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 attendance, however the world-famous celebs were conspicuously included in a slide discussion on social and sweepstakes casinos - the controversial sites offering both free casino-style games and financially rewarding rewards, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are just 2 cogs in the multibillion-dollar industry that now discovers itself besieged by lawsuits. In the eyes of numerous gaming corporations, not to discuss claim complainants and state regulators, sweepstakes gambling establishments serve as standard casinos, just without the oversight, customer securities and tax laws. So not just can they avoid the high 24-percent federal gambling levy, however sweepstakes operators aren't based on regulatory obstacles 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 deals with allegations of illegal gaming in a New York lawsuit that declares VGW utilizes celeb endorsers to 'develop a veneer of legitimacy' around its item. (See VGW's statement below)

'I'm not exactly sure" if you don't trust us, you can trust Paris Hilton" is a winning message for business operating multibillion-dollar prohibited operations out of places like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers include a variety of celebs from sports betting enthusiasts 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 traditional gaming and sweepstakes play.

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

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

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

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Instead, advertisements typically focus around the social element of the casinos, while omitting the capacity for real sports betting losses.

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

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

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

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

A representative for an industry trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, most of the gamers on social-sweepstakes casinos are sports betting free.

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

Social gambling establishments use consumers an opportunity to play casino-style video games with pals. Players have the alternative to buy valueless currency frequently described as 'gold coins,' which can not be exchanged for real money, but can be utilized to open different features within the games.

But within the world of social gambling establishments exists sweepstakes video gaming, permitting consumers to acquire other currency referred to as 'sweeps coins' that can be exchanged for cash or other prizes.

And therein lies the potential for monetary losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York City. One gamer informed the Washington Post he lost more than $100,000 on sweepstakes casinos in the previous year after continuing to buy more coins in pursuit of cash and other things of worth.

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

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake's cars and trucks, aircrafts and estates

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

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

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

Many sites, like the crypto-compatible Stake, permit customers to send mail-in requests for free sweeps coins, supplied the players follow painfully specific directions. What's more, players are frequently rewarded with sweeps coins just for signing up, thereby providing a reason to attempt their hands at any number of casino video games for a possibility to win - or lose - real money.

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

According to the stakeholders, their item is the totally free casino-style gaming, and the real-stakes competition is simply a means of promoting their bread and butter.

'Social sweepstakes games are simply a type of online entertainment,' an SPGA representative informed DailyMail.com by e-mail. '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 lack of a purchase requirement - or" consideration" - is a crucial difference between social sweeps and traditional online sports betting sites like gambling establishments.'

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

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

'Sweepstakes are an enduring technique for promoting all sort of daily organizations in the United States, everything from hamburgers to publication subscriptions to coffee and home enhancement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are regularly utilized by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For starters, gaming lawyer Daniel Wallach explains, McDonald's Monopoly game does not run forever. Rather, it has a distinct beginning and end, thereby suggesting the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being utilized to promote genuine items like fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're generally not connected to casino-style video games of opportunity,' Wallach informed DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [casinos] have none of the qualities commonly related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos provide" casino-like" payments, typically 80 percent or more of revenues, whereas the common payment portion for a short-lived promotional sweepstakes is a trivial 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 internet coffee shops that emerged in Florida, offering customers the opportunity to play casino-style games for real rewards. Many of those brick-and-mortar facilities have actually because been shuttered over allegations of prohibited gaming.

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

Now, Wallach argues, social sweeps casinos must face comparable examination.

'These distinctions are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have consistently been pointed out by courts and state attorney general of the United States as essential consider identifying that a sweepstakes promo remained in truth a guise for unlawful gambling.'

Among the casino industry's leading trade companies, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, in some cases, enact brand-new legislation on the problem.

'Consumers are being deprived of securities and states are giving up significant tax and profits opportunities as this gaming replaces that conducted through managed channels,' checked out 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 gambling establishment operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action lawsuit, stating the settlement was made to prevent legal costs and continued lawsuits.

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

In the most current claim, which is mainly comparable to its predecessors, New York state locals 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 sports betting enterprise. '

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

'We generally do not talk about matters before the courts,' a VGW representative told DailyMail.com through e-mail. 'However, we note that this claim has actually only just been filed with the court and VGW has not been officially served.

'We have full self-confidence in our compliance with all laws and guidelines where we run, and stay confident about the future,' the representative continued. 'We continue to use our free-to-play video games throughout most of North America, as we have for more than a years, creating not only fantastic video games, user experiences and home entertainment, but likewise guaranteeing this is done securely, properly and at the greatest level of requirements.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are reasonably common across the online social games market (and the US more broadly), and our standard practice is that we plan to vigorously protect any claim which might be brought against us.'

The concerns between conventional online sports betting and sweepstakes gambling establishments might show bothersome for some star endorsers.

Towns, a star center with the Knicks, and the 76ers' George both back VGW's Global Poker brand name while the NBA is partnered with standard video gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking unlawful sports betting 'sweeps' websites while at the exact same time the leagues wish to predict a strong stance against unlawful gambling - specifically when attempting to tamp down the occasional gambling scandal,' Glaser told DailyMail.com.

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

Together with VGW, Apple and Google are being demanded hosting apparently unlawful sports betting websites

Regardless, Glaser sees sweepstakes gambling establishments as a major problem for leagues such as the NBA.

'I 'd expect that a league crackdown on professional athletes endorsing sweepstakes sites is a matter of when, not if,' Glaser included.

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

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

'We have complete confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the spokesperson stated. '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 everything we do.'

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

'Celebrities who provide their names to dubious unlawful gambling websites are, at a minimum, putting their track records at risk as well as courting civil and class actions by consumers who allege harm,' Glaser said. 'There is likewise some risk that state regulators and state lawyers general rope star endorsers into enforcement efforts for helping with illegal sports betting.'

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