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

No, they weren't personally in presence, however the world-famous celebs were conspicuously included in a slide discussion on social and sweepstakes gambling establishments - the controversial websites providing both complimentary casino-style games and profitable prizes, such as money, gift cards or cryptocurrency. In one ad, 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 sites are simply 2 cogs in the multibillion-dollar market that now discovers itself besieged by claims. In the eyes of lots of gaming corporations, not to discuss lawsuit complainants and state regulators, sweepstakes casinos serve as traditional gambling establishments, just without the oversight, customer defenses and tax laws. So not just can they prevent the steep 24-percent federal gaming 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 earnings last year alone. Now the company faces accusations of prohibited gambling in a New York suit that claims VGW uses celeb endorsers to 'develop a veneer of legitimacy' around its product. (See VGW's declaration listed below)

'I'm unsure" if you don't trust us, you can rely on Paris Hilton" is a winning message for business running multibillion-dollar illegal operations out of places 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 range of celebs from gambling 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 in between conventional gaming and sweepstakes play.

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

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

Drake has an offer with social sweeps gambling establishment, Stake, that he regularly promotes on social media

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Instead, ads normally focus around the social element of the casinos, while omitting the capacity for actual sports betting losses.

Others lure customers with promises of prizes. One such operator, Stake, ran a social media ad revealing off Drake's vehicles, aircrafts and estates before pivoting to video of the rap artist playing online casino-style games.

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

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

The inconsistency in between gambling sites and social or sweepstakes gambling establishments is a bit complicated, but operators of the latter insist they're not included with the former.

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

'Most social sweeps consumers never ever purchase,' the SPGA spokesperson told DailyMail.com. 'The minority of clients who make purchases do so in amounts far smaller than the normal deposit or wager size at real-money online gaming websites.'

Social casinos use consumers a chance to play casino-style games with good friends. Players have the option to buy valueless currency frequently described as 'gold coins,' which can not be exchanged for real money, however can be utilized to open different functions within the video games.

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

And therein lies the potential for financial losses, like the ones declared 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 cash and other things of value.

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

Social sweeps gambling establishment Stake ran an ad displaying Drake's automobiles, aircrafts 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 7 states, which has actually helped to sustain the appeal of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, permit clients to submit mail-in ask for totally free sweeps coins, supplied the players follow painfully particular directions. What's more, players are often rewarded with sweeps coins merely for signing up, thus providing a factor to attempt their hands at any variety of gambling establishment video games for an opportunity to win - or lose - real cash.

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

According to the stakeholders, their product is the complimentary casino-style video gaming, and the real-stakes competition is simply a way of promoting their bread and butter.

'Social sweepstakes games are simply a kind of online entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is needed to dip into social casinos with sweepstakes rewards. Consumers never ever need to spend for an opportunity to win rewards. That lack of a purchase requirement - or" factor to consider" - is an important distinction in between social sweeps and standard online sports betting websites like gambling establishments.'

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

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

'Sweepstakes are a long-standing method for promoting all type of daily companies in the United States, everything from hamburgers to magazine subscriptions to coffee and home enhancement 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 does not cut it.

For beginners, gaming attorney Daniel Wallach mentions, McDonald's Monopoly video game does not run indefinitely. Rather, it has a well-defined beginning and end, consequently suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote genuine items like fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're usually not tied to casino-style games of opportunity,' Wallach informed DailyMail.com. 'They're just money giveaways.

'The sweepstakes [casinos] have none of the characteristics commonly associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments offer" casino-like" payments, typically 80 percent or more of earnings, whereas the typical payout percentage for a momentary promotional sweepstakes is an unimportant share of the revenue made by the business [generally less than one percent]'

Wallach is quick to liken the online social sweeps gambling establishments to the web cafes that emerged in Florida, using consumers the chance to play casino-style video games for real prizes. A number of those brick-and-mortar facilities have since been shuttered over claims of unlawful sports betting.

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

Now, Wallach argues, social sweeps gambling establishments must deal with similar examination.

'These differences are not arbitrary,' Wallach said of social sweeps casinos. 'They have actually consistently been cited by courts and state lawyer generals as key aspects in figuring out that a sweepstakes promotion was in reality a guise for illegal gaming.'

Among the gambling establishment industry's leading trade organizations, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, in many cases, enact new legislation on the concern.

'Consumers are being denied of securities and states are giving up substantial tax and earnings opportunities as this sports betting replaces that performed through managed channels,' read a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in four different cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action claim, stating the settlement was made to prevent legal costs and continued lawsuits.

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

In the most current suit, which is largely comparable to its predecessors, New York state residents Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is explained in the filing as an 'illegal gambling business. '

Apple and Google have actually likewise been called as offenders in claims for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for comment.

'We normally don't talk about matters before the courts,' a VGW spokesperson informed DailyMail.com by means of email. 'However, we note that this claim has actually only just 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 run, and stay positive about the future,' the spokesperson continued. 'We continue to use our free-to-play games across most of The United States and Canada, as we have for more than a years, developing not only great video games, user experiences and entertainment, but also ensuring this is done safely, properly and at the greatest level of requirements.

'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 intend to strongly safeguard any claim which may be brought against us.'

The problems in between conventional online gaming 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 traditional gaming titans like FanDuel and DraftKings.

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

It was simply 8 months ago that Toronto Raptors forward Jontay Porter received a lifetime ban from the NBA over allegations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes casinos.

Along with VGW, Apple and Google are being sued for hosting supposedly prohibited gambling websites

Regardless, Glaser sees sweepstakes casinos as a significant problem 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 representative nor the players' representatives responded to DailyMail.com's requests for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to respond to DailyMail.com emails.

Asked if their celeb endorsers have a duty to explain to customers the distinctions and similarities in between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that requires to be done.

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

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

'Celebrities who lend their names to shady prohibited gaming sites are, at a minimum, putting their reputations at risk in addition to courting civil and class actions by consumers who allege damage,' Glaser stated. 'There is likewise some danger that state regulators and state lawyers general rope celeb endorsers into enforcement efforts for assisting in unlawful gaming.'

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