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 notably consisted of in a slide discussion on social and sweepstakes gambling establishments - the questionable sites offering both totally free casino-style games and rewarding prizes, such as money, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for 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 suits. In the eyes of numerous gaming corporations, not to discuss lawsuit complainants and state regulators, sweepstakes gambling establishments serve as conventional gambling establishments, just without the oversight, consumer defenses and tax laws. So not just can they prevent the high 24-percent federal gambling levy, but sweepstakes operators aren't subject to regulative difficulties like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the company faces accusations of prohibited gambling in a New York lawsuit that declares VGW utilizes celebrity endorsers to 'produce a veneer of authenticity' around its item. (See VGW's statement below)

'I'm uncertain" if you do not trust us, you can trust Paris Hilton" is a winning message for companies operating multibillion-dollar illegal operations out of places 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 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 conventional gambling and sweepstakes play.

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

Ryan Seacrest urges fans to play at Chumba Casino, where numerous - but not all - games are totally free

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

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Instead, ads typically focus around the social aspect of the gambling establishments, while leaving out the capacity for real gaming losses.

Others tempt customers with promises of rewards. One such operator, Stake, ran a social media advertisement flaunting Drake's vehicles, aircrafts and mansions before rotating to video of the rap artist playing online casino-style games.

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

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

The disparity in between gambling sites and social or sweepstakes casinos is a bit complicated, but 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 competitors with online casinos and sportsbooks. Furthermore, according to SPGA information, the majority of the gamers on social-sweepstakes gambling establishments are playing for free.

'Most social sweeps customers never make a purchase,' the SPGA spokesperson informed 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 casinos offer consumers 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 cash, but can be utilized to unlock various features within the video games.

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

And therein lies the potential for financial losses, like the ones claimed by complainants 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 buy more coins in pursuit of money and other things of worth.

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

Social sweeps casino Stake ran an ad showing off Drake's vehicles, 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 7 states, which has assisted to sustain the popularity of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes websites, which do not require usually require identification. However, sites like Chumba will request for IDs from gamers trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, enable consumers to submit mail-in demands for totally free sweeps coins, offered the gamers follow painfully particular directions. What's more, gamers are frequently rewarded with sweeps coins just for registering, consequently providing them a factor to try their hands at any number of gambling establishment games for a possibility to win - or lose - genuine money.

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

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

'Social sweepstakes games are simply a form of online home entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is required to play at social casinos with sweepstakes prizes. Consumers never have to pay for a chance to win rewards. That lack of a purchase requirement - or" consideration" - is an essential distinction between social sweeps and standard online gambling sites like casinos.'

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

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

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

But to lots of gambling industry experts, that argument does not cut it.

For beginners, gaming lawyer Daniel Wallach points out, McDonald's Monopoly game doesn't run forever. Rather, it has a distinct start and end, consequently suggesting the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being used to promote genuine products like french fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're generally not connected to casino-style games of chance,' Wallach told DailyMail.com. 'They're just money free gifts.

'The sweepstakes [gambling establishments] have none of the qualities frequently related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos use" casino-like" payments, normally 80 percent or more of revenues, whereas the common payout percentage for a temporary marketing sweepstakes is an unimportant share of the revenue made by the company [usually less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the web coffee shops that emerged in Florida, using customers the possibility to play casino-style video games for genuine prizes. A lot of those brick-and-mortar facilities have actually since been shuttered over accusations of unlawful gambling.

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

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

'These distinctions are not approximate,' Wallach said of social sweeps casinos. 'They have repeatedly been cited by courts and state chief law officer as essential consider figuring out that a sweepstakes promo was in truth a guise for prohibited sports betting.'

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

'Consumers are being deprived of defenses and states are giving up significant tax and earnings opportunities as this gaming replaces that conducted through managed channels,' checked out a well-circulated AGA memo.

And then there are the plaintiffs who have sued social casinos in more than a dozen states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in four different cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action suit, stating the settlement was made to prevent legal expenses and continued lawsuits.

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

In the newest claim, which is mainly 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 described in the filing as an 'prohibited gaming business. '

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

'We usually do not discuss matters before the courts,' a VGW representative informed DailyMail.com through email. 'However, we keep in mind that this claim has actually only simply been submitted with the court and VGW has actually not been officially served.

'We have full confidence in our compliance with all laws and policies where we run, and remain positive about the future,' the representative continued. 'We continue to use our free-to-play games across most of North America, as we have for more than a years, producing not just great video games, user experiences and entertainment, but also ensuring this is done securely, responsibly and at the greatest level of standards.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are fairly typical across the online social video games market (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 concerns in between conventional online gambling and sweepstakes casinos could prove troublesome for some star 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 standard gaming titans like FanDuel and DraftKings.

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

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

Along with VGW, Apple and Google are being demanded hosting apparently illegal sports betting websites

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

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

Neither an NBA spokesperson nor the gamers' agents reacted to DailyMail.com's demands 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 celeb endorsers have a responsibility to explain to customers the differences and similarities between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that requires to be done.

'We have full confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the spokesperson stated. 'A few of our worths are" our gamers come first" 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 in a different way.

'Celebrities who provide their names to dubious unlawful sports betting sites are, at a minimum, putting their track records at danger along with courting civil and class actions by customers who declare harm,' Glaser said. 'There is likewise some risk that state regulators and state attorneys basic rope celeb endorsers into enforcement efforts for assisting in prohibited gambling.'

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