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 attendance, but the world-famous celebrities were conspicuously included in a slide discussion on social and sweepstakes casinos - the questionable websites offering both totally free casino-style video games and financially rewarding prizes, such as cash, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet totally 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 industry that now discovers itself besieged by lawsuits. In the eyes of numerous video gaming corporations, not to mention claim complainants and state regulators, sweepstakes casinos serve as standard casinos, just without the oversight, customer defenses and tax laws. So not only can they avoid the steep 24-percent federal gaming levy, but sweepstakes operators aren't based on regulative difficulties like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income last year alone. Now the business faces allegations of prohibited gaming in a New York suit that declares VGW utilizes celeb endorsers to 'produce a veneer of authenticity' around its item. (See VGW's declaration below)

'I'm uncertain" if you don't trust us, you can rely on Paris Hilton" is a winning message for companies operating multibillion-dollar prohibited operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers include a series of stars from gambling lovers 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 conventional gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among many sweepstakes gambling establishments discovered online

Ryan Seacrest prompts fans to play at Chumba Casino, where numerous - however not all - games are free

Drake has a handle social sweeps casino, Stake, that he frequently touts on social networks

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

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

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

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

The discrepancy in between gaming sites and social or sweepstakes casinos is a bit complicated, 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 competition with online casinos and sportsbooks. Furthermore, according to SPGA information, the majority of the players on social-sweepstakes casinos are playing for complimentary.

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

Social gambling establishments offer customers a chance to play casino-style games with good friends. Players have the option to purchase worthless currency often described as 'gold coins,' which can not be exchanged genuine cash, however can be used to open numerous functions within the video games.

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

And therein lies the capacity for monetary losses, like the ones declared 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 cash and other things of worth.

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

Social sweeps casino Stake ran an advertisement revealing off Drake's cars, planes 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 assisted to sustain the appeal 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 players trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, permit customers to submit mail-in ask for free sweeps coins, provided the players follow painfully specific instructions. What's more, players are frequently rewarded with sweeps coins just for signing up, thereby giving them a reason to attempt their hands at any variety of gambling establishment games for a possibility to win - or lose - real money.

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

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

'Social sweepstakes games are simply a form of online home entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is required to dip into social gambling establishments with sweepstakes prizes. Consumers never ever have to spend for a chance to win rewards. That absence of a purchase requirement - or" consideration" - is an important difference in between social sweeps and conventional online gambling sites like casinos.'

Think of the manner in which McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and fries that provide them the possibility to win financially rewarding prizes, such as a $1 million prize.

And without a purchase requirement, or 'factor to consider', the game itself doesn't fulfill the definition of gambling in the US.

'Sweepstakes are a long-standing technique for promoting all sort of daily services in the United States, everything from burgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are routinely used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

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

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

'The sweepstakes [casinos] have none of the qualities frequently associated with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments use" casino-like" payouts, normally 80 percent or more of earnings, whereas the common payout percentage for a momentary advertising sweepstakes is an unimportant share of the income made by the business [generally less than one percent]'

Wallach is fast to compare the online social sweeps gambling establishments to the internet cafes that emerged in Florida, offering clients the possibility to play casino-style games for real prizes. Many of those brick-and-mortar establishments have since been shuttered over allegations of prohibited gambling.

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

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

'These distinctions are not approximate,' Wallach said of social sweeps casinos. 'They have actually repeatedly been mentioned by courts and state lawyer generals as crucial consider identifying that a sweepstakes promo was in reality a guise for prohibited gaming.'

Among the casino industry's leading trade organizations, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, sometimes, enact new legislation on the concern.

'Consumers are being deprived of protections and states are forgoing considerable tax and profits opportunities as this gaming replaces that carried out through managed channels,' checked out a well-circulated AGA memo.

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

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

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

In the most recent suit, 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 described in the filing as an 'illegal sports betting enterprise. '

Apple and Google have also been called as accuseds in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com's ask for remark.

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

'We have complete self-confidence in our compliance with all laws and policies where we operate, and remain confident about the future,' the representative continued. 'We continue to provide our free-to-play games throughout many of The United States and Canada, as we have for more than a years, producing not only great games, user experiences and entertainment, however also guaranteeing this is done securely, properly and at the highest level of requirements.

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

The concerns in between standard online sports betting and sweepstakes casinos might prove bothersome 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 'sweeps' sites while at the very same time the leagues wish to forecast a strong stance against illegal sports betting - particularly when trying to tamp down the occasional gambling scandal,' Glaser told DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter received a life time ban from the NBA over claims he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes gambling establishments.

Together with VGW, Apple and Google are being demanded hosting allegedly unlawful sports betting 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 professional athletes backing sweepstakes websites refers when, not if,' Glaser included.

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

Asked if their star endorsers have an obligation to discuss to customers the distinctions and resemblances in between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that requires to be done.

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the representative said. 'Some of our worths 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 challenger of sweepstakes sites, sees things in a different way.

'Celebrities who lend their names to dubious unlawful sports betting sites are, at a minimum, putting their credibilities at danger along with courting civil and class actions by consumers who declare damage,' Glaser said. 'There is likewise some risk that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for facilitating illegal gambling.'

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