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

No, they weren't personally in participation, however the world-famous celebs were notably consisted of in a slide presentation on social and sweepstakes gambling establishments - the questionable sites offering both 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 'play for complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are just two cogs in the multibillion-dollar industry that now finds itself besieged by claims. In the eyes of many gaming corporations, not to discuss lawsuit complainants and state regulators, sweepstakes casinos function as standard casinos, just without the oversight, consumer defenses and tax laws. So not just can they prevent the steep 24-percent federal gambling 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 revenue in 2015 alone. Now the business deals with allegations of unlawful gaming in a New York lawsuit that claims VGW uses celebrity endorsers to 'develop a veneer of authenticity' around its item. (See VGW's declaration listed below)

'I'm uncertain" if you don't trust us, you can trust Paris Hilton" is a winning message for companies operating 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 celebs from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions between standard sports betting and sweepstakes play.

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

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

Drake has an offer with social sweeps gambling establishment, Stake, that he routinely touts on social networks

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

Others tempt customers with promises of rewards. One such operator, Stake, ran a social networks ad displaying Drake's automobiles, airplanes and mansions before rotating to video of the rapper playing online casino-style video games.

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

Another caption described: 'Because I never ever offered up.'

The inconsistency 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 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 casinos are sports betting free.
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'Most social sweeps clients never purchase,' the SPGA representative informed 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 gambling sites.'
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Social casinos offer clients an opportunity to play casino-style games with friends. Players have the option to buy worthless currency typically referred to as 'gold coins,' which can not be exchanged genuine money, however can be used to unlock various functions within the games.

But within the world of social gambling establishments exists sweepstakes gaming, allowing clients to acquire other currency called 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the capacity for monetary losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York. One gamer told the Washington Post he lost more than $100,000 on sweepstakes casinos in the past year after continuing to buy more coins in pursuit of money and other things of worth.

The Philadelphia 76ers' Paul George is seen promoting a Global Poker occasion

Social sweeps gambling establishment Stake ran an ad flaunting Drake's cars, planes and estates

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

Traditional online casinos are prohibited in all however seven states, which has helped to fuel the popularity of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes websites, which don't need normally need identification. However, sites like Chumba will request IDs from players trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, allow consumers to send mail-in requests for free sweeps coins, supplied the gamers follow painfully specific guidelines. What's more, players are often rewarded with sweeps coins merely for registering, therefore providing a factor to attempt their hands at any variety of gambling establishment games for a chance to win - or lose - real cash.

So why are sweepstakes sites permitted to run in 48 states, while online casinos are prohibited in all but 7?
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According to the stakeholders, their item is the complimentary casino-style gaming, and the real-stakes competitors is merely a method of promoting their bread and butter.

'Social sweepstakes video games are simply a kind of online entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is needed to dip into social casinos with sweepstakes prizes. Consumers never ever have to spend for an opportunity to win rewards. That lack of a purchase requirement - or" factor to consider" - is a crucial difference in between social sweeps and standard online gambling sites like casinos.'

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

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

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

But to many gambling industry insiders, that argument doesn't cut it.

For starters, gaming lawyer Daniel Wallach points out, McDonald's Monopoly game doesn't run forever. Rather, it has a distinct start and end, thus suggesting the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being utilized to promote genuine products like french fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [casinos] have none of the qualities typically associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments use" casino-like" payments, typically 80 percent or more of earnings, whereas the normal payout percentage for a temporary advertising sweepstakes is a minor share of the profits earned by the business [typically less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the internet cafes that sprang up in Florida, providing consumers the chance to play casino-style video games for real prizes. Much of those brick-and-mortar establishments have actually since been shuttered over accusations of prohibited gaming.

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

Now, Wallach argues, social sweeps casinos need to deal with similar analysis.

'These distinctions are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have repeatedly been mentioned by courts and state attorney generals as key factors in figuring out that a sweepstakes promotion was in reality a guise for unlawful gambling.'

Among the casino industry's leading trade companies, the American Gaming Association, is now pressing lawmakers to investigate sweepstakes operators and, sometimes, enact brand-new legislation on the issue.

'Consumers are being denied of protections and states are giving up substantial tax and profits chances as this gaming changes that performed through regulated channels,' read a well-circulated AGA memo.

And then there are the complainants who have actually taken legal action against 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 accepted pay $11.75 million in one class-action claim, stating the settlement was made to prevent legal costs and continued litigation.
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Michael Phelps has signed a handle the VGW Group, which owns Global Poker

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

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

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

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

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are relatively common across the online social video games industry (and the US more broadly), and our standard practice is that we intend to intensely safeguard any claim which might be brought versus us.'

The issues between standard online gaming and sweepstakes casinos might prove troublesome for some star endorsers.

Towns, a with the Knicks, and the 76ers' George both endorse VGW's Global Poker brand name while the NBA is partnered with traditional gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking illegal sports betting wagering 'sweeps' websites while at the very same time the leagues desire to project a strong stance versus illegal sports betting - particularly when attempting to tamp down the periodic gaming scandal,' Glaser informed DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter got a life time restriction from the NBA over claims he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes casinos.
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Along with VGW, Apple and Google are being sued for hosting supposedly illegal gambling sites

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

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

Neither an NBA representative nor the gamers' agents reacted to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also disregarded to react to DailyMail.com emails.

Asked if their celebrity endorsers have a responsibility to explain to clients the differences and resemblances 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 collaborations, and our business practices more broadly,' the representative stated. 'A few of our worths are" our gamers precede" and" we do what's right", and we put our worths at the core of everything we do.'
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Glaser, an outspoken challenger of sweepstakes websites, sees things differently.

'Celebrities who provide their names to dubious unlawful sports betting sites are, at a minimum, putting their track records at risk along with courting civil and class actions by customers who declare damage,' Glaser stated. 'There is likewise some threat that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for helping with unlawful sports betting.'

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