The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on prohibited gaming.

No, they weren't personally in participation, but the world-famous celebrities were conspicuously consisted of in a slide discussion on social and sweepstakes gambling establishments - the controversial websites using both totally free casino-style games and 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 free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are simply two cogs in the multibillion-dollar industry that now finds itself besieged by claims. In the eyes of many video gaming corporations, not to mention suit complainants and state regulators, sweepstakes casinos serve as traditional casinos, just without the oversight, consumer defenses and tax laws. So not only can they prevent the steep 24-percent federal sports betting levy, but 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 gaming in a New york city suit that claims VGW utilizes celebrity endorsers to 'develop a veneer of legitimacy' around its product. (See VGW's declaration below)

'I'm not exactly sure" if you do not trust us, you can rely on Paris Hilton" is a winning message for companies operating 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 consist of a range of celebrities 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 use any distinctions in between standard gaming and sweepstakes play.

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

Ryan Seacrest prompts fans to play at Chumba Casino, where numerous - however not all - video games are free

Drake has an offer with social sweeps gambling establishment, Stake, that he routinely promotes on social media

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Instead, advertisements normally focus around the social element of the casinos, while leaving out the capacity for real sports betting losses.

Others tempt clients with promises of rewards. One such operator, Stake, ran a social networks advertisement showing off Drake's automobiles, airplanes and mansions before rotating to video footage of the rap artist playing online casino-style games.

'Daddy, why do we have a lot cash?' check out the very first caption on the screen.

Another caption discussed: 'Because I never quit.'

The discrepancy in between sports betting sites and social or sweepstakes casinos is a bit complicated, however operators of the latter insist they're not involved with the former.

A spokesperson for a market 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, most of the gamers on social-sweepstakes gambling establishments are sports betting free.

'Most social sweeps clients never ever make a purchase,' the SPGA spokesperson informed DailyMail.com. 'The minority of clients who make purchases do so in quantities far smaller sized than the typical deposit or bet size at real-money online sports betting websites.'

Social casinos provide clients an opportunity to play casino-style games with buddies. Players have the option to buy valueless currency frequently described as 'gold coins,' which can not be exchanged for genuine cash, but can be used to unlock numerous functions within the video games.

But within the world of social gambling establishments exists sweepstakes video gaming, permitting clients to get other currency called 'sweeps coins' that can be exchanged for money 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 past year after continuing to purchase more coins in pursuit of money and other things of value.

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

Social sweeps casino Stake ran an advertisement displaying Drake's automobiles, aircrafts and mansions

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

Traditional online casinos are banned in all however seven 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 don't require generally require identification. However, sites like Chumba will request for IDs from gamers trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, permit clients to send mail-in requests for free sweeps coins, offered the gamers follow painfully particular directions. What's more, players are often rewarded with sweeps coins simply for signing up, consequently providing a reason to try their hands at any number of casino video games for a possibility to win - or lose - genuine money.

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

According to the stakeholders, their item is the complimentary casino-style gaming, and the real-stakes competitors is just a method of promoting their support.

'Social sweepstakes video games are simply a type of online home entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is required to dip into social gambling establishments with sweepstakes prizes. Consumers never ever need to spend for an opportunity to win rewards. That lack of a purchase requirement - or" consideration" - is a vital difference between social sweeps and standard online gambling websites like casinos.'

Think about the method that McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to gamble, but rather they're buying hamburgers and fries that provide them the opportunity to win lucrative rewards, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the video game itself does not meet the meaning of gambling in the US.

'Sweepstakes are a long-standing approach for promoting all type of daily businesses in the United States, everything from hamburgers to magazine memberships to coffee and home enhancement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are regularly utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of gambling industry insiders, that argument doesn't cut it.

For beginners, video gaming attorney Daniel Wallach points out, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a distinct beginning and end, consequently recommending the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being utilized to promote real products like fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're normally not connected to casino-style games of opportunity,' Wallach informed DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [gambling establishments] possess none of the characteristics commonly connected with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes casinos provide" casino-like" payments, usually 80 percent or more of profits, whereas the normal payout percentage for a short-lived advertising sweepstakes is an unimportant share of the revenue made by the business [usually less than one percent]'

Wallach is quick to liken the online social sweeps casinos to the internet coffee shops that emerged in Florida, providing customers the chance to play casino-style video games for real rewards. Much of those brick-and-mortar facilities have actually given that been shuttered over allegations of illegal gaming.

DJ Khaled is amongst a number of celeb spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps gambling establishments should deal with similar scrutiny.

'These differences are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have actually repeatedly been mentioned by courts and state attorney generals as key aspects in determining that a sweepstakes promotion was in fact a guise for prohibited sports betting.'

Among the gambling establishment industry's leading trade companies, the American Gaming Association, is now pushing legislators to examine sweepstakes operators and, in many cases, enact new legislation on the concern.

'Consumers are being denied of defenses and states are forgoing considerable tax and earnings opportunities as this gambling replaces that performed through regulated channels,' checked out a well-circulated AGA memo.

And then there are the plaintiffs who have actually 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 misdeed, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action claim, stating the settlement was made to prevent legal expenses and continued litigation.

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

In the current claim, which is mostly comparable to its predecessors, New york city state citizens Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is described in the filing as an 'illegal gaming enterprise. '

Apple and Google have likewise been called as offenders in suits for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's ask for remark.

'We generally do not discuss matters before the courts,' a VGW representative informed DailyMail.com by means of e-mail. 'However, we keep in mind that this claim has actually only just been filed with the court and VGW has actually not been officially served.

'We have full self-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 video games across many of North America, as we have for more than a decade, producing not only terrific video games, user experiences and home entertainment, however likewise guaranteeing this is done safely, properly and at the highest level of standards.

'More broadly, we 'd restate that class actions and other litigations and arbitrations are relatively common across the online social games industry (and the US more broadly), and our basic practice is that we intend to strongly protect any claim which may be brought versus us.'

The concerns between conventional online sports betting and sweepstakes gambling establishments might show bothersome for some celebrity 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 video gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking illegal sports betting 'sweeps' websites while at the very same time the leagues desire to project a strong position versus unlawful gaming - specifically when attempting to tamp down the occasional gaming scandal,' Glaser told DailyMail.com.

It was simply eight months ago that Toronto Raptors forward Jontay Porter got a lifetime ban from the NBA over accusations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes casinos.

Together with VGW, Apple and Google are being demanded hosting apparently illegal gambling sites

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

'I 'd expect that a league crackdown on professional athletes backing sweepstakes websites refers when, not if,' Glaser included.

Neither an NBA spokesperson nor the players' representatives 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 celebrity endorsers have a responsibility to discuss to customers the distinctions and resemblances in between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that requires to be done.

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

Glaser, an outspoken challenger of sweepstakes websites, sees things in a different way.

'Celebrities who provide their names to dubious illegal sports betting websites are, at a minimum, putting their reputations at risk along with courting civil and class actions by consumers who allege damage,' Glaser said. 'There is likewise some danger that state regulators and state lawyers general rope celeb endorsers into enforcement efforts for assisting in prohibited sports betting.'

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