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

No, they weren't personally in attendance, but the world-famous celebrities were notably consisted of in a slide discussion on social and sweepstakes casinos - the questionable sites providing both complimentary casino-style games and lucrative prizes, such as cash, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are simply 2 cogs in the multibillion-dollar industry that now discovers itself besieged by suits. In the eyes of many gaming corporations, not to point out lawsuit complainants and state regulators, sweepstakes gambling establishments act as conventional gambling establishments, only without the oversight, customer defenses and tax laws. So not only can they prevent the high 24-percent federal sports betting levy, however 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 accusations of prohibited sports betting in a New york city claim that claims VGW utilizes celebrity endorsers to 'create a veneer of authenticity' around its product. (See VGW's statement listed below)

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

Sweepstakes endorsers include a series of stars 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 differences in between standard sports betting and sweepstakes play.

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

Ryan Seacrest urges fans to dip into Chumba Casino, where many - but not all - video games are free

Drake has a handle social sweeps casino, Stake, that he routinely touts on social networks

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Instead, advertisements generally center around the social aspect of the gambling establishments, while omitting the potential for actual gambling losses.

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

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

Another caption explained: 'Because I never ever provided up.'

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

A representative for an industry trade group, the Social and Promotional Gaming Association (SPGA), discussed 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 playing for totally free.

'Most social sweeps consumers never ever make a purchase,' the SPGA spokesperson told 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 gambling websites.'

Social gambling establishments provide clients an opportunity to play casino-style video games with pals. Players have the choice to buy valueless currency frequently referred to as 'gold coins,' which can not be exchanged genuine cash, however can be used to open numerous features within the games.

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

And therein lies the capacity for financial losses, like the ones declared by complainants 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 past year after continuing to purchase more coins in pursuit of cash and other things of worth.

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

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake's cars and trucks, airplanes and estates

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

Traditional online casinos are banned in all however seven states, which has helped to sustain the popularity of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes websites, which do not need typically require recognition. However, sites like Chumba will request IDs from gamers trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, enable customers to submit mail-in ask for totally free sweeps coins, supplied the players follow painfully particular instructions. What's more, players are typically rewarded with sweeps coins merely for signing up, thus offering them a factor to attempt their hands at any number of gambling establishment games for an opportunity to win - or lose - real cash.

So why are sweepstakes websites permitted to run 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 just a means of promoting their support.

'Social sweepstakes games are just a type of online entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is required to dip into social casinos with sweepstakes rewards. Consumers never have to pay for an opportunity to win prizes. That absence of a purchase requirement - or" consideration" - is an important distinction in between social sweeps and conventional online gambling sites like casinos.'

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

And without a purchase requirement, or 'factor to consider', the video game itself does not fulfill the definition of gaming in the US.

'Sweepstakes are a long-standing method for promoting all kinds of everyday companies in the United States, whatever from burgers to magazine subscriptions to coffee and home enhancement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are frequently utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling industry experts, that argument does not cut it.

For beginners, gaming attorney Daniel Wallach explains, McDonald's Monopoly game does not run forever. Rather, it has a well-defined start and end, consequently recommending the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being utilized to promote genuine items like fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're typically not tied to casino-style games of chance,' Wallach told DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [casinos] have none of the characteristics frequently connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes casinos provide" casino-like" payouts, normally 80 percent or more of earnings, whereas the normal payout percentage for a temporary marketing sweepstakes is an insignificant share of the earnings earned by the business [usually less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the internet cafes that emerged in Florida, providing clients the chance to play casino-style video games for genuine rewards. Much of those brick-and-mortar establishments have considering that been shuttered over allegations of illegal gambling.

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

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

'These differences are not approximate,' Wallach stated of social sweeps casinos. 'They have repeatedly been cited by courts and state chief law officer as key factors in determining that a sweepstakes promo remained in fact a guise for illegal gaming.'

Among the casino market's leading trade companies, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, in many cases, enact brand-new legislation on the concern.

'Consumers are being deprived of defenses and states are passing up considerable tax and profits chances as this sports betting changes that conducted through managed channels,' checked out a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in 4 separate cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action suit, stating the settlement was made to prevent legal costs and continued litigation.

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

In the current suit, which is mainly similar to its predecessors, New York state citizens Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited gambling enterprise. '

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

'We usually don't comment on matters before the courts,' a VGW representative informed DailyMail.com through e-mail. 'However, we note that this claim has actually only simply been submitted with the court and VGW has not been formally served.

'We have complete confidence in our compliance with all laws and guidelines where we run, and stay confident about the future,' the spokesperson continued. 'We continue to provide our free-to-play video games throughout most of The United States and Canada, as we have for more than a years, producing not only great games, user experiences and entertainment, however likewise guaranteeing this is done safely, responsibly and at the highest level of requirements.

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

The concerns between traditional online gambling and sweepstakes gambling establishments could prove problematic 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 traditional gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking prohibited sports betting wagering 'sweeps' sites while at the same time the leagues desire to predict a strong stance against unlawful gaming - particularly when attempting to tamp down the occasional gambling scandal,' Glaser told DailyMail.com.

It was simply eight months ago that Toronto Raptors forward Jontay Porter got a life time ban from the NBA over allegations he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes gambling establishments.

In addition to VGW, Apple and Google are being sued for hosting apparently prohibited gambling websites

Regardless, Glaser sees sweepstakes casinos as a significant issue for leagues such as the NBA.

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

Neither an NBA spokesman 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 clients the differences and similarities between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that requires to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the spokesperson said. 'Some of our worths are" our players precede" and" we do what's right", and we put our worths at the core of everything we do.'

Glaser, an outspoken opponent of sweepstakes websites, sees things differently.

'Celebrities who lend their names to shady unlawful gaming sites are, at a minimum, putting their track records at risk as well as courting civil and class actions by consumers who declare harm,' Glaser stated. 'There is likewise some risk that state regulators and state chief law officers rope celebrity endorsers into enforcement efforts for assisting in illegal gambling.'

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