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

No, they weren't personally in participation, but the world-famous celebs were notably consisted of in a slide presentation on social and sweepstakes gambling establishments - the questionable sites offering both complimentary casino-style video games and rewarding prizes, such as money, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for 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 industry that now discovers itself besieged by lawsuits. In the eyes of lots of gaming corporations, not to discuss lawsuit plaintiffs and state regulators, sweepstakes casinos serve as conventional casinos, just without the oversight, customer defenses and tax laws. So not only can they avoid the high 24-percent federal gambling levy, however sweepstakes operators aren't based on regulatory hurdles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income last year alone. Now the company deals with accusations of prohibited gaming in a New York suit that declares VGW utilizes star endorsers to 'produce a veneer of authenticity' around its product. (See VGW's statement below)

'I'm not sure" if you do not trust us, you can rely on Paris Hilton" is a winning message for companies running multibillion-dollar unlawful 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 series of stars from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom offer any differences in between traditional sports betting and sweepstakes play.

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

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

Drake has a deal with social sweeps gambling establishment, Stake, that he routinely touts on social media

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Instead, ads normally center around the social aspect of the casinos, while leaving out the capacity for actual gambling losses.

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

'Daddy, why do we have so much cash?' read the very first caption on the screen.

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

The discrepancy in between gambling websites and social or sweepstakes casinos is a bit intricate, 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), described 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 gambling establishments are sports betting totally free.

'Most social sweeps clients never purchase,' the SPGA spokesperson told DailyMail.com. 'The minority of clients who make purchases do so in amounts far smaller sized than the common deposit or wager size at real-money online gaming sites.'

Social casinos provide clients a possibility to play casino-style games with buddies. Players have the alternative to buy worthless currency frequently referred to as 'gold coins,' which can not be exchanged for genuine money, but can be used to open different features within the video games.

But within the world of social gambling establishments exists sweepstakes video gaming, permitting consumers to obtain other currency called 'sweeps coins' that can be exchanged for cash or other prizes.

And therein lies the capacity for financial losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York City. One gamer told 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 money and other things of worth.

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

Social sweeps gambling establishment Stake ran an ad showing off Drake's cars, airplanes and mansions

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

Traditional online casinos are prohibited in all but 7 states, which has actually helped to fuel the appeal of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes sites, which do not need normally require identification. However, websites like Chumba will request for IDs from players attempting to withdraw any funds.

Many sites, like the crypto-compatible Stake, allow consumers to send mail-in demands for complimentary sweeps coins, offered the gamers follow painfully specific directions. What's more, gamers are frequently rewarded with sweeps coins simply for registering, thereby giving them a reason to attempt their hands at any number of casino video games for a chance to win - or lose - genuine money.

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

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

'Social sweepstakes games are just a kind of online entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is needed to dip into social casinos with sweepstakes rewards. Consumers never have to pay for an opportunity to win prizes. That lack of a purchase requirement - or" factor to consider" - is a vital difference between social sweeps and standard online gambling websites 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, however rather they're purchasing hamburgers and french fries that use them the opportunity to win lucrative prizes, such as a $1 million jackpot.

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

'Sweepstakes are an enduring technique for promoting all kinds of everyday services in the United States, whatever from hamburgers to publication memberships to coffee and home improvement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are frequently utilized by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many sports betting market insiders, that argument does not cut it.

For beginners, gaming lawyer Daniel Wallach explains, McDonald's Monopoly video game does not run indefinitely. Rather, it has a well-defined beginning and end, therefore suggesting the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being utilized to promote real products like french fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're normally not connected to casino-style video games of opportunity,' Wallach informed DailyMail.com. 'They're just cash free gifts.

'The sweepstakes [gambling establishments] have none of the characteristics typically associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos offer" casino-like" payouts, usually 80 percent or more of incomes, whereas the typical payment portion for a short-term promotional sweepstakes is an insignificant share of the profits made by the business [usually less than one percent]'

Wallach is fast to compare the online social sweeps gambling establishments to the internet cafes that emerged in Florida, providing consumers the possibility to play casino-style video games for genuine prizes. Much of those brick-and-mortar facilities have actually because been shuttered over claims of illegal gaming.

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

Now, Wallach argues, social sweeps gambling establishments must face comparable scrutiny.

'These differences are not approximate,' Wallach said of social sweeps casinos. 'They have consistently been pointed out by courts and state attorney general of the United States as crucial aspects in figuring out that a sweepstakes promotion remained in reality a guise for illegal gambling.'

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

'Consumers are being denied of securities and states are giving up considerable tax and profits chances as this sports betting changes that conducted through controlled channels,' read a well-circulated AGA memo.

And after that there are the complainants who have actually sued social gambling establishments in more than a dozen states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, stating the settlement was made to avoid legal expenses and continued litigation.

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

In the current suit, which is mostly comparable to its predecessors, New york city state homeowners Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited sports betting enterprise. '

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

'We usually don't talk about matters before the courts,' a VGW representative informed DailyMail.com via e-mail. 'However, we keep in mind that this claim has actually only simply been filed with the court and VGW has not been officially served.

'We have full confidence in our compliance with all laws and regulations where we run, and remain confident about the future,' the representative continued. 'We continue to offer our free-to-play games throughout most of North America, as we have for more than a decade, producing not just terrific games, user experiences and entertainment, however likewise guaranteeing this is done securely, responsibly and at the greatest level of requirements.

'More broadly, we 'd restate that class actions and other litigations and arbitrations are fairly common throughout the online social games market (and the US more broadly), and our basic practice is that we intend to vigorously protect any claim which might be brought against us.'

The concerns in between conventional online gambling and sweepstakes casinos could show bothersome for some celeb endorsers.

Towns, a star center with the Knicks, and the 76ers' George both endorse VGW's Global Poker brand name while the NBA is partnered with traditional video 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 forecast a strong position against unlawful gambling - especially when trying to tamp down the periodic gambling scandal,' Glaser informed DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter received a life time restriction 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.

In addition to VGW, Apple and Google are being demanded hosting supposedly illegal gambling websites

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

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

Neither an NBA spokesperson nor the players' representatives responded to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise neglected to react to DailyMail.com emails.

Asked if their celeb endorsers have a duty to explain to consumers the distinctions and resemblances between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that requires to be done.

'We have full confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the spokesperson stated. 'Some of our worths are" our gamers come initially" 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 dubious unlawful sports betting sites are, at a minimum, putting their track records at danger as well as courting civil and class actions by consumers who declare harm,' Glaser said. 'There is also some threat that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for helping with illegal gambling.'

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