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

No, they weren't personally in attendance, however the world-famous celebs were conspicuously included in a slide presentation on social and sweepstakes gambling establishments - the controversial websites providing both totally free casino-style games and lucrative prizes, such as money, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet complimentary,' 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 finds itself besieged by suits. In the eyes of lots of gaming corporations, not to discuss suit plaintiffs and state regulators, sweepstakes gambling establishments function as conventional gambling establishments, only without the oversight, consumer protections and tax laws. So not only can they avoid the high 24-percent federal sports betting levy, however sweepstakes operators aren't based on regulatory hurdles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings last year alone. Now the company faces accusations of prohibited sports betting in a New york city suit that declares VGW utilizes star endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's statement below)

'I'm not exactly sure" if you do not trust us, you can rely on Paris Hilton" is a winning message for business 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, informed DailyMail.com.

Sweepstakes endorsers include a series of celebs 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 use any differences between traditional gambling and sweepstakes play.

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

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

Drake has a deal with social sweeps casino, Stake, that he regularly promotes on social media

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Instead, advertisements usually focus around the social aspect of the casinos, while leaving out the capacity for actual sports betting losses.

Others lure consumers with pledges of rewards. One such operator, Stake, ran a social networks advertisement flaunting Drake's vehicles, airplanes and mansions before pivoting to video footage of the rap artist playing online casino-style video games.

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

Another caption described: 'Because I never quit.'

The disparity in between sports betting websites and social or sweepstakes gambling establishments is a bit complicated, however operators of the latter insist they're not included with the previous.

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

'Most social sweeps clients never purchase,' the SPGA spokesperson informed DailyMail.com. 'The minority of clients who make purchases do so in quantities far smaller than the normal deposit or bet size at real-money online gambling sites.'

Social casinos offer customers a chance to play casino-style games with buddies. Players have the alternative to buy worthless currency frequently referred to as 'gold coins,' which can not be exchanged genuine money, but can be utilized to unlock different features within the games.

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

And therein lies the capacity for financial losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York. One player informed the Washington Post he lost more than $100,000 on sweepstakes gambling establishments 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 Worldwide Poker occasion

Social sweeps gambling establishment Stake ran an ad showing off Drake's automobiles, planes and mansions

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 however seven states, which has assisted to sustain the popularity of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, enable clients to submit mail-in requests for complimentary sweeps coins, offered the players follow painfully specific directions. What's more, gamers are often rewarded with sweeps coins just for signing up, thereby providing them a factor to attempt their hands at any variety of casino video games for an opportunity to win - or lose - genuine cash.

So why are sweepstakes websites permitted to operate in 48 states, while online gambling establishments are prohibited in all however 7?

According to the stakeholders, their product is the totally free casino-style gaming, and the real-stakes competitors is just a method of promoting their support.

'Social sweepstakes video games are just a kind of online entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is needed to dip into social gambling establishments with sweepstakes prizes. Consumers never ever have to pay for a chance to win rewards. That lack of a purchase requirement - or" factor to consider" - is a crucial distinction in between social sweeps and conventional online gambling sites like gambling establishments.'

Think about the method that McDonald's utilizes its yearly 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 chance to win financially rewarding rewards, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the game itself doesn't meet the meaning of gambling in the US.

'Sweepstakes are a long-standing approach for promoting all type of everyday companies in the United States, whatever from burgers to publication memberships to coffee and home improvement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are routinely utilized by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For beginners, gaming lawyer Daniel Wallach explains, McDonald's Monopoly game doesn't run forever. Rather, it has a distinct start and end, thereby recommending the sweepstakes is not the fast-food giant's main product. 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 informed DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [casinos] have none of the characteristics frequently associated 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 profits, whereas the normal payout portion for a momentary advertising sweepstakes is a trivial share of the profits made by the company [typically less than one percent]'

Wallach is quick to liken the online social sweeps casinos to the web cafes that sprang up in Florida, using consumers the chance to play casino-style games for real prizes. Many of those brick-and-mortar establishments have actually because been shuttered over accusations of prohibited sports betting.

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

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

'These differences are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have repeatedly been pointed out by courts and state lawyer generals as essential aspects in identifying that a sweepstakes promotion was in truth a guise for prohibited gambling.'

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

'Consumers are being deprived of protections and states are passing up considerable tax and income chances as this gambling changes that conducted through controlled channels,' checked out a well-circulated AGA memo.

And after that there are the plaintiffs who have actually sued social casinos in more than a lots states.

Sweepstakes gambling establishment 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, saying 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 current lawsuit, which is mostly comparable to its predecessors, New York state residents Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is described in the filing as an 'prohibited gaming business. '

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

'We normally don't discuss matters before the courts,' a VGW representative told DailyMail.com through e-mail. 'However, we keep in mind that this claim has actually only just been submitted with the court and VGW has actually not been formally served.

'We have complete self-confidence in our compliance with all laws and regulations where we run, and remain 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, producing not only excellent video games, user experiences and home entertainment, but likewise ensuring this is done safely, responsibly and at the greatest level of standards.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are fairly typical throughout the online social games market (and the US more broadly), and our standard practice is that we intend to vigorously defend any claim which may be brought against us.'

The issues between conventional online sports betting and sweepstakes gambling establishments 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 gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking prohibited sports betting 'sweeps' sites while at the same time the leagues desire to predict a strong position against prohibited gaming - particularly when attempting to tamp down the periodic gambling scandal,' Glaser informed DailyMail.com.

It was simply eight 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 gambling establishments.

In addition to VGW, Apple and Google are being demanded hosting supposedly prohibited gambling websites

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

'I 'd anticipate that a league crackdown on professional athletes backing sweepstakes sites refers when, not if,' Glaser added.

Neither an NBA spokesman nor the players' agents reacted to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also overlooked to react to DailyMail.com e-mails.

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

'We have full self-confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the spokesperson said. 'A few of our values are" our players precede" and" we do what's right", and we put our worths at the core of whatever we do.'

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

'Celebrities who provide their names to shady prohibited gaming sites are, at a minimum, putting their track records at risk in addition to courting civil and class actions by customers who allege damage,' Glaser stated. 'There is also some danger that state regulators and state lawyers basic rope celeb endorsers into enforcement efforts for assisting in illegal sports betting.'

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