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 presence, however the world-famous celebrities were conspicuously consisted of in a slide discussion on social and sweepstakes gambling establishments - the questionable websites providing both free casino-style video games and rewarding prizes, such as cash, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for totally 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 market that now discovers itself besieged by suits. In the eyes of many gaming corporations, not to point out suit complainants and state regulators, sweepstakes casinos serve as standard casinos, just without the oversight, consumer protections and tax laws. So not only can they avoid the steep 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulative difficulties like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the company faces allegations of unlawful gambling in a New York lawsuit that claims VGW uses celeb endorsers to 'develop a veneer of authenticity' around its item. (See VGW's declaration below)

'I'm uncertain" if you don't trust us, you can rely on Paris Hilton" is a winning message for business operating multibillion-dollar illegal operations out of locations 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 celebrities from sports betting 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 traditional sports betting and sweepstakes play.

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

Ryan Seacrest advises fans to dip into Chumba Casino, where lots of - however not all - video games are totally free

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

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Instead, advertisements typically center around the social aspect of the gambling establishments, while omitting the capacity for actual sports betting losses.

Others lure clients with promises of rewards. One such operator, Stake, ran a social media ad flaunting Drake's vehicles, planes and estates before pivoting to footage of the rapper playing online casino-style games.

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

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

The discrepancy in between sports betting websites and social or sweepstakes casinos is a bit complex, but operators of the latter insist they're not included with the former.

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

'Most social sweeps clients never ever buy,' the SPGA representative informed DailyMail.com. 'The minority of consumers who make purchases do so in quantities far smaller sized than the common deposit or wager size at real-money online gaming sites.'

Social gambling establishments offer consumers a possibility to play casino-style video games with buddies. Players have the alternative to buy worthless currency frequently described as 'gold coins,' which can not be exchanged for genuine cash, but can be used to unlock numerous features within the games.

But within the world of social gambling establishments exists sweepstakes video gaming, allowing customers to obtain other currency referred to as 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the potential for monetary losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York City. One gamer informed the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the previous year after continuing to buy more coins in pursuit of cash and other things of value.

The Philadelphia 76ers' Paul George is seen promoting an International Poker event

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

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

Traditional online gambling establishments are banned in all however 7 states, which has actually helped to fuel the popularity of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes websites, which don't need normally need identification. However, sites like Chumba will ask for IDs from players trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, allow clients to send mail-in requests for free sweeps coins, supplied the gamers follow painfully particular instructions. What's more, players are often rewarded with sweeps coins simply for registering, thereby providing them a reason to try their hands at any variety of gambling establishment video games for an opportunity to win - or lose - real cash.

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

According to the stakeholders, their product is the totally free casino-style video gaming, and the real-stakes competitors is simply a way of promoting their support.

'Social sweepstakes video games are merely a form of online home entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is required to dip into social gambling establishments with sweepstakes prizes. Consumers never ever have to spend for a chance to win rewards. That lack of a purchase requirement - or" factor to consider" - is a vital distinction in between social sweeps and standard online sports betting sites like gambling establishments.'

Think of the way that McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and french fries that offer them the possibility to win profitable prizes, such as a $1 million prize.

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

'Sweepstakes are a long-standing technique for promoting all type of everyday businesses in the United States, everything from burgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are frequently used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous sports betting market insiders, that argument doesn't cut it.

For starters, gaming attorney Daniel Wallach mentions, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a well-defined start and end, thereby suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote real items like fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're normally not tied to casino-style video games of chance,' Wallach informed DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [gambling establishments] possess none of the qualities typically related to McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments offer" casino-like" payments, typically 80 percent or more of earnings, whereas the common payment portion for a short-lived advertising sweepstakes is a trivial share of the income earned by the business [generally less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the web coffee shops that sprang up in Florida, providing customers the opportunity to play casino-style games for real rewards. A lot of those brick-and-mortar establishments have given that been shuttered over accusations of illegal gambling.

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

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

'These differences are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have consistently been mentioned by courts and state chief law officer as essential consider determining that a sweepstakes promo was in truth a guise for prohibited sports betting.'

One of the casino industry's leading trade organizations, the American Gaming Association, is now pressing legislators to investigate sweepstakes operators and, in some cases, enact brand-new legislation on the issue.

'Consumers are being deprived of securities and states are passing up substantial tax and profits chances as this gaming changes that carried out through regulated channels,' read a well-circulated AGA memo.

And after that there are the complainants who have actually sued social casinos in more than a lots states.

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

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

In the newest claim, which is mainly comparable to its predecessors, New york city state residents 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 'unlawful sports betting enterprise. '

Apple and Google have actually also been named as offenders in suits for hosting the sweepstakes websites. But unlike VGW, neither tech company responded to DailyMail.com's demand for remark.

'We usually don't comment on matters before the courts,' a VGW representative told DailyMail.com by means of email. '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 full self-confidence in our compliance with all laws and guidelines where we run, and stay confident about the future,' the representative continued. 'We continue to offer our free-to-play games throughout the majority of North America, as we have for more than a years, creating not only fantastic video games, user experiences and home entertainment, however also guaranteeing this is done securely, responsibly and at the greatest level of standards.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are reasonably typical across the online social games market (and the US more broadly), and our basic practice is that we intend to strongly protect any claim which may be brought against us.'

The concerns between standard online sports betting and sweepstakes casinos 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 while the NBA is partnered with standard video gaming titans like FanDuel and DraftKings.

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

It was simply eight months ago that Toronto Raptors forward Jontay Porter received a lifetime restriction from the NBA over claims he conspired with gamblers. 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 apparently prohibited 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 backing sweepstakes websites refers when, not if,' Glaser added.

Neither an NBA representative nor the gamers' agents reacted to DailyMail.com's requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also overlooked to respond to DailyMail.com e-mails.

Asked if their celebrity endorsers have a responsibility to explain to customers the distinctions and resemblances in between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that needs to be done.

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the spokesperson said. 'A few of our values are" our players 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 prohibited gaming websites are, at a minimum, putting their reputations at danger as well as courting civil and class actions by customers who declare harm,' Glaser stated. 'There is likewise some threat that state regulators and state attorneys basic rope celeb endorsers into enforcement efforts for assisting in prohibited gambling.'

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