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

No, they weren't personally in attendance, however the world-famous celebs were conspicuously included in a slide discussion on social and sweepstakes gambling establishments - the questionable websites offering both free casino-style games and profitable rewards, such as money, gift 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 simply 2 cogs in the multibillion-dollar market that now finds itself besieged by claims. In the eyes of many video gaming corporations, not to mention lawsuit complainants and state regulators, sweepstakes casinos function as standard gambling establishments, just without the oversight, consumer defenses and tax laws. So not just can they prevent the steep 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulative obstacles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the business faces accusations of prohibited gambling in a New York claim that declares VGW utilizes star endorsers to 'create a veneer of legitimacy' around its item. (See VGW's statement below)

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

Sweepstakes endorsers consist of a series of celebs from gambling lovers 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 Vegas, one of many sweepstakes casinos discovered online

Ryan Seacrest advises fans to dip into Chumba Casino, where many - however not all - video games are complimentary

Drake has a deal with social sweeps casino, Stake, that he regularly touts on social media

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Instead, ads usually center around the social aspect of the casinos, while omitting the capacity for real sports betting losses.

Others tempt clients with guarantees of prizes. One such operator, Stake, ran a social networks advertisement showing off Drake's cars and trucks, aircrafts and estates before pivoting to video footage of the rapper playing online casino-style video games.

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

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

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

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA data, many of the gamers on social-sweepstakes gambling establishments are sports betting totally free.

'Most social sweeps customers never purchase,' the SPGA representative told DailyMail.com. 'The minority of clients who make purchases do so in quantities far smaller sized than the common deposit or bet size at real-money online gambling websites.'

Social gambling establishments offer customers a chance to play casino-style video games with good friends. Players have the option to purchase valueless currency typically referred to as 'gold coins,' which can not be exchanged for real cash, but can be used to unlock numerous features within the games.

But within the world of social casinos exists sweepstakes gaming, enabling customers to obtain other currency called 'sweeps coins' that can be exchanged for cash or other rewards.

And therein lies the capacity 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 purchase more coins in pursuit of cash and other things of worth.

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

Social sweeps casino Stake ran an advertisement displaying Drake's cars, planes 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 but 7 states, which has actually helped to sustain the appeal of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, allow consumers to submit mail-in ask for complimentary sweeps coins, supplied the players follow painfully particular guidelines. What's more, gamers are often rewarded with sweeps coins merely for registering, thereby giving them a factor to attempt their hands at any number of casino video games for a possibility to win - or lose - genuine cash.

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

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

'Social sweepstakes games are simply a kind of online entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is needed to play at social casinos with sweepstakes rewards. Consumers never ever have to pay for a chance to win prizes. That lack of a purchase requirement - or" consideration" - is a vital distinction between social sweeps and standard online sports betting websites like gambling establishments.'

Consider 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 fries that offer them the chance to win rewarding rewards, such as a $1 million prize.

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

'Sweepstakes are an enduring technique for promoting all sort of everyday services in the United States, everything from hamburgers to magazine memberships to coffee and home improvement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are routinely used by a who's who of household 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 starters, video gaming lawyer Daniel Wallach points out, McDonald's Monopoly video game does not run forever. Rather, it has a well-defined start and end, thereby suggesting the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being used to promote genuine items like fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're generally not tied to casino-style games of possibility,' Wallach informed DailyMail.com. 'They're just money giveaways.

'The sweepstakes [gambling establishments] possess none of the characteristics commonly related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments offer" casino-like" payments, generally 80 percent or more of profits, whereas the typical payment percentage for a short-lived promotional sweepstakes is a minor share of the earnings earned by the company [generally less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the web cafes that emerged in Florida, offering clients the chance to play casino-style video games for real prizes. Many of those brick-and-mortar establishments have actually because been shuttered over claims of prohibited gambling.

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

Now, Wallach argues, social sweeps gambling establishments should face similar examination.

'These differences are not approximate,' Wallach stated of social sweeps casinos. 'They have actually repeatedly been pointed out by courts and state chief law officer as key consider figuring out that a sweepstakes promotion was in truth a guise for prohibited gambling.'

One of the gambling establishment industry's leading trade companies, the American Gaming Association, is now pushing legislators to examine sweepstakes operators and, sometimes, enact new legislation on the issue.

'Consumers are being denied of defenses and states are giving up significant tax and revenue chances as this gambling replaces that performed through regulated channels,' read 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 gambling establishment operators paid a combined $14.2 million in four different cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action claim, saying the settlement was made to prevent legal expenses and continued lawsuits.

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

In the most recent claim, which is mostly comparable 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 gaming enterprise. '

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

'We typically do not comment on matters before the courts,' a VGW spokesperson informed DailyMail.com by means of e-mail. 'However, we keep in mind that this claim has only simply been filed with the court and VGW has actually not been officially served.

'We have full 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 video games throughout the majority of The United States and Canada, as we have for more than a years, developing not only terrific video games, user experiences and entertainment, but also ensuring this is done safely, properly and at the greatest level of requirements.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are relatively common throughout the online social video games industry (and the US more broadly), and our standard practice is that we plan to strongly defend any claim which may be brought versus us.'

The problems between standard online sports betting and sweepstakes casinos might prove troublesome for some star 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 standard video gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking illegal sports betting wagering 'sweeps' sites while at the exact same time the leagues want to predict a strong stance versus illegal sports betting - particularly when attempting to tamp down the periodic gaming scandal,' Glaser told DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter got a lifetime restriction from the NBA over allegations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes gambling establishments.

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

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

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

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

Asked if their celebrity endorsers have a duty to describe to customers the distinctions and similarities in between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that needs to be done.

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the representative said. 'Some of our values 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 provide their names to shady illegal sports betting sites are, at a minimum, putting their credibilities at risk as well as courting civil and class actions by customers who allege damage,' Glaser stated. 'There is likewise some danger that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for helping with unlawful gaming.'

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