The smiling faces of Paris Hilton and Ryan Seacrest made surprise looks 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 questionable websites providing both 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 complimentary,’ while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are simply 2 cogs in the multibillion-dollar market that now finds itself besieged by lawsuits. In the eyes of lots of gaming corporations, not to discuss suit plaintiffs and state regulators, sweepstakes gambling establishments serve as traditional gambling establishments, only without the oversight, customer securities and tax laws. So not only 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 securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the business deals with allegations of unlawful sports betting in a New york city lawsuit that claims VGW uses celebrity endorsers to ‘produce a veneer of legitimacy’ around its product. (See VGW’s declaration below)

‘I’m not exactly sure” if you don’t trust us, you can trust Paris Hilton” is a winning message for companies running multibillion-dollar illegal operations out of locations like Malta, Isle of Man, or US mail drops,’ Friday’s speaker, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers include a variety of celebs 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 distinctions in between standard gambling and sweepstakes play.

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

Ryan Seacrest urges fans to play at Chumba Casino, where lots of - however not all - video games are free

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

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Instead, ads usually focus around the social element of the gambling establishments, while leaving out the potential for real sports betting losses.

Others lure consumers with guarantees of prizes. One such operator, Stake, ran a social networks ad showing off Drake’s automobiles, aircrafts and mansions before pivoting to video of the rapper playing online casino-style video games.

‘Daddy, why do we have so much cash?’ check out the very first caption on the screen.

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

The inconsistency in between sports betting websites and social or sweepstakes casinos is a bit complicated, but operators of the latter insist they’re not included with the former.

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, the majority of the gamers on social-sweepstakes casinos are sports betting totally free.

‘Most social sweeps clients never buy,’ the SPGA spokesperson told DailyMail.com. ‘The minority of customers who make purchases do so in amounts far smaller sized than the typical deposit or wager size at real-money online gaming websites.’

Social gambling establishments offer customers a possibility to play casino-style video games with friends. Players have the alternative to buy valueless currency frequently described as ‘gold coins,’ which can not be exchanged genuine money, but can be utilized to unlock different features within the video games.

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

And therein lies the potential for monetary losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York. One player told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the past year after continuing to purchase more coins in pursuit of money and other things of worth.

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

Social sweeps casino Stake ran an advertisement displaying Drake’s automobiles, aircrafts 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 seven states, which has actually helped to sustain the popularity of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, enable consumers to send mail-in ask for complimentary sweeps coins, supplied the players follow painfully specific directions. What’s more, gamers are typically rewarded with sweeps coins just for registering, thus giving them a factor to try their hands at any number of gambling establishment video games for a possibility to win - or lose - real cash.

So why are sweepstakes websites enabled to run in 48 states, while online gambling establishments are prohibited in all however 7?
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According to the stakeholders, their product is the complimentary casino-style video gaming, and the real-stakes competitors is simply a method of promoting their support.

‘Social sweepstakes video games are merely a type of online home entertainment,’ an SPGA spokesperson informed DailyMail.com by e-mail. ‘No purchase is required to play at social casinos with sweepstakes prizes. Consumers never need to pay for a chance to win prizes. That absence of a purchase requirement - or” consideration” - is an important difference between social sweeps and conventional online sports betting sites like gambling establishments.’

Consider the manner in which McDonald’s utilizes its annual Monopoly game to promote its food: Customers aren’t paying to bet, however rather they’re buying hamburgers and french fries that provide them the chance to win rewarding rewards, such as a $1 million prize.

And without a purchase requirement, or ‘consideration’, the video game itself does not satisfy the meaning of sports betting in the US.

‘Sweepstakes are an enduring technique for promoting all kinds of daily organizations in the United States, whatever from hamburgers to publication subscriptions to coffee and home improvement shops,’ the SPGA representative told DailyMail.com. ‘Sweepstakes promos are frequently used by a who’s who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.’

But to numerous gambling market insiders, that argument doesn’t cut it.

For beginners, video gaming attorney Daniel Wallach mentions, McDonald’s Monopoly video game does not run indefinitely. Rather, it has a well-defined beginning and end, therefore suggesting the sweepstakes is not the fast-food giant’s primary item. Instead, the sweepstakes is being used to promote real items like fries, shakes, and the Filet-O-Fish.

‘They don’t last permanently and they’re normally not tied to casino-style games of chance,’ Wallach informed DailyMail.com. ‘They’re simply cash giveaways.

‘The sweepstakes [gambling establishments] have none of the qualities frequently connected with McDonald’s-design sweepstakes promos,’ Wallach continued. ‘Besides running in eternity, the sweepstakes gambling establishments provide” casino-like” payments, generally 80 percent or more of profits, whereas the common payment portion for a momentary promotional sweepstakes is a minor share of the income earned by the company [normally less than one percent]’

Wallach fasts to compare the online social sweeps gambling establishments to the web coffee shops that emerged in Florida, providing clients the possibility to play casino-style games for genuine prizes. A lot of those brick-and-mortar facilities have considering that been shuttered over allegations of illegal gambling.

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

Now, Wallach argues, social sweeps gambling establishments ought to face similar scrutiny.
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‘These differences are not arbitrary,’ Wallach stated of social sweeps casinos. ‘They have consistently been cited by courts and state attorney general of the United States as essential elements in figuring out that a sweepstakes promo was in truth a guise for prohibited sports betting.’

One of the casino market’s leading trade organizations, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, sometimes, enact new legislation on the issue.

‘Consumers are being deprived of securities and states are passing up significant tax and profits opportunities as this gambling replaces that conducted through regulated channels,’ checked out a well-circulated AGA memo.
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And after that there are the complainants who have sued social gambling establishments in more than a lots states.

Sweepstakes casino operators paid a combined $14.2 million in four different cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action lawsuit, stating the settlement was made to avoid legal costs and continued litigation.

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

In the most recent lawsuit, which is largely similar to its predecessors, New York state homeowners Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an ‘prohibited gaming business. ‘

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

‘We usually don’t talk about matters before the courts,’ a VGW spokesperson informed DailyMail.com via e-mail. ‘However, we note that this claim has actually only simply been filed with the court and VGW has not been officially served.

‘We have full confidence in our compliance with all laws and policies where we operate, and stay confident about the future,’ the spokesperson continued. ‘We continue to offer our free-to-play games throughout the majority of North America, as we have for more than a years, developing not only fantastic games, user experiences and entertainment, however also guaranteeing this is done safely, properly and at the highest level of standards.

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

The concerns in between standard online sports betting and sweepstakes gambling establishments could prove 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 traditional gaming titans like FanDuel and DraftKings.

‘It’s paradoxical that professional athletes are hawking illegal sports betting wagering ‘sweeps’ websites while at the same time the leagues wish to project a strong stance against illegal sports betting - particularly when attempting to tamp down the periodic sports betting scandal,’ Glaser informed 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 bettors. However, to be clear, Porter’s scandal is unrelated to anything involving social or sweepstakes gambling establishments.

Along with VGW, Apple and Google are being demanded hosting supposedly illegal sports betting websites

Regardless, Glaser sees sweepstakes gambling establishments as a major problem for leagues such as the NBA.

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

Neither an NBA spokesman nor the players’ representatives reacted to DailyMail.com’s ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise disregarded to react to DailyMail.com emails.

Asked if their celebrity endorsers have a duty to discuss to clients the distinctions and similarities in between iGaming and sweepstakes casinos, VGW firmly insisted there is absolutely nothing more that requires to be done.

‘We have complete confidence in our influencer and ambassadorial collaborations, and our organization practices more broadly,’ the representative stated. ‘A few of our values are” our players precede” and” we do what’s right”, and we put our worths at the core of everything we do.’

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

‘Celebrities who provide their names to shady unlawful gaming sites are, at a minimum, putting their credibilities at threat along with courting civil and class actions by customers who declare harm,’ Glaser said. ‘There is likewise some threat that state regulators and state attorneys general rope star endorsers into enforcement efforts for helping with illegal gambling.’

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