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

No, they weren't personally in presence, however the world-famous stars were notably consisted of in a slide presentation on social and sweepstakes casinos - the controversial websites providing both free casino-style games and financially rewarding prizes, such as cash, 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 sites are simply two cogs in the multibillion-dollar market that now discovers itself besieged by lawsuits. In the eyes of many video gaming corporations, not to point out lawsuit plaintiffs and state regulators, sweepstakes casinos serve as standard gambling establishments, only without the oversight, customer protections and tax laws. So not only 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 profits in 2015 alone. Now the company faces accusations of prohibited gambling in a New York suit that declares VGW utilizes celeb endorsers to 'develop a veneer of authenticity' around its item. (See VGW's declaration listed below)

'I'm unsure" if you do not trust us, you can rely on Paris Hilton" is a winning message for business operating multibillion-dollar prohibited 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 series of celebrities from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom use any differences in between traditional sports betting and sweepstakes play.

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

Ryan Seacrest advises fans to dip into Chumba Casino, where numerous - however not all - games are complimentary

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

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Instead, advertisements generally focus around the social aspect of the gambling establishments, while leaving out the capacity for real gambling losses.

Others lure consumers with promises of prizes. One such operator, Stake, ran a social networks advertisement flaunting Drake's vehicles, planes and mansions before pivoting to video of the rap artist playing online casino-style games.

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

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

The discrepancy in between sports betting websites and social or sweepstakes gambling establishments is a bit complex, but operators of the latter insist they're not involved with the previous.

A representative for an industry trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, many of the players on social-sweepstakes gambling establishments are playing for complimentary.

'Most social sweeps consumers never buy,' the SPGA representative told DailyMail.com. 'The minority of clients who make purchases do so in amounts far smaller sized than the normal deposit or bet size at real-money online gaming websites.'

Social gambling establishments provide clients a possibility to play casino-style games with buddies. Players have the option to purchase worthless currency typically described as 'gold coins,' which can not be exchanged for genuine money, however can be used to unlock various functions within the video games.

But within the world of social gambling establishments exists sweepstakes gaming, allowing clients 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 declared by complainants 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 a Global Poker event

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake's automobiles, airplanes and estates

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

Traditional online gambling establishments are banned in all however seven states, which has actually assisted to sustain the appeal of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes sites, which don't require generally require identification. However, websites like Chumba will request for IDs from players trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, permit customers to send mail-in requests for free sweeps coins, supplied the gamers follow painfully specific guidelines. What's more, gamers are typically rewarded with sweeps coins just for signing up, thereby providing a factor to attempt their hands at any variety of casino games for a chance to win - or lose - genuine money.

So why are sweepstakes websites permitted to run in 48 states, while online casinos are prohibited in all however 7?

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

'Social sweepstakes games are just a form of online entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is needed to play at social casinos with sweepstakes rewards. Consumers never ever need to spend for an opportunity to win prizes. That lack of a purchase requirement - or" factor to consider" - is a vital distinction between social sweeps and conventional online gambling websites like casinos.'

Think about 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 provide them the chance to win financially rewarding rewards, such as a $1 million jackpot.

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

'Sweepstakes are a long-standing method for promoting all type of daily businesses in the United States, whatever from hamburgers to magazine memberships to coffee and home improvement stores,' the SPGA representative 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 lots of sports betting market experts, that argument does not cut it.

For beginners, gaming lawyer Daniel Wallach points out, McDonald's Monopoly video game does not run forever. Rather, it has a well-defined start and end, consequently recommending the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being used to promote real products like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [gambling establishments] have none of the attributes frequently related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments offer" casino-like" payments, usually 80 percent or more of earnings, whereas the typical payment portion for a temporary marketing sweepstakes is an unimportant share of the profits earned by the business [typically less than one percent]'

Wallach is fast to liken the online social sweeps gambling establishments to the web cafes that emerged in Florida, using customers the chance to play casino-style video games for real prizes. A number of those brick-and-mortar establishments have actually because been shuttered over allegations of unlawful gambling.

DJ Khaled is amongst several celeb spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps gambling establishments should deal with comparable examination.

'These distinctions are not approximate,' Wallach said of social sweeps gambling establishments. 'They have repeatedly been mentioned by courts and state attorney general of the United States as key elements in determining that a sweepstakes promotion was in reality a guise for illegal sports betting.'

Among the gambling establishment market's leading trade organizations, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, in some cases, enact new legislation on the concern.

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

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

Sweepstakes casino operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action claim, stating the settlement was made to avoid legal expenses and continued litigation.

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

In the current claim, which is largely similar to its predecessors, New york city state citizens 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 gambling enterprise. '

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

'We normally don't discuss matters before the courts,' a VGW representative informed DailyMail.com through email. 'However, we keep in mind that this claim has only just been filed with the court and VGW has actually not been formally served.

'We have complete confidence in our compliance with all laws and policies where we operate, and stay confident about the future,' the representative continued. 'We continue to provide our free-to-play games across the majority of North America, as we have for more than a years, producing not just fantastic games, user experiences and home entertainment, but also ensuring this is done safely, properly and at the highest level of standards.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are reasonably typical across the online social video games industry (and the US more broadly), and our basic practice is that we intend to vigorously protect any claim which might be brought against us.'

The problems between conventional online gambling and sweepstakes gambling establishments could prove troublesome for some celeb 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 traditional video gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking prohibited sports betting wagering 'sweeps' sites while at the exact same time the leagues desire to predict a strong stance versus illegal gaming - particularly when attempting to tamp down the periodic gambling scandal,' Glaser told DailyMail.com.

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

Together with VGW, Apple and Google are being demanded hosting presumably unlawful gambling sites

Regardless, Glaser sees sweepstakes gambling establishments as a major concern 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 included.

Neither an NBA representative nor the players' representatives reacted to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also disregarded to react to DailyMail.com emails.

Asked if their celebrity endorsers have an obligation to describe to customers the differences and resemblances in between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is absolutely 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 worths are" our players precede" and" we do what's right", and we put our values at the core of everything we do.'

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

'Celebrities who provide their names to dubious unlawful sports betting sites are, at a minimum, putting their reputations at threat along with courting civil and class actions by customers who declare harm,' Glaser stated. 'There is likewise some risk that state regulators and state attorneys general rope celebrity endorsers into enforcement efforts for facilitating illegal gambling.'

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