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

No, they weren't personally in attendance, however the world-famous celebrities were conspicuously consisted of in a slide discussion on social and sweepstakes gambling establishments - the controversial websites providing both complimentary casino-style video games and rewarding rewards, such as money, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody 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 market that now finds itself besieged by lawsuits. In the eyes of many gaming corporations, not to point out lawsuit plaintiffs and state regulators, sweepstakes casinos act as conventional casinos, only without the oversight, consumer defenses and tax laws. So not only can they avoid the high 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulative obstacles 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 gambling in a New york city lawsuit that claims VGW uses celeb endorsers to 'create a veneer of authenticity' around its item. (See VGW's statement listed below)

'I'm uncertain" if you do not trust us, you can rely on Paris Hilton" is a winning message for business running multibillion-dollar illegal operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's presenter, 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, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom provide any differences between traditional sports betting and sweepstakes play.

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

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

Drake has a handle social sweeps gambling establishment, Stake, that he regularly touts on social media

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

Others lure customers with promises of rewards. One such operator, Stake, ran a social networks advertisement revealing off Drake's cars, planes and estates before pivoting to video footage of the rapper playing online casino-style games.

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

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

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

A spokesperson 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 information, many of the players on social-sweepstakes gambling establishments are sports betting free.

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

Social gambling establishments use clients a possibility to play casino-style video games with friends. Players have the choice to purchase worthless currency frequently referred to as 'gold coins,' which can not be exchanged genuine cash, however can be used to open numerous features within the video games.

But within the world of social gambling establishments exists sweepstakes gaming, enabling consumers to get other currency understood as 'sweeps coins' that can be exchanged for money or other rewards.

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 previous year after continuing to purchase more coins in pursuit of money and other things of value.

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

Social sweeps casino Stake ran an advertisement showing off Drake's automobiles, 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 however seven states, which has assisted to sustain the popularity of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, allow clients to send mail-in ask for totally free sweeps coins, provided the gamers follow painfully particular instructions. What's more, gamers are often rewarded with sweeps coins merely for registering, therefore giving them a reason to attempt their hands at any variety of casino games for a chance to win - or lose - genuine money.

So why are sweepstakes sites enabled to run in 48 states, while online gambling establishments are prohibited in all but 7?

According to the stakeholders, their item is the totally free casino-style video gaming, and the real-stakes competitors is merely a means of promoting their support.

'Social sweepstakes video games are merely a type of online entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is required to dip into social casinos with sweepstakes prizes. Consumers never need to pay for an opportunity to win prizes. That absence of a purchase requirement - or" factor to consider" - is an important difference between social sweeps and conventional online gambling sites like gambling establishments.'

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

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

'Sweepstakes are a long-standing technique for promoting all kinds of daily organizations in the United States, whatever from hamburgers to magazine subscriptions to coffee and home enhancement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are regularly used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous sports betting industry insiders, that argument doesn't cut it.

For starters, gaming lawyer Daniel Wallach mentions, McDonald's Monopoly game does not run forever. Rather, it has a well-defined start and end, therefore recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote real products like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [gambling establishments] possess none of the characteristics commonly associated with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments offer" casino-like" payments, normally 80 percent or more of profits, whereas the common payout percentage for a temporary advertising sweepstakes is a trivial share of the profits made by the business [usually less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, using clients the opportunity to play casino-style video games for genuine rewards. A number of those brick-and-mortar facilities have actually considering that been shuttered over accusations of illegal gambling.

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

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

'These differences are not approximate,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been mentioned by courts and state chief law officer as crucial consider determining that a sweepstakes promo remained in truth a guise for prohibited gambling.'

One of the casino industry's leading trade companies, the American Gaming Association, is now pressing legislators to investigate sweepstakes operators and, sometimes, enact new legislation on the issue.

'Consumers are being deprived of defenses and states are passing up considerable tax and earnings chances as this gaming replaces that carried out through managed channels,' checked out a well-circulated AGA memo.

And after that there are the complainants who have taken legal action against social gambling establishments in more than a dozen states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in four separate cases in Kentucky without confessing 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 lawsuits.

Michael Phelps has actually signed an offer with the VGW Group, which owns Global Poker

In the most recent lawsuit, which is mainly similar 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 gambling business. '

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

'We normally do not talk about matters before the courts,' a VGW spokesperson informed DailyMail.com through e-mail. 'However, we note that this claim has only just been submitted with the court and VGW has not been officially served.

'We have complete confidence in our compliance with all laws and guidelines where we operate, and remain confident about the future,' the spokesperson continued. 'We continue to provide our free-to-play games across the majority of The United States and Canada, as we have for more than a years, developing not only terrific video games, user experiences and entertainment, but likewise guaranteeing this is done securely, properly and at the greatest level of requirements.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are reasonably typical across the online social games market (and the US more broadly), and our standard practice is that we intend to strongly protect any claim which might be brought against us.'

The problems in between standard online sports betting and sweepstakes gambling establishments might 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 video gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking illegal sports betting 'sweeps' websites while at the very same time the leagues wish to forecast a strong position against prohibited gaming - especially when attempting to tamp down the occasional gaming scandal,' Glaser informed DailyMail.com.

It was simply eight months ago that Toronto Raptors forward Jontay Porter got a lifetime restriction from the NBA over accusations he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes casinos.

Together with VGW, Apple and Google are being taken legal action against for hosting supposedly prohibited gambling sites

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

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

Neither an NBA spokesperson nor the players' representatives reacted to DailyMail.com's requests for remark. 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 an obligation to discuss to consumers the differences and similarities in between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the representative said. 'A few of our worths are" our players come first" and" we do what's right", and we put our values 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 illegal gambling sites are, at a minimum, putting their reputations at risk as well as courting civil and class actions by customers who allege harm,' Glaser said. 'There is likewise some danger that state regulators and state chief law officers rope star endorsers into enforcement efforts for helping with unlawful gambling.'

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