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

No, they weren't personally in attendance, but the world-famous celebs were notably included in a slide presentation on social and sweepstakes casinos - the controversial sites providing both totally 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 anybody can 'bet totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The sites are just 2 cogs in the multibillion-dollar industry that now discovers itself besieged by claims. In the eyes of lots of gaming corporations, not to mention suit plaintiffs and state regulators, sweepstakes casinos function as traditional casinos, just without the oversight, consumer defenses and tax laws. So not just can they avoid the steep 24-percent federal sports betting levy, however sweepstakes operators aren't based on regulative obstacles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings last year alone. Now the company faces accusations of prohibited sports betting in a New York suit that declares VGW utilizes celebrity endorsers to 'develop a veneer of authenticity' around its item. (See VGW's declaration listed below)

'I'm not exactly sure" if you do not trust us, you can rely on 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 presenter, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers include a variety of celebrities from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions in between traditional gambling and sweepstakes play.

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

Ryan Seacrest prompts fans to dip into Chumba Casino, where many - however not all - video games are totally free

Drake has a handle social sweeps gambling establishment, Stake, that he frequently touts on social networks

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Instead, ads usually center around the social aspect of the gambling establishments, while omitting the capacity for actual gaming losses.

Others tempt clients with promises of rewards. One such operator, Stake, ran a social networks ad revealing off Drake's cars and trucks, aircrafts and mansions before rotating to video footage of the rapper playing online casino-style video games.

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

Another caption discussed: 'Because I never ever quit.'

The inconsistency between gambling websites and social or sweepstakes gambling establishments is a bit intricate, however operators of the latter insist they're not included with the previous.

A spokesperson for a market trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA information, most of the players on social-sweepstakes casinos are sports betting complimentary.

'Most social sweeps customers never ever purchase,' the SPGA representative informed DailyMail.com. 'The minority of consumers who make purchases do so in amounts far smaller than the normal deposit or bet size at real-money online gambling websites.'

Social casinos use clients a chance to play casino-style video games with good friends. Players have the alternative to purchase worthless currency typically referred to as 'gold coins,' which can not be exchanged for genuine cash, but can be used to open different features within the video games.

But within the world of social casinos exists sweepstakes video gaming, enabling clients to obtain 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 player 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 cash and other things of value.

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

Social sweeps casino Stake ran an advertisement flaunting Drake's vehicles, airplanes 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 helped to fuel the popularity of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes websites, which do not require generally require recognition. However, websites like Chumba will ask for IDs from gamers attempting to withdraw any funds.

Many websites, like the crypto-compatible Stake, permit customers to submit mail-in ask for complimentary sweeps coins, supplied the players follow painfully specific instructions. What's more, players are typically rewarded with sweeps coins simply for signing up, consequently providing a factor to attempt their hands at any variety of gambling establishment games for a possibility to win - or lose - real money.

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

According to the stakeholders, their product is the totally free casino-style video gaming, and the real-stakes competition is merely a method of promoting their support.

'Social sweepstakes games are merely a kind of online home entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is needed to play at social casinos with sweepstakes rewards. Consumers never need to pay for an opportunity to win rewards. That lack of a purchase requirement - or" consideration" - is an essential difference in between social sweeps and conventional online gaming sites like gambling establishments.'

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

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

'Sweepstakes are a long-standing technique for promoting all sort of everyday organizations in the United States, everything from burgers to publication subscriptions to coffee and home enhancement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are routinely utilized by a who's who of home 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, video gaming attorney Daniel Wallach mentions, McDonald's Monopoly 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 utilized to promote genuine products like fries, shakes, and the Filet-O-Fish.
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'They do not last forever and they're normally not connected to casino-style games of possibility,' Wallach informed DailyMail.com. 'They're just money giveaways.

'The sweepstakes [casinos] possess none of the qualities commonly connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments offer" casino-like" payouts, usually 80 percent or more of earnings, whereas the common payout portion for a short-term promotional sweepstakes is a minor share of the revenue made by the business [typically less than one percent]'
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Wallach is fast to liken the online social sweeps gambling establishments to the web coffee shops that emerged in Florida, providing consumers the opportunity to play casino-style video games for genuine prizes. A number of those brick-and-mortar establishments have because been shuttered over accusations of unlawful sports betting.

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

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

'These differences are not approximate,' Wallach stated of social sweeps casinos. 'They have repeatedly been pointed out by courts and state lawyer generals as crucial factors in identifying that a sweepstakes promotion was in reality a guise for unlawful sports betting.'

Among the gambling establishment industry's leading trade organizations, the American Gaming Association, is now pressing legislators to investigate sweepstakes operators and, sometimes, enact brand-new on the issue.

'Consumers are being denied of securities and states are giving up substantial tax and income opportunities as this gambling changes that carried out through managed channels,' read a well-circulated AGA memo.

And then there are the complainants who have actually taken legal action against social gambling establishments in more than a dozen states.

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

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

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

Apple and Google have likewise been called as defendants in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's demand for comment.

'We generally do not comment on matters before the courts,' a VGW spokesperson told 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 formally served.

'We have full self-confidence in our compliance with all laws and policies where we run, and stay positive about the future,' the spokesperson continued. 'We continue to use our free-to-play games throughout most of North America, as we have for more than a decade, developing not only fantastic video games, user experiences and home entertainment, however also ensuring this is done safely, properly and at the highest level of requirements.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are reasonably typical throughout the online social games market (and the US more broadly), and our standard practice is that we mean to intensely safeguard any claim which might be brought versus us.'

The problems in between conventional online gambling and sweepstakes casinos could prove problematic for some star 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 conventional gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking illegal sports betting wagering 'sweeps' websites while at the very same time the leagues wish to project a strong position against illegal gaming - 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 got a life time restriction from the NBA over allegations he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes casinos.

Together with VGW, Apple and Google are being demanded hosting presumably illegal gambling websites

Regardless, Glaser sees sweepstakes casinos as a significant issue 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 representative nor the gamers' agents reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise overlooked to react to DailyMail.com e-mails.

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

'We have full confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the representative stated. 'Some of our worths are" our gamers precede" 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 lend their names to shady unlawful gambling sites are, at a minimum, putting their reputations at threat as well as courting civil and class actions by consumers who declare damage,' Glaser stated. 'There is likewise some risk that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for helping with illegal sports betting.'

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