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

No, they weren't personally in attendance, however the world-famous stars were conspicuously consisted of in a slide discussion on social and sweepstakes casinos - the questionable websites providing both free casino-style games and lucrative prizes, such as cash, 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 many video gaming corporations, not to discuss suit complainants and state regulators, sweepstakes gambling establishments act as standard casinos, only without the oversight, consumer securities and tax laws. So not just can they prevent the high 24-percent federal gaming levy, but sweepstakes operators aren't based on regulatory hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings last year alone. Now the company faces accusations of unlawful sports betting in a New york city suit 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 companies running multibillion-dollar illegal 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 consist of a series of celebrities from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions in between traditional gambling and sweepstakes play.

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

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

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

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Instead, ads generally center around the social element of the gambling establishments, while omitting the potential for actual gambling losses.

Others lure customers with pledges of rewards. One such operator, Stake, ran a social media advertisement displaying Drake's cars and trucks, aircrafts and mansions before pivoting to video footage of the rapper playing online casino-style video games.

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

Another caption discussed: 'Because I never gave up.'

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

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, the majority of the players on social-sweepstakes casinos are playing for free.

'Most social sweeps customers never make a purchase,' the SPGA representative informed DailyMail.com. 'The minority of clients who make purchases do so in amounts far smaller than the common deposit or wager size at real-money online gaming sites.'

Social casinos use customers a possibility to play casino-style video games with pals. Players have the choice to purchase valueless currency typically referred to as 'gold coins,' which can not be exchanged genuine money, but can be used to open various functions within the games.

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

And therein lies the potential for financial losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York. 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 cash and other things of worth.

The Philadelphia 76ers' Paul George is seen promoting a Worldwide Poker event

Social sweeps gambling establishment Stake ran an ad flaunting Drake's cars and trucks, airplanes and mansions

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

Traditional online casinos are banned in all but 7 states, which has helped to sustain the popularity of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes websites, which don't need normally need recognition. However, websites like Chumba will ask for IDs from gamers trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, enable consumers to send mail-in ask for totally free sweeps coins, supplied the players follow painfully specific directions. What's more, gamers are frequently rewarded with sweeps coins simply for registering, therefore offering them a reason to attempt their hands at any number of gambling establishment video games for a possibility to win - or lose - genuine cash.

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 product is the complimentary casino-style video gaming, and the real-stakes competition is merely a means of promoting their bread and butter.

'Social sweepstakes video games are merely a form of online entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is required to play at social gambling establishments with sweepstakes prizes. Consumers never ever need to spend for a chance to win prizes. That absence of a purchase requirement - or" consideration" - is a crucial difference in between social sweeps and standard online gaming websites like casinos.'

Think of the method that McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and fries that provide them the possibility to win lucrative rewards, such as a $1 million jackpot.

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

'Sweepstakes are a long-standing approach for promoting all kinds of daily organizations in the United States, whatever from hamburgers to magazine memberships to coffee and home improvement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are frequently utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting industry experts, that argument doesn't cut it.

For beginners, gaming attorney Daniel Wallach explains, McDonald's Monopoly game does not run indefinitely. Rather, it has a distinct beginning and end, thus recommending the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being utilized to promote real items like french fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're normally not connected to casino-style games of opportunity,' Wallach told DailyMail.com. 'They're simply cash giveaways.

'The sweepstakes [gambling establishments] possess none of the qualities frequently connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments use" casino-like" payouts, generally 80 percent or more of incomes, whereas the common payout portion for a momentary marketing sweepstakes is an insignificant share of the earnings made by the company [usually less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the internet cafes that emerged in Florida, offering consumers the chance to play casino-style video games for real prizes. Much of those brick-and-mortar facilities have given that been shuttered over accusations of prohibited gambling.

DJ Khaled is amongst numerous star spokespeople for VGW's Global Poker brand

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

'These distinctions are not approximate,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been mentioned by courts and state attorney general of the United States as crucial elements in figuring out that a sweepstakes promotion was in fact a guise for prohibited gambling.'

Among the gambling establishment industry's leading trade companies, the American Gaming Association, is now pressing legislators to investigate sweepstakes operators and, sometimes, enact new legislation on the concern.

'Consumers are being deprived of securities and states are forgoing significant tax and income chances as this gambling changes that performed through managed channels,' read a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in 4 separate cases in Kentucky without admitting any misbehavior, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, stating the settlement was made to avoid legal expenses and continued litigation.

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

In the latest claim, which is mostly similar to its predecessors, New York state homeowners 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 'prohibited sports betting enterprise. '

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

'We generally don't discuss matters before the courts,' a VGW spokesperson informed DailyMail.com by means of 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 complete confidence in our compliance with all laws and policies where we operate, and remain confident 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 decade, producing not just great video games, user experiences and home entertainment, however likewise ensuring this is done safely, properly and at the greatest level of standards.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are reasonably common throughout the online social video games industry (and the US more broadly), and our basic practice is that we plan to strongly protect any claim which may be brought against us.'

The concerns in between conventional online gambling and sweepstakes casinos might show troublesome for some celebrity endorsers.

Towns, a star center 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 ironic that expert athletes are hawking unlawful sports betting wagering 'sweeps' sites while at the exact same time the leagues want to project a strong stance against unlawful gambling - particularly when trying to tamp down the periodic sports betting scandal,' Glaser informed DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter received 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.

Along with VGW, Apple and Google are being demanded hosting allegedly prohibited sports betting sites

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

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

Neither an NBA representative 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 disregarded to react to DailyMail.com e-mails.

Asked if their star endorsers have an obligation to describe to clients the differences and similarities between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that requires to be done.

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the spokesperson said. 'Some of our values are" our gamers precede" and" we do what's right", and we put our worths at the core of whatever we do.'

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

'Celebrities who provide their names to shady unlawful sports betting websites are, at a minimum, putting their track records at risk along with courting civil and class actions by customers who allege harm,' Glaser said. 'There is likewise some risk that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for assisting in prohibited gaming.'

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