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, but the world-famous celebrities were notably consisted of in a slide presentation on social and sweepstakes casinos - the questionable websites offering both free casino-style video games and lucrative rewards, such as money, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for 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 industry that now finds itself besieged by claims. In the eyes of lots of video gaming corporations, not to discuss claim plaintiffs and state regulators, sweepstakes casinos function as conventional gambling establishments, just without the oversight, customer protections and tax laws. So not only can they avoid the high 24-percent federal sports betting levy, but sweepstakes operators aren't based on regulatory obstacles 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 deals with allegations of illegal gambling in a New York suit that claims VGW utilizes celeb endorsers to 'create a veneer of authenticity' around its item. (See VGW's statement listed below)

'I'm unsure" if you don't trust us, you can rely on 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 include a variety of stars from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, as well as 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 numerous sweepstakes gambling establishments found online

Ryan Seacrest advises fans to play at Chumba Casino, where lots of - however not all - video games are free

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

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Instead, advertisements normally focus around the social aspect of the casinos, while leaving out the capacity for actual gaming losses.

Others lure consumers with promises of rewards. One such operator, Stake, ran a social media ad displaying Drake's automobiles, airplanes and mansions before rotating to video footage of the rapper playing online casino-style video games.

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

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

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 previous.

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA data, the majority of the gamers on social-sweepstakes casinos are playing for complimentary.

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

Social casinos offer consumers a chance to play casino-style video games with pals. Players have the option to purchase worthless currency often described as 'gold coins,' which can not be exchanged genuine cash, however can be utilized to unlock various functions within the video games.

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

And therein lies the capacity for financial losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York City. One gamer 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 occasion

Social sweeps casino Stake ran an ad displaying Drake's vehicles, planes and mansions

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 however 7 states, which has actually helped to fuel the appeal of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, enable clients to submit mail-in demands for free sweeps coins, offered the gamers follow painfully specific instructions. What's more, players are often rewarded with sweeps coins simply for signing up, consequently providing a factor to attempt their hands at any number of gambling establishment games for a chance to win - or lose - real money.

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

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

'Social sweepstakes video games are simply a kind of online entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is required to play at social casinos with sweepstakes rewards. Consumers never ever need to pay for a chance to win rewards. That lack of a purchase requirement - or" factor to consider" - is an important difference in between social sweeps and standard online sports betting websites like casinos.'

Consider the manner in which McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and french fries that offer them the opportunity 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 fulfill the meaning of gaming in the US.

'Sweepstakes are an enduring technique for promoting all type of daily businesses in the United States, everything from burgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are routinely utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling industry experts, that argument doesn't cut it.

For beginners, gaming attorney Daniel Wallach mentions, McDonald's Monopoly video game does not run forever. Rather, it has a distinct beginning and end, therefore recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote real items like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [casinos] possess none of the qualities commonly related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments provide" casino-like" payouts, generally 80 percent or more of revenues, whereas the common payment portion for a short-lived advertising sweepstakes is an unimportant share of the revenue earned by the business [usually less than one percent]'

Wallach is fast to compare the online social sweeps casinos to the web cafes that emerged in Florida, offering consumers the chance to play casino-style games for real rewards. Much of those brick-and-mortar establishments have actually considering that been shuttered over claims of illegal gaming.

DJ Khaled is amongst a number of celeb spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps casinos ought to face similar examination.

'These distinctions are not arbitrary,' Wallach stated of social sweeps casinos. 'They have actually consistently been cited by courts and state lawyer generals as essential consider figuring out that a sweepstakes promo was in truth a guise for illegal sports betting.'

One of the gambling establishment market's leading trade organizations, the American Gaming Association, is now pressing legislators to examine sweepstakes operators and, in some cases, enact brand-new legislation on the problem.

'Consumers are being deprived of defenses and states are giving up substantial tax and income chances as this gaming changes that conducted through regulated channels,' read a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in 4 separate cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action suit, saying the settlement was made to avoid legal expenses and continued lawsuits.

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

In the most recent suit, which is largely comparable to its predecessors, New York state locals Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is explained in the filing as an 'unlawful sports betting business. '

Apple and Google have likewise been named as defendants in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's request for remark.

'We typically do not talk about matters before the courts,' a VGW representative told DailyMail.com through email. 'However, we note that this claim has only just been submitted with the court and VGW has not been formally served.

'We have complete self-confidence in our compliance with all laws and regulations where we run, and stay positive about the future,' the representative continued. 'We continue to provide our free-to-play games across the majority of The United States and Canada, as we have for more than a decade, producing not just fantastic video games, user experiences and home entertainment, however likewise ensuring this is done safely, responsibly and at the highest level of standards.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are reasonably common across the online social games industry (and the US more broadly), and our standard practice is that we plan to intensely defend any claim which may be brought against us.'

The problems between standard online sports betting and sweepstakes gambling establishments could show bothersome for some star 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 conventional gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking unlawful sports betting 'sweeps' sites while at the very same time the leagues want to project a strong stance versus unlawful gambling - especially when trying to tamp down the periodic sports betting scandal,' Glaser informed DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter got a life time 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.

Together with VGW, Apple and Google are being sued for hosting apparently prohibited gambling websites

Regardless, Glaser sees sweepstakes gambling establishments as a significant issue for leagues such as the NBA.

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

Neither an NBA spokesperson nor the players' representatives reacted to DailyMail.com's demands for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise neglected to respond to DailyMail.com emails.

Asked if their celebrity endorsers have an obligation to explain to consumers the distinctions and similarities between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that requires to be done.

'We have complete confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the spokesperson said. 'A few of our values are" our gamers come first" and" we do what's right", and we put our worths at the core of everything we do.'

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

'Celebrities who lend their names to shady illegal sports betting 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 stated. 'There is likewise some danger that state regulators and state chief law officers rope celeb endorsers into enforcement efforts for assisting in unlawful gambling.'

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