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 participation, but the world-famous stars were conspicuously consisted of in a slide discussion on social and sweepstakes gambling establishments - the controversial websites providing both free casino-style video games and profitable prizes, such as money, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for free,' 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 market that now discovers itself besieged by claims. In the eyes of numerous gaming corporations, not to point out suit complainants and state regulators, sweepstakes gambling establishments act as traditional gambling establishments, just without the oversight, customer protections and tax laws. So not just can they prevent the high 24-percent federal gambling levy, but sweepstakes operators aren't based on regulatory obstacles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the business faces accusations of prohibited sports betting 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 below)

'I'm not exactly sure" if you do not trust us, you can rely on Paris Hilton" is a winning message for companies operating multibillion-dollar illegal operations out of locations 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 variety of celebs from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions between traditional gaming and sweepstakes play.

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

Ryan Seacrest prompts fans to dip into Chumba Casino, where lots of - but not all - games are complimentary

Drake has a handle social sweeps gambling establishment, Stake, that he frequently promotes on social networks

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Instead, advertisements typically focus around the social aspect of the casinos, while omitting the potential for real gaming losses.

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

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

Another caption described: 'Because I never ever offered up.'

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

A spokesperson for a market 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 players on social-sweepstakes casinos are playing for complimentary.

'Most social sweeps consumers never ever 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 typical deposit or wager size at real-money online sports betting websites.'

Social gambling establishments use consumers a possibility to play casino-style video games with friends. Players have the option to purchase worthless currency frequently described as 'gold coins,' which can not be exchanged for real cash, but can be utilized to unlock different features within the video games.

But within the world of social casinos exists sweepstakes video gaming, allowing clients to acquire other currency known as 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the capacity for financial losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York City. One player told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the previous year after continuing to purchase more coins in pursuit of cash and other things of value.

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

Social sweeps casino Stake ran an ad flaunting Drake's cars, planes 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 however 7 states, which has helped to fuel the popularity of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, permit consumers to send mail-in ask for totally free sweeps coins, provided the gamers follow painfully specific instructions. What's more, players are often rewarded with sweeps coins simply for registering, thus offering them a reason to try their hands at any variety of casino video games for a possibility to win - or lose - genuine money.

So why are sweepstakes websites permitted to run in 48 states, while online gambling establishments are banned in all but 7?

According to the stakeholders, their item is the complimentary casino-style gaming, and the real-stakes competitors is merely a method of promoting their support.

'Social sweepstakes video games are merely a form of online home entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is needed to play at social casinos with sweepstakes rewards. Consumers never have to pay for a chance to win prizes. That lack of a purchase requirement - or" consideration" - is an important difference in between social sweeps and standard online sports betting websites like casinos.'

Think of the way that 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 fries that offer them the chance to win profitable prizes, such as a $1 million jackpot.

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

'Sweepstakes are an enduring technique for promoting all type of everyday companies in the United States, everything from burgers to publication subscriptions to coffee and home enhancement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are regularly used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For beginners, video gaming lawyer Daniel Wallach mentions, McDonald's Monopoly game does not run indefinitely. Rather, it has a distinct beginning and end, consequently suggesting the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being used to promote real items like fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're normally not tied to casino-style games of possibility,' Wallach told DailyMail.com. 'They're simply cash giveaways.

'The sweepstakes [gambling establishments] have none of the characteristics commonly connected with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos offer" casino-like" payouts, normally 80 percent or more of profits, whereas the common payout portion for a temporary advertising sweepstakes is an insignificant share of the earnings made by the business [usually less than one percent]'

Wallach is fast to liken the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, providing consumers the chance to play casino-style video games for real rewards. A lot of those brick-and-mortar facilities have actually since been shuttered over allegations of prohibited gaming.

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

Now, Wallach argues, social sweeps casinos must deal with similar analysis.

'These differences are not approximate,' Wallach stated of social sweeps casinos. 'They have actually repeatedly been cited by courts and state attorney generals as key aspects in determining that a sweepstakes promo was in truth a guise for illegal gaming.'

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

'Consumers are being denied of protections and states are forgoing considerable tax and profits opportunities as this sports betting changes that carried out through controlled channels,' checked out a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action lawsuit, stating the settlement was made to avoid legal costs and continued litigation.

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

In the most recent lawsuit, which is largely similar to its predecessors, New york city state homeowners Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is described in the filing as an 'unlawful gaming business. '

Apple and Google have also been named as accuseds in claims for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's demand for remark.

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

'We have complete self-confidence in our compliance with all laws and regulations where we run, and remain positive about the future,' the representative continued. 'We continue to provide our free-to-play games throughout the majority of The United States and Canada, as we have for more than a years, developing not just great games, user experiences and home entertainment, but also guaranteeing this is done securely, properly and at the greatest level of requirements.

'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are relatively common throughout the online social games market (and the US more broadly), and our standard practice is that we mean to strongly defend any claim which may be brought against us.'

The concerns in between traditional online sports betting and sweepstakes gambling establishments might prove bothersome for some star endorsers.

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

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

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

In addition to VGW, Apple and Google are being demanded hosting presumably illegal gambling sites

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

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

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

Asked if their star endorsers have a responsibility to explain to clients the differences and resemblances in between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the representative stated. 'A few of our worths are" our gamers precede" and" we do what's right", and we put our worths at the core of everything we do.'

Glaser, an outspoken opponent of sweepstakes sites, sees things in a different way.

'Celebrities who provide their names to dubious illegal gaming sites are, at a minimum, putting their credibilities at threat along with courting civil and class actions by consumers who allege damage,' Glaser said. 'There is likewise some danger that state regulators and state attorneys basic rope star endorsers into enforcement efforts for assisting in prohibited sports betting.'

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