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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 gambling.
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No, they weren’t personally in participation, however the world-famous celebrities were conspicuously included in a slide presentation on social and sweepstakes casinos - the controversial sites providing both totally free casino-style video games and rewarding prizes, such as cash, present cards or cryptocurrency. In one advertisement, 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.

The websites are just 2 cogs in the multibillion-dollar industry that now finds itself besieged by lawsuits. In the eyes of lots of video gaming corporations, not to point out suit plaintiffs and state regulators, sweepstakes casinos act as standard gambling establishments, just without the oversight, consumer defenses and tax laws. So not only can they avoid the high 24-percent federal gaming 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 last year alone. Now the business faces accusations of illegal sports betting in a New york city claim that declares VGW uses celebrity endorsers to ‘create a veneer of legitimacy’ around its item. (See VGW’s declaration listed below)

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

Sweepstakes endorsers consist of a variety of celebs from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom use any differences in between standard sports betting and sweepstakes play.

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

Ryan Seacrest advises fans to play at Chumba Casino, where many - but not all - games are free

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

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Instead, ads generally focus around the social aspect of the gambling establishments, while omitting the potential for real gaming losses.

Others lure clients with guarantees of rewards. One such operator, Stake, ran a social media advertisement displaying Drake’s cars and trucks, airplanes and estates before pivoting to video footage 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 quit.’

The inconsistency between gambling websites and social or sweepstakes gambling establishments is a bit complex, however operators of the latter insist they’re not involved with the former.

A representative 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 information, the majority of the players on social-sweepstakes casinos are sports betting complimentary.

‘Most social sweeps consumers never make a purchase,’ the SPGA spokesperson informed DailyMail.com. ‘The minority of clients who make purchases do so in amounts far smaller sized than the typical deposit or bet size at real-money online gambling sites.’

Social casinos offer consumers a possibility to play casino-style video games with pals. Players have the option to buy valueless currency frequently described as ‘gold coins,’ which can not be exchanged genuine cash, but can be used to open numerous features within the video games.

But within the world of social casinos exists sweepstakes gaming, allowing clients to acquire other currency referred to 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 gambling establishments in the past 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 Global Poker event

Social sweeps casino Stake ran an advertisement showing off Drake’s cars and trucks, aircrafts and estates

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

Traditional online casinos are prohibited in all but 7 states, which has helped to the popularity of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, enable clients to submit mail-in ask for complimentary sweeps coins, offered the players follow painfully particular guidelines. What’s more, gamers are often rewarded with sweeps coins simply for signing up, thereby providing them a reason to try their hands at any number of casino games for an opportunity to win - or lose - real cash.

So why are sweepstakes sites permitted to run in 48 states, while online gambling establishments are prohibited in all however 7?

According to the stakeholders, their product is the complimentary casino-style gaming, and the real-stakes competition is simply a method of promoting their support.

‘Social sweepstakes video games are merely a form of online entertainment,’ an SPGA spokesperson told DailyMail.com by email. ‘No purchase is required to play at social gambling establishments with sweepstakes prizes. Consumers never ever have to spend for an opportunity to win prizes. That lack of a purchase requirement - or” factor to consider” - is an important distinction in between social sweeps and conventional online sports betting sites like gambling establishments.’

Think about the manner in which McDonald’s uses its annual Monopoly game to promote its food: Customers aren’t paying to gamble, but rather they’re purchasing hamburgers and french fries that provide them the chance to win rewarding prizes, such as a $1 million prize.

And without a purchase requirement, or ‘factor to consider’, the video game itself doesn’t satisfy the definition of gaming in the US.

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

But to lots of sports betting market experts, that argument doesn’t cut it.

For starters, video gaming attorney Daniel Wallach points out, McDonald’s Monopoly video game does not run indefinitely. Rather, it has a well-defined start and end, thus recommending the sweepstakes is not the fast-food giant’s primary product. 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 games of possibility,’ Wallach told DailyMail.com. ‘They’re simply cash free gifts.

‘The sweepstakes [gambling establishments] have none of the characteristics commonly connected with McDonald’s-style sweepstakes promos,’ Wallach continued. ‘Besides running in all time, the sweepstakes gambling establishments use” casino-like” payments, generally 80 percent or more of incomes, whereas the normal payment portion for a short-lived promotional sweepstakes is a minor share of the earnings earned by the business [typically less than one percent]’

Wallach is quick to liken the online social sweeps gambling establishments to the internet coffee shops that emerged in Florida, using customers the opportunity to play casino-style video games for genuine rewards. Much of those brick-and-mortar establishments have actually given that been shuttered over claims of illegal sports betting.

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

Now, Wallach argues, social sweeps casinos ought to deal with similar examination.

‘These distinctions are not approximate,’ Wallach stated of social sweeps casinos. ‘They have actually repeatedly been mentioned by courts and state lawyer generals as key consider identifying that a sweepstakes promotion remained in truth a guise for illegal gambling.’

One of the gambling establishment market’s leading trade organizations, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, in some cases, enact brand-new legislation on the problem.

‘Consumers are being deprived of defenses and states are forgoing significant tax and revenue chances as this gaming changes that carried out through controlled channels,’ read a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 different cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW accepted 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 deal with the VGW Group, which owns Global Poker

In the most recent lawsuit, which is largely similar to its predecessors, New York state locals Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is explained in the filing as an ‘illegal gambling enterprise. ‘

Apple and Google have actually also been called as offenders in suits for hosting the sweepstakes sites. But unlike VGW, neither tech company responded to DailyMail.com’s ask for comment.

‘We usually don’t comment on matters before the courts,’ a VGW spokesperson told DailyMail.com via e-mail. ‘However, we keep in mind that this claim has only just been filed with the court and VGW has not been officially served.

‘We have full self-confidence in our compliance with all laws and guidelines where we run, and stay positive about the future,’ the spokesperson continued. ‘We continue to offer our free-to-play video games across most of North America, as we have for more than a decade, producing not just terrific video games, user experiences and home entertainment, however also ensuring this is done safely, responsibly and at the greatest level of requirements.

‘More broadly, we ’d reiterate that class actions and other litigations and arbitrations are reasonably typical throughout the online social video 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 problems in between conventional online gambling and sweepstakes casinos could show troublesome for some celeb 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 conventional video gaming titans like FanDuel and DraftKings.

‘It’s paradoxical that expert athletes are hawking unlawful sports betting ‘sweeps’ sites while at the exact same time the leagues desire to project a strong position against prohibited gambling - particularly when attempting to tamp down the occasional gambling scandal,’ Glaser informed DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter got a life time restriction from the NBA over accusations he conspired with bettors. However, to be clear, Porter’s scandal is unrelated to anything involving social or sweepstakes casinos.

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

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

‘I ’d expect that a league crackdown on athletes backing sweepstakes websites is a matter of when, not if,’ Glaser included.

Neither an NBA spokesman nor the gamers’ agents reacted to DailyMail.com’s requests for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also ignored to respond to DailyMail.com emails.

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

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

Glaser, an outspoken challenger of sweepstakes sites, sees things differently.
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‘Celebrities who provide their names to dubious unlawful gambling sites are, at a minimum, putting their track records at risk along with courting civil and class actions by consumers who declare harm,’ Glaser said. ‘There is also some threat that state regulators and state chief law officers rope celeb endorsers into enforcement efforts for helping with illegal gambling.’

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