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, however the world-famous celebrities were conspicuously consisted of in a slide presentation on social and sweepstakes gambling establishments - the controversial websites offering both totally free casino-style video games and financially rewarding rewards, such as cash, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet complimentary,' 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 market that now finds itself besieged by claims. In the eyes of numerous video gaming corporations, not to point out claim complainants and state regulators, sweepstakes casinos 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 gambling levy, but sweepstakes operators aren't based on regulative hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income last year alone. Now the business faces allegations of unlawful gaming in a New York lawsuit that declares VGW uses celeb endorsers to 'develop a veneer of legitimacy' around its product. (See VGW's statement below)

'I'm not exactly sure" if you don't trust us, you can rely on Paris Hilton" is a winning message for companies operating multibillion-dollar prohibited operations out of places like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of video gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers consist of a series of celebrities 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 provide any distinctions between conventional gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of lots of sweepstakes casinos discovered online

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

Drake has a deal with social sweeps casino, Stake, that he frequently touts on social networks

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Instead, ads usually center around the social aspect of the casinos, while leaving out the potential for real sports betting losses.

Others lure clients with promises of rewards. One such operator, Stake, ran a social networks ad flaunting Drake's cars, airplanes and mansions before rotating to video of the rapper playing online casino-style video games.

'Daddy, why do we have so much money?' check out the first caption on the screen.

Another caption described: 'Because I never ever offered up.'

The discrepancy in between gambling websites and social or sweepstakes gambling establishments is a bit complex, but operators of the latter insist they're not included with the previous.

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competition 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 clients never ever purchase,' the SPGA representative told DailyMail.com. 'The minority of clients who make purchases do so in amounts far smaller than the typical deposit or bet size at real-money online sports betting sites.'

Social casinos provide consumers a possibility to play casino-style games with good friends. Players have the alternative to purchase worthless currency frequently referred to as 'gold coins,' which can not be exchanged for genuine money, however can be used to unlock various functions within the games.

But within the world of social gambling establishments exists sweepstakes video gaming, permitting clients to get other currency referred to as 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the potential for monetary losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York. One player 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 Global Poker event

Social sweeps casino Stake ran an advertisement flaunting Drake's cars, planes and mansions

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 assisted to sustain the popularity of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes sites, which don't require typically require recognition. However, sites like Chumba will ask for IDs from players attempting to withdraw any funds.

Many sites, like the crypto-compatible Stake, allow clients to send mail-in ask for free sweeps coins, supplied the players follow painfully particular directions. What's more, players are often rewarded with sweeps coins just for signing up, thus providing a reason to attempt their hands at any variety of casino games for a possibility to win - or lose - real cash.

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

According to the stakeholders, their product is the free casino-style gaming, and the real-stakes competition is just a way of promoting their support.

'Social sweepstakes games are merely a form of online entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is needed to dip into social casinos with sweepstakes prizes. Consumers never ever have to pay for an opportunity to win rewards. That absence of a purchase requirement - or" consideration" - is a vital difference between social sweeps and conventional online gambling sites like casinos.'

Consider the manner in which McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're buying hamburgers and french fries that use them the chance to win profitable prizes, such as a $1 million jackpot.

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

'Sweepstakes are an enduring approach for promoting all type of everyday businesses in the United States, whatever from burgers to publication subscriptions to coffee and home improvement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are routinely 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 industry insiders, that argument doesn't cut it.

For starters, gaming lawyer Daniel Wallach points out, McDonald's Monopoly video game does not run forever. Rather, it has a well-defined beginning and end, therefore recommending the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being utilized to promote genuine products like french fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're typically not tied to casino-style games of possibility,' Wallach informed DailyMail.com. 'They're simply money free gifts.

'The sweepstakes [gambling establishments] have none of the attributes typically associated with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments use" casino-like" payments, generally 80 percent or more of revenues, whereas the typical payment percentage for a temporary marketing sweepstakes is an insignificant share of the earnings made by the business [normally less than one percent]'

Wallach is quick to compare the online social sweeps casinos to the web coffee shops that sprang up in Florida, using consumers the possibility to play casino-style games for real prizes. A number of those brick-and-mortar facilities have actually given that been shuttered over accusations of illegal gambling.

DJ Khaled is among numerous celeb spokespeople for VGW's Global Poker brand name

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

'These differences are not approximate,' Wallach stated of social sweeps casinos. 'They have actually repeatedly been pointed out by courts and state attorney general of the United States as essential aspects in identifying that a sweepstakes promotion was in reality a guise for illegal gaming.'

One of the gambling establishment market's leading trade companies, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, in many cases, enact new legislation on the issue.

'Consumers are being deprived of protections and states are giving up significant tax and revenue chances as this gambling replaces that conducted through regulated channels,' checked out a well-circulated AGA memo.

And after that there are the complainants who have actually taken legal action against social casinos in more than a dozen states.

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

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

In the newest claim, which is mainly similar to its predecessors, New york city state homeowners Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited sports betting enterprise. '

Apple and Google have actually also been named as offenders in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech business responded to DailyMail.com's demand for comment.

'We generally do not comment on matters before the courts,' a VGW spokesperson told DailyMail.com via email. 'However, we keep in mind that this claim has only simply been submitted with the court and VGW has actually not been officially served.

'We have full confidence in our compliance with all laws and regulations where we operate, and remain positive about the future,' the representative continued. 'We continue to provide our free-to-play video games across the majority of The United States and Canada, as we have for more than a years, developing not only terrific games, user experiences and home entertainment, but likewise guaranteeing this is done safely, responsibly and at the highest level of requirements.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are fairly typical throughout the online social video games industry (and the US more broadly), and our basic practice is that we plan to vigorously safeguard any claim which may be brought versus us.'

The problems between standard online gaming and sweepstakes gambling establishments might prove troublesome for some celebrity 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 ironic that expert athletes are hawking unlawful sports betting 'sweeps' sites while at the same time the leagues desire to project a strong position against unlawful sports betting - specifically when attempting to tamp down the periodic gambling scandal,' Glaser told DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter received a life time restriction from the NBA over accusations he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes casinos.

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

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

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

Neither an NBA spokesperson nor the gamers' representatives responded to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise neglected to respond to DailyMail.com e-mails.

Asked if their celebrity endorsers have an obligation to describe to clients the differences and similarities between iGaming and sweepstakes casinos, VGW firmly insisted there is absolutely 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. 'Some of our values are" our gamers come first" and" we do what's right", and we put our values at the core of everything we do.'

Glaser, an outspoken opponent of sweepstakes sites, sees things in a different way.

'Celebrities who lend their names to shady illegal gaming websites are, at a minimum, putting their reputations at danger along with courting civil and class actions by customers who allege damage,' Glaser said. 'There is also some risk that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for facilitating unlawful gambling.'

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