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

No, they weren't personally in presence, however the world-famous stars were conspicuously included in a slide presentation on social and sweepstakes gambling establishments - the questionable sites providing both complimentary casino-style video games and lucrative rewards, such as cash, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are simply 2 cogs in the multibillion-dollar industry that now discovers itself besieged by suits. In the eyes of numerous gaming corporations, not to point out suit plaintiffs and state regulators, sweepstakes casinos act as traditional casinos, just without the oversight, customer protections and tax laws. So not only can they prevent the high 24-percent federal gambling levy, however sweepstakes operators aren't based on regulative obstacles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the business deals with accusations of prohibited gaming in a New York suit that claims VGW uses star endorsers to 'create a veneer of legitimacy' around its item. (See VGW's statement listed below)

'I'm uncertain" if you don't trust us, you can rely on Paris Hilton" is a winning message for companies running multibillion-dollar illegal 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 series of stars from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions between standard gaming and sweepstakes play.

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

Ryan Seacrest advises fans to play at Chumba Casino, where numerous - however not all - video games are complimentary

Drake has an offer with social sweeps casino, Stake, that he frequently promotes on social networks
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Instead, advertisements typically center around the social element of the gambling establishments, while leaving out the capacity for real sports betting losses.

Others lure customers with guarantees of prizes. One such operator, Stake, ran a social networks ad showing off Drake's vehicles, aircrafts and mansions before rotating to video 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 described: 'Because I never ever gave up.'

The disparity in between gambling websites and social or sweepstakes gambling establishments is a bit complicated, however operators of the latter insist they're not involved with the former.

A spokesperson for a market trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, many of the gamers on social-sweepstakes casinos are playing for totally free.

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

Social casinos use consumers a chance to play casino-style games with friends. Players have the option to buy worthless currency often referred to as 'gold coins,' which can not be exchanged for real money, but can be used to unlock various functions within the games.

But within the world of social gambling establishments exists sweepstakes gaming, enabling clients to acquire other currency referred to as 'sweeps coins' that can be exchanged for money or other prizes.

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 gambling establishments 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 occasion

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

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

Traditional online casinos are banned in all but seven states, which has actually helped to fuel the popularity of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes sites, which don't require typically need recognition. However, sites like Chumba will request IDs from gamers attempting to withdraw any funds.

Many websites, like the crypto-compatible Stake, enable customers to submit mail-in ask for totally free sweeps coins, offered the players follow painfully particular directions. What's more, gamers 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 - genuine money.

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

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

'Social sweepstakes video games are merely a form of online home entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is needed to dip into social casinos with sweepstakes rewards. Consumers never ever need to spend for a chance to win prizes. That absence of a purchase requirement - or" consideration" - is an essential distinction between social sweeps and standard online sports betting websites like casinos.'
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Think of the manner in which McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and french fries that provide them the chance to win profitable rewards, such as a $1 million prize.
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And without a purchase requirement, or 'consideration', the game itself does not fulfill the definition of gaming in the US.

'Sweepstakes are a long-standing method for promoting all kinds of everyday services in the United States, whatever from hamburgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are frequently 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 industry experts, that argument does not cut it.

For starters, video gaming attorney Daniel Wallach mentions, McDonald's Monopoly game does not run indefinitely. Rather, it has a well-defined start and end, thereby suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote genuine items like french fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're normally not connected to casino-style games of opportunity,' Wallach informed DailyMail.com. 'They're simply money free gifts.

'The sweepstakes [casinos] possess none of the attributes commonly related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments provide" casino-like" payments, usually 80 percent or more of incomes, whereas the normal payout percentage for a temporary promotional sweepstakes is a minor share of the earnings earned by the company [usually less than one percent]'

Wallach is fast to compare the online social sweeps casinos to the internet cafes that emerged in Florida, using customers the possibility to play casino-style video games for genuine prizes. Much of those brick-and-mortar facilities have actually given that been shuttered over claims of unlawful gaming.

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

Now, Wallach argues, social sweeps casinos need to deal with comparable scrutiny.

'These distinctions are not arbitrary,' Wallach stated of social sweeps casinos. 'They have actually repeatedly been cited by courts and state attorney generals as crucial consider identifying that a sweepstakes promo remained in reality a guise for prohibited gambling.'

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

'Consumers are being denied of defenses and states are giving up considerable tax and income chances as this gaming changes that conducted through managed channels,' checked out a well-circulated AGA memo.

And after that there are the plaintiffs who have taken legal action against social gambling establishments in more than a lots states.

Sweepstakes casino operators paid a combined $14.2 million in four different cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW agreed 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 a handle the VGW Group, which owns Global Poker

In the most recent suit, which is largely similar 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 'prohibited sports betting business. '

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

'We normally do not comment on matters before the courts,' a VGW spokesperson informed DailyMail.com via e-mail. 'However, we keep in mind that this claim has only just been filed with the court and VGW has actually not been officially served.

'We have complete confidence in our compliance with all laws and guidelines where we run, and remain confident about the future,' the representative continued. 'We continue to provide our free-to-play video games across most of North America, as we have for more than a years, creating not only terrific video games, user experiences and entertainment, however also ensuring this is done safely, properly and at the greatest level of standards.

'More broadly, we 'd restate that class actions and other litigations and arbitrations are fairly common throughout the online social games industry (and the US more broadly), and our basic practice is that we plan to strongly defend any claim which might be brought versus us.'
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The concerns in between conventional online sports betting and sweepstakes casinos could show troublesome 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 traditional video gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking unlawful sports betting 'sweeps' sites while at the exact same time the leagues wish to forecast a strong stance versus illegal sports betting - especially when trying to tamp down the occasional sports betting scandal,' Glaser informed .com.

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

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

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

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

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

Asked if their celeb endorsers have an obligation to explain to customers the differences and resemblances between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that requires to be done.

'We have complete confidence in our influencer and ambassadorial collaborations, and our service practices more broadly,' the spokesperson stated. 'A few of our values are" our players come initially" and" we do what's right", and we put our values at the core of everything we do.'

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

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

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