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

No, they weren't personally in participation, but the world-famous stars were conspicuously included in a slide presentation on social and sweepstakes casinos - the controversial sites providing both complimentary casino-style video games and rewarding rewards, such as money, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are simply two cogs in the multibillion-dollar market that now discovers itself besieged by lawsuits. In the eyes of many gaming corporations, not to point out suit complainants and state regulators, sweepstakes gambling establishments serve as traditional gambling establishments, just without the oversight, consumer defenses and tax laws. So not just can they prevent the steep 24-percent federal sports betting 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 faces accusations of illegal gaming in a New york city lawsuit that claims VGW utilizes celebrity endorsers to 'create a veneer of legitimacy' around its item. (See VGW's declaration listed below)

'I'm unsure" if you do not trust us, you can trust Paris Hilton" is a winning message for business operating multibillion-dollar unlawful 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 variety of celebrities 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 use any differences between standard gambling and sweepstakes play.

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

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

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

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

Others lure clients with pledges of prizes. One such operator, Stake, ran a social media ad flaunting Drake's automobiles, planes and mansions before rotating to video footage of the rapper playing online casino-style video games.

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

Another caption explained: 'Because I never ever gave up.'

The discrepancy in between gaming sites and social or sweepstakes gambling establishments is a bit complex, but 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 competition with online casinos and sportsbooks. Furthermore, according to SPGA data, most of the players on social-sweepstakes casinos are playing for complimentary.

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

Social casinos use consumers an opportunity to play casino-style games with buddies. Players have the choice to buy worthless currency typically referred to as 'gold coins,' which can not be exchanged for genuine money, but can be used to unlock different functions within the video games.

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

And therein lies the capacity for financial 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 Global Poker occasion

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake's cars, 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 but seven states, which has helped to fuel the appeal of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes sites, which do not need usually need recognition. However, websites like Chumba will ask for IDs from gamers attempting to withdraw any funds.

Many sites, like the crypto-compatible Stake, permit consumers to submit mail-in demands for complimentary sweeps coins, provided the gamers follow painfully particular instructions. What's more, players are frequently rewarded with sweeps coins simply for registering, thus providing a factor to attempt their hands at any number of casino games for a chance to win - or lose - real money.

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

According to the stakeholders, their product is the totally free casino-style video gaming, and the real-stakes competition is just a method of promoting their support.

'Social sweepstakes video games are merely a type of online home entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is required to dip into social casinos with sweepstakes prizes. Consumers never have to pay for an opportunity to win prizes. That lack of a purchase requirement - or" consideration" - is an essential difference between social sweeps and conventional online sports betting sites like gambling establishments.'

Consider the manner in which McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're buying hamburgers and french fries that use them the opportunity to win financially rewarding rewards, such as a $1 million jackpot.

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

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

But to numerous sports betting market experts, that argument does not cut it.

For beginners, video gaming attorney Daniel Wallach explains, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a distinct beginning and end, thereby recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote real items like french fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're typically not tied to casino-style video games of chance,' Wallach informed DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [casinos] possess none of the characteristics typically connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos provide" casino-like" payments, typically 80 percent or more of incomes, whereas the normal payout portion for a momentary marketing sweepstakes is a trivial share of the earnings made by the company [typically less than one percent]'

Wallach is fast to compare the online social sweeps casinos to the internet cafes that sprang up in Florida, offering consumers the opportunity to play casino-style video games for genuine rewards. Many of those brick-and-mortar facilities have actually considering that been shuttered over accusations of prohibited gambling.

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

Now, Wallach argues, social sweeps gambling establishments should face comparable scrutiny.

'These differences are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have repeatedly been mentioned by courts and state attorney general of the United States as key consider determining that a sweepstakes promo remained in fact a guise for unlawful gaming.'

One of the casino market's leading trade organizations, the American Gaming Association, is now pushing legislators to examine sweepstakes operators and, sometimes, enact new legislation on the issue.

'Consumers are being deprived of securities and states are giving up considerable tax and revenue opportunities as this sports betting changes that conducted through controlled channels,' read a well-circulated AGA memo.

And then there are the plaintiffs 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 admitting any misbehavior, according to the Washington Post. Meanwhile VGW concurred 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 current suit, which is mostly similar to its predecessors, New York state residents 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 also been called as defendants in suits for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com's ask for remark.

'We usually 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 simply been filed with the court and VGW has not been officially served.

'We have complete confidence in our compliance with all laws and regulations where we operate, and stay positive about the future,' the representative continued. 'We continue to provide our free-to-play video games across the majority of The United States and Canada, as we have for more than a decade, creating not just excellent video games, user experiences and entertainment, but also guaranteeing this is done securely, responsibly and at the highest level of standards.

'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are reasonably common across 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 issues between traditional online sports betting and sweepstakes gambling establishments could show bothersome for some celeb 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 wagering 'sweeps' websites while at the same time the leagues want to project a strong stance against prohibited gaming - particularly when trying to tamp down the occasional gambling scandal,' Glaser informed DailyMail.com.

It was just 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.

Along with VGW, Apple and Google are being demanded hosting apparently unlawful sports betting sites

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

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

Neither an NBA spokesman nor the gamers' agents responded to DailyMail.com's demands for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also overlooked to respond to DailyMail.com emails.

Asked if their celeb endorsers have an obligation to describe to consumers the distinctions and similarities in between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that needs to be done.

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our organization practices more broadly,' the spokesperson said. 'Some of our values are" our gamers precede" 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 differently.

'Celebrities who provide their names to shady unlawful gambling websites are, at a minimum, putting their track records at threat along with courting civil and class actions by customers who declare harm,' Glaser stated. 'There is likewise some threat that state regulators and state attorneys basic rope celeb endorsers into enforcement efforts for facilitating illegal gaming.'

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