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

No, they weren't personally in presence, but the world-famous celebrities were notably consisted of in a slide presentation on social and sweepstakes gambling establishments - the questionable sites offering both totally free casino-style video games and profitable prizes, such as cash, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet 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 claims. In the eyes of numerous video gaming corporations, not to discuss lawsuit plaintiffs and state regulators, sweepstakes casinos serve as standard gambling establishments, only without the oversight, customer protections and tax laws. So not just can they avoid the high 24-percent federal gambling levy, however 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 allegations of illegal gambling in a New york city claim that claims VGW uses celeb endorsers to 'produce a veneer of authenticity' around its product. (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 business running multibillion-dollar illegal 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 variety of celebrities 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 provide any distinctions between standard gambling and sweepstakes play.

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

Ryan Seacrest prompts 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 regularly touts on social networks

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Instead, ads generally focus around the social aspect of the gambling establishments, while omitting the potential for real gambling losses.

Others lure consumers with promises of prizes. One such operator, Stake, ran a social media ad revealing off Drake's cars and trucks, airplanes and mansions before pivoting to footage of the rap artist playing online casino-style games.

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

Another caption discussed: 'Because I never quit.'

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

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA data, the majority of the gamers on social-sweepstakes casinos are sports betting totally free.

'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 casinos use consumers an opportunity to play casino-style games with pals. Players have the option to purchase worthless currency often described as 'gold coins,' which can not be exchanged genuine cash, however can be used to unlock various functions within the games.

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

And therein lies the potential for monetary losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York City. One player 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 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 ad revealing off Drake's vehicles, planes and estates

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 sustain the popularity of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, permit customers to send mail-in ask for complimentary sweeps coins, offered the players follow painfully specific instructions. What's more, players are frequently rewarded with sweeps coins just for signing up, consequently offering them a factor to attempt their hands at any number of casino video games for a chance to win - or lose - real money.

So why are sweepstakes sites permitted to run in 48 states, while online gambling establishments are banned in all but 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 bread and butter.

'Social sweepstakes video games are merely a kind of online entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is required to play at social gambling establishments with sweepstakes rewards. Consumers never need to spend for a chance to win rewards. That absence of a purchase requirement - or" factor to consider" - is an important difference in between social sweeps and conventional online gaming sites like casinos.'

Think of the way that McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to gamble, however rather they're buying hamburgers and french fries that provide them the opportunity to win rewarding rewards, such as a $1 million prize.

And without a purchase requirement, or 'factor to consider', the game itself does not fulfill the meaning of sports betting in the US.

'Sweepstakes are an enduring approach for promoting all type of everyday businesses in the United States, whatever from burgers to publication memberships to coffee and home improvement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are regularly utilized by a who's who of home 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 beginners, video gaming attorney Daniel Wallach points out, McDonald's Monopoly video game does not run forever. Rather, it has a distinct start and end, consequently recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote real products like french fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're usually not connected to casino-style games of opportunity,' Wallach told DailyMail.com. 'They're simply cash giveaways.

'The sweepstakes [casinos] have none of the qualities frequently associated with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments offer" casino-like" payouts, typically 80 percent or more of incomes, whereas the normal payout portion for a short-term marketing sweepstakes is an unimportant share of the revenue made by the business [normally less than one percent]'

Wallach is fast to liken the online social sweeps gambling establishments to the internet coffee shops that emerged in Florida, offering consumers the chance to play casino-style video games for genuine rewards. Many of those brick-and-mortar establishments have since been shuttered over claims of unlawful gambling.

DJ Khaled is among a number of star spokespeople for VGW's Global Poker brand

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

'These differences are not approximate,' Wallach said of social sweeps gambling establishments. 'They have repeatedly been cited by courts and state chief law officer as crucial consider determining that a sweepstakes promotion remained in truth a guise for prohibited sports betting.'

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

'Consumers are being deprived of defenses and states are forgoing significant tax and earnings opportunities as this gaming changes that performed through regulated channels,' read a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without admitting any misbehavior, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action claim, saying the settlement was made to prevent legal costs and continued lawsuits.

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

In the newest claim, which is largely comparable to its predecessors, New York state residents 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 'illegal gambling enterprise. '

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

'We generally do not talk about matters before the courts,' a VGW spokesperson informed DailyMail.com by means of e-mail. 'However, we note that this claim has only just been submitted with the court and VGW has actually not been formally served.

'We have complete confidence in our compliance with all laws and guidelines where we operate, and stay confident about the future,' the spokesperson continued. 'We continue to offer our free-to-play games throughout the majority of North America, as we have for more than a decade, producing not just great games, user experiences and entertainment, but also ensuring this is done safely, responsibly and at the highest level of requirements.

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

The issues between standard online sports betting and sweepstakes casinos could show 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 professional athletes are hawking illegal sports betting 'sweeps' websites while at the exact same time the leagues desire to project a strong position versus unlawful gaming - especially when trying to tamp down the occasional gambling scandal,' Glaser informed DailyMail.com.

It was simply 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 including social or sweepstakes casinos.

Along with VGW, Apple and Google are being demanded hosting apparently prohibited gambling websites

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

'I 'd anticipate that a league crackdown on athletes backing sweepstakes sites is a matter of when, not if,' Glaser included.

Neither an NBA spokesman nor the gamers' representatives reacted 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 e-mails.

Asked if their star endorsers have a responsibility to explain to customers the differences and similarities between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that requires to be done.

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

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

'Celebrities who lend their names to shady prohibited gaming websites are, at a minimum, putting their track records at threat in addition to courting civil and class actions by consumers who allege damage,' Glaser said. 'There is also some danger that state regulators and state attorneys general rope celeb endorsers into enforcement efforts for facilitating prohibited sports betting.'

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