anticipate that a league crackdown on athletes backing sweepstakes sites refers when, not if,’ Glaser included.

Neither an NBA spokesman 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 e-mails.

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

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

Glaser, an outspoken opponent of sweepstakes sites, sees things in a different way.
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‘Celebrities who lend their names to shady illegal sports betting websites are, at a minimum, putting their track records at danger along with courting civil and class actions by consumers who declare damage,’ Glaser said. ‘There is also some risk that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for facilitating unlawful sports betting.’

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