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

No, they weren't personally in presence, however the world-famous stars were conspicuously consisted of in a slide discussion on social and sweepstakes gambling establishments - the controversial sites offering both free casino-style games and financially rewarding prizes, such as money, present cards or cryptocurrency. In one advertisement, 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 market that now discovers itself besieged by suits. In the eyes of lots of video gaming corporations, not to mention claim plaintiffs and state regulators, sweepstakes casinos act as conventional gambling establishments, just without the oversight, consumer protections and tax laws. So not only can they avoid the steep 24-percent federal gambling levy, but sweepstakes operators aren't based on regulatory hurdles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income last year alone. Now the business faces accusations of prohibited gaming in a New york city claim that claims VGW utilizes celeb endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's declaration below)

'I'm not sure" if you don't trust us, you can rely on Paris Hilton" is a winning message for business operating multibillion-dollar unlawful operations out of locations 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 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 offer any differences in between standard gambling and sweepstakes play.

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

Ryan Seacrest urges fans to dip into Chumba Casino, where lots of - but not all - video games are totally free

Drake has an offer with social sweeps gambling establishment, Stake, that he frequently touts on social media

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Instead, ads generally focus around the social element of the casinos, while leaving out the potential for real gambling losses.

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

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

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

The inconsistency between gaming sites and social or sweepstakes casinos is a bit complicated, 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), described its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, the majority of the players on social-sweepstakes casinos are sports betting totally free.

'Most social sweeps consumers never make a purchase,' the SPGA spokesperson told DailyMail.com. 'The minority of customers who make purchases do so in quantities far smaller sized than the normal deposit or wager size at real-money online sports betting sites.'

Social gambling establishments offer consumers a possibility to play casino-style video games with good friends. Players have the choice to purchase worthless currency frequently referred to as 'gold coins,' which can not be exchanged for genuine money, however can be used to unlock various functions within the games.

But within the world of social gambling establishments exists sweepstakes video gaming, allowing clients to acquire 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 declared by complainants 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 money and other things of worth.

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

Social sweeps gambling establishment Stake ran an advertisement displaying Drake's vehicles, airplanes and estates

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 seven states, which has actually helped to sustain the popularity of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, allow customers to submit mail-in ask for totally free sweeps coins, offered the players follow painfully particular instructions. What's more, players are often rewarded with sweeps coins simply for signing up, consequently offering them a reason to try their hands at any number of gambling establishment video games for an opportunity to win - or lose - genuine money.

So why are sweepstakes sites permitted to operate in 48 states, while online casinos are prohibited in all but 7?

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

'Social sweepstakes video games are merely a kind of online entertainment,' an SPGA representative 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 absence of a purchase requirement - or" factor to consider" - is an important difference between social sweeps and conventional online gaming sites like casinos.'

Consider the manner in which McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and french fries that offer them the opportunity to win financially rewarding prizes, such as a $1 million prize.

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

'Sweepstakes are an enduring method for promoting all type of daily businesses in the United States, everything from burgers to magazine memberships to coffee and home improvement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are frequently used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many sports betting market insiders, that argument doesn't cut it.

For beginners, video gaming attorney Daniel Wallach points out, McDonald's Monopoly game does not run forever. Rather, it has a distinct beginning and end, thus suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote genuine products like fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're usually not tied to casino-style video games of possibility,' Wallach informed DailyMail.com. 'They're just money giveaways.

'The sweepstakes [gambling establishments] possess none of the characteristics typically connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes casinos use" casino-like" payments, generally 80 percent or more of revenues, whereas the normal payout percentage for a momentary advertising sweepstakes is a trivial share of the earnings earned by the company [typically less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the internet coffee shops that emerged in Florida, offering clients the possibility to play casino-style video games for genuine rewards. A lot of those brick-and-mortar facilities have actually given that been shuttered over accusations of illegal gaming.

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

Now, Wallach argues, social sweeps casinos ought to deal with comparable scrutiny.

'These differences are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have actually consistently been mentioned by courts and state attorney general of the United States as key consider identifying that a sweepstakes promotion remained in fact a guise for prohibited gaming.'

One of the gambling establishment market's leading trade organizations, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, sometimes, enact brand-new legislation on the concern.

'Consumers are being deprived of protections and states are passing up significant tax and revenue chances as this sports betting changes that conducted through managed channels,' read a well-circulated AGA memo.

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

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

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

In the most recent suit, which is largely comparable to its predecessors, New York state citizens Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is described in the filing as an 'prohibited sports betting enterprise. '

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

'We typically do not talk about matters before the courts,' a VGW representative informed DailyMail.com via email. 'However, we note that this claim has actually only simply been submitted with the court and VGW has actually not been officially served.

'We have full self-confidence in our compliance with all laws and policies where we run, and stay positive about the future,' the representative continued. 'We continue to provide our free-to-play video games throughout the majority of North America, as we have for more than a years, developing not only terrific games, user experiences and home entertainment, however likewise guaranteeing this is done securely, properly and at the highest level of standards.

'More broadly, we 'd restate that class actions and other litigations and arbitrations are fairly common throughout the online social games industry (and the US more broadly), and our standard practice is that we intend to intensely protect any claim which may be brought against us.'

The problems in between traditional online sports betting and sweepstakes casinos could prove bothersome for some celeb 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 conventional video gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking unlawful sports betting 'sweeps' sites while at the same time the leagues want to forecast a strong stance against illegal gaming - specifically when trying 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 life time ban from the NBA over allegations he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes gambling establishments.

Together with VGW, Apple and Google are being sued for hosting presumably prohibited gambling websites

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

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

Neither an NBA representative nor the gamers' representatives reacted to DailyMail.com's requests for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise ignored to react to DailyMail.com e-mails.

Asked if their celeb endorsers have an obligation to discuss to consumers the distinctions and resemblances in between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that requires to be done.

'We have full confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the representative said. 'A few of our worths are" our players precede" 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 lend their names to shady prohibited gambling sites are, at a minimum, putting their track records at threat as well as courting civil and class actions by customers who allege damage,' Glaser stated. 'There is likewise some threat that state regulators and state attorneys general rope celeb endorsers into enforcement efforts for facilitating prohibited gaming.'

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