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

No, they weren't personally in attendance, however the world-famous celebrities were conspicuously included in a slide presentation on social and sweepstakes gambling establishments - the questionable websites using both free casino-style games and rewarding rewards, such as money, gift cards or cryptocurrency. In one advertisement, 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 websites are just two cogs in the multibillion-dollar market that now finds itself besieged by lawsuits. In the eyes of many video gaming corporations, not to mention claim complainants and state regulators, sweepstakes casinos serve as conventional casinos, only without the oversight, customer defenses and tax laws. So not only can they prevent 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 revenue last year alone. Now the company deals with accusations of illegal sports betting in a New York lawsuit that declares VGW utilizes star endorsers to 'develop a veneer of legitimacy' around its item. (See VGW's declaration listed below)

'I'm not exactly sure" if you don't trust us, you can rely on Paris Hilton" is a winning message for companies running multibillion-dollar prohibited operations out of places 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 range of stars 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 offer any differences in between standard gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among numerous sweepstakes gambling establishments found online

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

Drake has an offer with social sweeps gambling establishment, Stake, that he frequently touts on social networks

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Instead, advertisements normally focus around the social aspect of the gambling establishments, while omitting the capacity for actual gaming losses.

Others tempt consumers with promises of prizes. One such operator, Stake, ran a social media ad flaunting Drake's vehicles, airplanes and estates before pivoting to video footage of the rapper playing online casino-style games.

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

Another caption described: 'Because I never ever quit.'

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

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

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

Social gambling establishments provide customers a chance to play casino-style video games with friends. Players have the choice to purchase worthless currency typically referred to as 'gold coins,' which can not be exchanged genuine cash, but can be utilized to unlock various functions within the games.

But within the world of social casinos exists sweepstakes video gaming, enabling consumers to obtain other currency understood as 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the potential for monetary losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York City. One player informed 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 worth.

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

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

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

Traditional online gambling establishments are prohibited in all however 7 states, which has assisted to fuel the popularity of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, allow consumers to submit mail-in ask for complimentary sweeps coins, supplied the players follow painfully specific directions. What's more, gamers are typically rewarded with sweeps coins merely for signing up, consequently providing a reason to try their hands at any variety of casino video games for a possibility to win - or lose - genuine cash.

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

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

'Social sweepstakes games are merely a type of online home entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is required to play at social gambling establishments with sweepstakes rewards. Consumers never ever have to spend for an opportunity to win rewards. That absence of a purchase requirement - or" factor to consider" - is a vital distinction between social sweeps and traditional online sports betting sites like casinos.'

Think about the way that McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to gamble, but 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 'factor to consider', the video game itself doesn't satisfy the definition of gambling in the US.

'Sweepstakes are an enduring approach for promoting all type of everyday businesses in the United States, whatever from burgers to publication memberships to coffee and home improvement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are frequently utilized by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many sports betting industry experts, that argument does not cut it.

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

'They don't last permanently and they're usually not connected to casino-style games of chance,' Wallach informed DailyMail.com. 'They're simply money free gifts.

'The sweepstakes [gambling establishments] possess none of the qualities frequently connected with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes casinos provide" casino-like" payouts, usually 80 percent or more of earnings, whereas the typical payout percentage for a short-term promotional sweepstakes is an unimportant share of the profits made by the company [usually less than one percent]'

Wallach fasts to compare 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. Much of those brick-and-mortar establishments have actually considering that been shuttered over accusations of illegal gaming.

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

Now, Wallach argues, social sweeps gambling establishments ought to face comparable examination.

'These differences are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have consistently been mentioned by courts and state chief law officer as essential consider determining that a sweepstakes promotion was in reality a guise for illegal gambling.'

One of the gambling establishment industry's leading trade companies, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, in many cases, enact brand-new legislation on the issue.

'Consumers are being denied of protections and states are forgoing significant tax and income chances as this gaming replaces that conducted through managed channels,' read a well-circulated AGA memo.

And after that there are the plaintiffs who have actually sued social gambling establishments in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action claim, saying the settlement was made to prevent legal costs and continued litigation.

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

In the most recent suit, which is mostly comparable 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 'illegal gaming business. '

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

'We typically do not discuss matters before the courts,' a VGW representative informed DailyMail.com through e-mail. 'However, we note that this claim has only just been filed with the court and VGW has actually not been formally served.

'We have full 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 many of North America, as we have for more than a years, producing not just excellent games, user experiences and home entertainment, however likewise ensuring this is done safely, properly and at the highest level of standards.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are fairly typical throughout the online social games market (and the US more broadly), and our basic practice is that we intend to strongly safeguard any claim which may be brought versus us.'

The problems in between standard online gambling and sweepstakes casinos could show bothersome for some celebrity 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 gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking prohibited sports betting 'sweeps' websites while at the exact same time the leagues desire to forecast a strong position versus prohibited gaming - particularly when attempting to tamp down the periodic gambling scandal,' Glaser told DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter got a lifetime restriction from the NBA over claims he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes gambling establishments.

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

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

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

Neither an NBA spokesperson nor the gamers' agents reacted to DailyMail.com's requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also ignored to react to DailyMail.com e-mails.

Asked if their celebrity endorsers have a duty to describe to customers the distinctions and similarities in between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the representative stated. 'Some of our values are" our gamers come first" and" we do what's right", and we put our values at the core of everything we do.'

Glaser, an outspoken challenger of sweepstakes websites, sees things differently.

'Celebrities who provide their names to dubious unlawful gaming sites are, at a minimum, putting their reputations at threat in addition to courting civil and class actions by customers who allege harm,' Glaser stated. 'There is also some risk that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for helping with prohibited gaming.'

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