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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 unlawful sports betting.

No, they weren't personally in attendance, but the world-famous celebrities were notably included in a slide presentation on social and sweepstakes casinos - the questionable sites using both complimentary casino-style video games and financially rewarding prizes, such as money, gift 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 sites are just 2 cogs in the multibillion-dollar market that now finds itself besieged by claims. In the eyes of lots of video gaming corporations, not to discuss claim plaintiffs and state regulators, sweepstakes casinos serve as traditional gambling establishments, just without the oversight, customer protections and tax laws. So not only can they avoid the high 24-percent federal gambling levy, but sweepstakes operators aren't based on regulatory difficulties like anti-money laundering and responsible-gaming securities.
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One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the company deals with accusations of unlawful sports betting in a New York suit that claims VGW utilizes celebrity endorsers to 'develop a veneer of authenticity' around its product. (See VGW's statement below)

'I'm not sure" if you don't trust us, you can trust Paris Hilton" is a winning message for business running multibillion-dollar illegal operations out of places like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of video gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers include a variety 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 use any distinctions between traditional gambling and sweepstakes play.

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

urges fans to dip into Chumba Casino, where many - but not all - games are free

Drake has an offer with social sweeps gambling establishment, Stake, that he regularly touts on social media

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Instead, ads usually focus around the social element of the casinos, while leaving out the capacity for real gambling losses.

Others lure clients with promises of rewards. One such operator, Stake, ran a social media advertisement flaunting Drake's cars, aircrafts and estates before pivoting to video 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 explained: 'Because I never quit.'

The disparity between gaming websites and social or sweepstakes casinos is a bit intricate, 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), discussed its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, many of the gamers on social-sweepstakes casinos are playing for free.

'Most social sweeps customers never ever buy,' the SPGA spokesperson told DailyMail.com. 'The minority of clients who make purchases do so in amounts far smaller than the typical deposit or wager size at real-money online sports betting websites.'
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Social gambling establishments use consumers an opportunity to play casino-style games with friends. Players have the alternative to buy valueless currency frequently referred to as 'gold coins,' which can not be exchanged for real money, however can be utilized to open numerous functions within the games.

But within the world of social casinos exists sweepstakes gaming, enabling consumers to acquire other currency called 'sweeps coins' that can be exchanged for cash or other prizes.
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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 gambling establishments in the past year after continuing to purchase 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 gambling establishment Stake ran an advertisement flaunting Drake's automobiles, planes 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 assisted to sustain the appeal of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes websites, which do not require typically require identification. However, websites like Chumba will ask for IDs from players trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, allow customers to send mail-in demands for free sweeps coins, supplied the gamers follow painfully particular guidelines. What's more, players are often rewarded with sweeps coins just for registering, thus giving them a reason to try their hands at any number of casino games for a chance to win - or lose - real cash.

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

According to the stakeholders, their item is the totally free casino-style gaming, and the real-stakes competition is just a way of promoting their bread and butter.

'Social sweepstakes video games are just a type of online home entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is needed to play at social casinos with sweepstakes prizes. Consumers never ever have to spend for an opportunity to win prizes. That lack of a purchase requirement - or" consideration" - is an essential distinction between social sweeps and traditional online gambling sites like gambling establishments.'

Think about the way that McDonald's utilizes its annual Monopoly game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and fries that provide them the chance to win rewarding rewards, such as a $1 million jackpot.

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

'Sweepstakes are an enduring method for promoting all kinds of daily businesses in the United States, whatever from burgers to publication memberships to coffee and home enhancement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are regularly utilized 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 doesn't cut it.

For starters, gaming attorney Daniel Wallach explains, McDonald's Monopoly game doesn't run forever. Rather, it has a well-defined start and end, consequently suggesting the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being used to promote genuine products like french fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're usually not connected to casino-style video games of chance,' Wallach told DailyMail.com. 'They're simply cash giveaways.

'The sweepstakes [gambling establishments] possess none of the attributes frequently connected with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments offer" casino-like" payments, usually 80 percent or more of revenues, whereas the typical payout portion for a momentary promotional sweepstakes is an unimportant share of the earnings earned by the company [normally less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the web coffee shops that sprang up in Florida, using clients the possibility to play casino-style video games for genuine prizes. A lot of those brick-and-mortar facilities have because been shuttered over claims of prohibited sports betting.

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

Now, Wallach argues, social sweeps gambling establishments ought to deal with comparable analysis.
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'These distinctions are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have consistently been pointed out by courts and state chief law officer as crucial factors in figuring out that a sweepstakes promotion remained in fact a guise for illegal sports betting.'

Among the gambling establishment market's leading trade companies, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, sometimes, enact new legislation on the problem.

'Consumers are being denied of securities and states are passing up substantial tax and profits opportunities as this gambling replaces that carried out through controlled channels,' checked out a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in 4 separate cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, stating the settlement was made to prevent legal expenses and continued lawsuits.

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

In the current suit, which is largely similar to its predecessors, New york city state homeowners Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is described in the filing as an 'illegal gaming enterprise. '
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Apple and Google have actually also been named as defendants in claims for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's request for comment.

'We usually don't talk about matters before the courts,' a VGW representative informed DailyMail.com through e-mail. 'However, we keep in mind that this claim has only simply been submitted with the court and VGW has not been officially served.

'We have complete confidence in our compliance with all laws and policies where we run, and stay confident about the future,' the representative continued. 'We continue to provide our free-to-play games across most of North America, as we have for more than a years, developing not just fantastic video games, user experiences and home entertainment, but also 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 reasonably common across the online social video games industry (and the US more broadly), and our basic practice is that we mean to intensely safeguard any claim which may be brought versus us.'

The problems between conventional online sports betting and sweepstakes casinos might show troublesome for some celebrity endorsers.

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

'It's ironic that professional athletes are hawking illegal sports betting wagering 'sweeps' sites while at the same time the leagues wish to project a strong stance against unlawful gambling - specifically when trying to tamp down the occasional gaming scandal,' Glaser told DailyMail.com.

It was simply 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 including social or sweepstakes casinos.

In addition to VGW, Apple and Google are being demanded hosting supposedly prohibited sports betting sites

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

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

Neither an NBA representative nor the gamers' agents reacted to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also ignored to react to DailyMail.com emails.
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Asked if their celebrity endorsers have an obligation to explain to customers the distinctions and similarities in 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 organization practices more broadly,' the spokesperson stated. 'A few of our values are" our gamers come first" 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 illegal gaming sites are, at a minimum, putting their track records at danger along with courting civil and class actions by consumers who allege damage,' Glaser stated. 'There is also some danger that state regulators and state chief law officers rope star endorsers into enforcement efforts for facilitating unlawful gaming.'

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