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

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

The sites are just two cogs in the multibillion-dollar market that now finds itself besieged by suits. In the eyes of lots of video gaming corporations, not to discuss suit complainants and state regulators, sweepstakes casinos function as traditional gambling establishments, just without the oversight, customer defenses and tax laws. So not just can they prevent the steep 24-percent federal gaming levy, but sweepstakes operators aren't based on regulatory obstacles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income last year alone. Now the business faces accusations of unlawful sports betting in a New york city claim that declares VGW utilizes celebrity endorsers to 'produce a veneer of authenticity' around its item. (See VGW's statement listed below)

'I'm unsure" if you don't 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 speaker, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers consist of a series of celebrities from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions in between standard gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of numerous sweepstakes gambling establishments found online

Ryan Seacrest urges fans to dip into Chumba Casino, where numerous - however not all - games are totally free

Drake has an offer with social sweeps casino, Stake, that he frequently promotes on social media

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Instead, advertisements generally focus around the social aspect of the gambling establishments, while leaving out the potential for real gambling losses.

Others lure customers with pledges of prizes. One such operator, Stake, ran a social media ad revealing off Drake's vehicles, aircrafts and mansions before rotating to video of the rap artist playing online casino-style games.

'Daddy, why do we have a lot money?' read the very first caption on the screen.

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

The discrepancy in between gambling websites and social or sweepstakes casinos 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), explained its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA information, the majority of the gamers on social-sweepstakes gambling establishments are sports betting complimentary.

'Most social sweeps customers never purchase,' the SPGA spokesperson informed DailyMail.com. 'The minority of customers who make purchases do so in amounts far smaller than the typical deposit or bet size at real-money online gaming websites.'

Social gambling establishments offer consumers an opportunity to play casino-style games with buddies. Players have the alternative to purchase valueless currency typically described as 'gold coins,' which can not be exchanged genuine cash, but can be used to open different functions within the video games.

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

And therein lies the potential for monetary losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York. One gamer told 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 money and other things of value.

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

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake's vehicles, airplanes and mansions

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

Traditional online casinos are banned in all but seven states, which has assisted to sustain the appeal of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, enable customers to send mail-in demands for free sweeps coins, provided the players follow painfully specific directions. What's more, gamers are often rewarded with sweeps coins just for signing up, therefore giving them a factor to try their hands at any number of casino video games for a possibility to win - or lose - real cash.

So why are sweepstakes websites enabled to run in 48 states, while online casinos are prohibited in all but 7?

According to the stakeholders, their item is the free casino-style video gaming, and the real-stakes competitors is merely a means of promoting their bread and butter.

'Social sweepstakes games are simply a kind of online home entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is required to play at social gambling establishments with sweepstakes rewards. Consumers never have to spend for an opportunity to win rewards. That absence of a purchase requirement - or" consideration" - is an important difference between social sweeps and standard online gambling sites like gambling establishments.'

Think about the manner in which McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and french fries that offer them the possibility to win financially rewarding rewards, such as a $1 million jackpot.

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

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

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

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

'They don't last permanently and they're typically not connected to casino-style games of possibility,' Wallach informed DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [casinos] have none of the attributes typically connected with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments provide" casino-like" payouts, normally 80 percent or more of earnings, whereas the typical payout percentage for a temporary marketing sweepstakes is a trivial share of the earnings made by the company [usually less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the web coffee shops that sprang up in Florida, using customers the opportunity to play casino-style video games for real rewards. A number of those brick-and-mortar facilities have actually because been shuttered over accusations of unlawful gaming.

DJ Khaled is among several star spokespeople for VGW's Global Poker brand

Now, Wallach argues, social sweeps casinos need to face comparable analysis.

'These distinctions are not approximate,' Wallach said of social sweeps gambling establishments. 'They have actually repeatedly been pointed out by courts and state attorney generals as key elements in determining that a sweepstakes promo was in fact a guise for prohibited gambling.'

Among the gambling establishment industry's leading trade companies, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, sometimes, enact new legislation on the concern.

'Consumers are being denied of protections and states are passing up considerable tax and revenue opportunities as this gambling changes that carried out through regulated channels,' read a well-circulated AGA memo.

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

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

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

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

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

'We typically don't talk about matters before the courts,' a VGW representative told DailyMail.com by means of email. 'However, we note that this claim has actually only just been filed with the court and VGW has not been formally served.

'We have full self-confidence in our compliance with all laws and guidelines where we operate, and remain confident about the future,' the representative continued. 'We continue to use our free-to-play games throughout many of North America, as we have for more than a years, producing not just excellent games, user experiences and home entertainment, however 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 games market (and the US more broadly), and our basic practice is that we mean to intensely defend any claim which might be brought against us.'

The issues between conventional online gaming and sweepstakes gambling establishments could prove bothersome 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 traditional video gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking illegal sports betting 'sweeps' websites while at the same time the leagues want to predict a strong stance against prohibited gaming - specifically when trying to tamp down the occasional gaming 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 claims he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes casinos.

Together with VGW, Apple and Google are being demanded hosting allegedly unlawful sports betting 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 endorsing sweepstakes sites is a matter of when, not if,' Glaser added.

Neither an NBA representative nor the gamers' agents responded to DailyMail.com's requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise ignored to react to DailyMail.com emails.

Asked if their celebrity endorsers have a responsibility to discuss to clients the distinctions and similarities between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that requires to be done.

'We have full confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the spokesperson said. 'A few of our values are" our gamers precede" and" we do what's right", and we put our values at the core of everything we do.'

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

'Celebrities who provide their names to dubious illegal gambling sites are, at a minimum, putting their reputations at threat as well as courting civil and class actions by customers who declare damage,' Glaser stated. 'There is likewise some risk that state regulators and state attorneys basic rope star endorsers into enforcement efforts for helping with unlawful gambling.'

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