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

No, they weren't personally in attendance, however the world-famous celebrities were notably included in a slide presentation on social and sweepstakes casinos - the controversial websites using both free casino-style video games and lucrative rewards, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are simply 2 cogs in the multibillion-dollar industry that now discovers itself besieged by lawsuits. In the eyes of lots of gaming corporations, not to point out claim complainants and state regulators, sweepstakes casinos serve as conventional gambling establishments, only without the oversight, customer protections and tax laws. So not only can they avoid the steep 24-percent federal gambling levy, however sweepstakes operators aren't subject to regulatory hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits last year alone. Now the company faces allegations of unlawful sports betting in a New York claim that claims VGW uses celebrity endorsers to 'produce a veneer of legitimacy' around its item. (See VGW's declaration listed below)

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

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

Ryan Seacrest prompts fans to play at Chumba Casino, where lots of - however not all - video games are totally free

Drake has a deal with social sweeps gambling establishment, Stake, that he routinely promotes on social media

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

Others lure clients with promises of prizes. One such operator, Stake, ran a social media ad displaying Drake's cars and trucks, aircrafts and estates before rotating to footage of the rapper playing online casino-style video games.

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

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

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

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

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

Social gambling establishments use clients a possibility to play casino-style video games with buddies. Players have the alternative to purchase valueless currency often referred to as 'gold coins,' which can not be exchanged for real cash, but can be used to open different features within the video games.

But within the world of social casinos exists sweepstakes video gaming, allowing customers to obtain other currency known as 'sweeps coins' that can be exchanged for cash or other prizes.

And therein lies the capacity for financial losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York City. One player 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.
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The Philadelphia 76ers' Paul George is seen promoting a Global Poker event

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake's cars, aircrafts and mansions
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Karl-Anthony Towns of the New York Knicks is another NBA star plugging VGW's Global Poker

Traditional online gambling establishments are banned in all but 7 states, which has assisted to sustain the appeal of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, permit consumers to submit mail-in demands for complimentary sweeps coins, supplied the players follow painfully particular guidelines. What's more, players are typically rewarded with sweeps coins simply for signing up, consequently providing a reason to their hands at any number of gambling establishment games for a possibility to win - or lose - real money.

So why are sweepstakes websites enabled to run in 48 states, while online gambling establishments are banned in all however 7?

According to the stakeholders, their item is the complimentary casino-style gaming, and the real-stakes competitors is just a way of promoting their bread and butter.

'Social sweepstakes games are merely a type of online entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is required to dip into social casinos with sweepstakes prizes. Consumers never ever need to pay for a chance to win prizes. That absence of a purchase requirement - or" factor to consider" - is a crucial difference between social sweeps and traditional online gambling websites like casinos.'

Think of the way that McDonald's utilizes its annual Monopoly game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and fries that offer them the chance to win lucrative prizes, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the video game itself doesn't satisfy the definition of gaming in the US.

'Sweepstakes are an enduring technique for promoting all kinds of everyday businesses in the United States, everything from hamburgers to publication memberships to coffee and home enhancement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are routinely utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For beginners, video gaming lawyer Daniel Wallach mentions, McDonald's Monopoly video game does not run forever. Rather, it has a well-defined beginning and end, consequently recommending the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being utilized to promote real items like french fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're normally not tied to casino-style games of chance,' Wallach told DailyMail.com. 'They're just money giveaways.

'The sweepstakes [casinos] possess none of the qualities typically connected with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments use" casino-like" payouts, generally 80 percent or more of incomes, whereas the normal payment portion for a short-lived advertising sweepstakes is a minor share of the earnings earned by the business [generally less than one percent]'

Wallach is quick to liken the online social sweeps casinos to the internet coffee shops that emerged in Florida, offering clients the possibility to play casino-style games for genuine prizes. A lot of those brick-and-mortar establishments have because been shuttered over accusations of prohibited gaming.
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DJ Khaled is among numerous star spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps gambling establishments need to deal with comparable examination.

'These distinctions are not arbitrary,' Wallach said of social sweeps casinos. 'They have actually repeatedly been cited by courts and state chief law officer as crucial consider figuring out that a sweepstakes promotion remained in truth a guise for illegal gambling.'

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

'Consumers are being denied of defenses and states are passing up significant tax and revenue opportunities as this gambling replaces that performed through controlled channels,' checked out a well-circulated AGA memo.

And after that there are the plaintiffs who have actually sued social gambling establishments in more than a dozen 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 agreed to pay $11.75 million in one class-action suit, saying the settlement was made to avoid legal expenses and continued litigation.

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

In the newest claim, which is largely comparable to its predecessors, New york city state locals 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 'prohibited sports betting enterprise. '

Apple and Google have likewise been named as accuseds in claims for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's ask for comment.

'We typically don't comment on matters before the courts,' a VGW spokesperson told DailyMail.com via email. 'However, we keep in mind that this claim has only just been filed with the court and VGW has not been officially served.

'We have full self-confidence in our compliance with all laws and guidelines where we run, and stay positive about the future,' the representative continued. 'We continue to provide our free-to-play games across the majority of North America, as we have for more than a years, creating not just great games, user experiences and home entertainment, however also guaranteeing this is done safely, properly and at the greatest level of standards.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are fairly common throughout the online social games industry (and the US more broadly), and our basic practice is that we mean to vigorously protect any claim which might be brought versus us.'

The issues in between traditional online gaming and sweepstakes casinos could prove bothersome for some celeb endorsers.

Towns, a star center with the Knicks, and the 76ers' George both endorse VGW's Global Poker brand while the NBA is partnered with conventional 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 versus illegal gambling - specifically when attempting to tamp down the periodic sports betting scandal,' Glaser informed DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter received a life time ban from the NBA over allegations he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes gambling establishments.

Together with VGW, Apple and Google are being demanded hosting presumably unlawful gambling websites

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

'I 'd anticipate that a league crackdown on athletes endorsing sweepstakes websites refers when, not if,' Glaser added.

Neither an NBA representative nor the players' representatives responded to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to react to DailyMail.com emails.

Asked if their star endorsers have a duty to describe to clients the distinctions and resemblances between iGaming and sweepstakes casinos, VGW firmly insisted there is absolutely nothing more that requires to be done.

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

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

'Celebrities who provide their names to shady prohibited gambling websites are, at a minimum, putting their track records at risk along with courting civil and class actions by customers who declare harm,' Glaser said. 'There is likewise some danger that state regulators and state attorneys basic rope celeb endorsers into enforcement efforts for assisting in illegal sports betting.'

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