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

No, they weren't personally in presence, however the world-famous celebrities were notably consisted of in a slide presentation on social and sweepstakes gambling establishments - the controversial sites offering both complimentary casino-style games and profitable rewards, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The websites are just two cogs in the multibillion-dollar industry that now discovers itself besieged by lawsuits. In the eyes of many video gaming corporations, not to point out claim complainants and state regulators, sweepstakes serve as standard gambling establishments, just without the oversight, consumer securities and tax laws. So not just can they avoid the high 24-percent federal gaming levy, however sweepstakes operators aren't subject to regulative hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the company faces allegations of illegal gambling in a New York suit that declares VGW uses celebrity endorsers to 'develop a veneer of legitimacy' around its item. (See VGW's declaration below)

'I'm not sure" if you do not trust us, you can trust Paris Hilton" is a winning message for business 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 include a variety of stars from sports betting 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 differences in between traditional gaming and sweepstakes play.

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

Ryan Seacrest urges fans to dip into Chumba Casino, where many - but not all - video games are complimentary
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Drake has a handle social sweeps casino, Stake, that he regularly touts on social networks

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Instead, advertisements typically focus around the social element of the gambling establishments, while leaving out the potential for actual gaming losses.

Others tempt clients with promises of rewards. One such operator, Stake, ran a social media advertisement flaunting Drake's automobiles, aircrafts and mansions before rotating to video footage of the rap artist playing online casino-style games.

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

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

The inconsistency between sports betting sites and social or sweepstakes gambling establishments is a bit intricate, but operators of the latter insist they're not included with the previous.
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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 information, many of the gamers on social-sweepstakes casinos are playing for totally free.

'Most social sweeps customers never ever make a purchase,' the SPGA representative informed DailyMail.com. 'The minority of clients who make purchases do so in quantities far smaller than the normal deposit or bet size at real-money online sports betting sites.'

Social gambling establishments provide clients a chance to play casino-style games with friends. Players have the choice to buy valueless currency frequently referred to as 'gold coins,' which can not be exchanged for genuine cash, but can be used to open various features within the games.

But within the world of social gambling establishments exists sweepstakes video gaming, permitting customers to acquire other currency referred to as 'sweeps coins' that can be exchanged for cash or other rewards.
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And therein lies the capacity for monetary losses, like the ones declared by plaintiffs 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 buy 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 advertisement flaunting Drake's automobiles, 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 however seven states, which has actually helped to fuel the popularity of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, allow consumers to submit mail-in ask for free sweeps coins, supplied the players follow painfully particular instructions. What's more, players are often rewarded with sweeps coins simply for signing up, therefore providing a reason to attempt their hands at any number of gambling establishment video games for an opportunity to win - or lose - real money.

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

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

'Social sweepstakes games are merely a type of online home entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is required to play at social gambling establishments with sweepstakes rewards. Consumers never ever need to pay for an opportunity to win prizes. That absence of a purchase requirement - or" consideration" - is an essential distinction in between social sweeps and conventional online gaming websites like gambling establishments.'

Consider the manner in which McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and french fries that provide them the opportunity to win rewarding prizes, such as a $1 million prize.

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

'Sweepstakes are a long-standing approach for promoting all sort of daily companies in the United States, everything from burgers to publication subscriptions to coffee and home improvement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are regularly utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of gambling industry insiders, that argument doesn't cut it.
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For beginners, gaming attorney Daniel Wallach points out, McDonald's Monopoly game does not run indefinitely. Rather, it has a well-defined start and end, thus suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote genuine items like french fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're typically not tied to casino-style video games of opportunity,' Wallach informed DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [gambling establishments] have none of the characteristics commonly related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos provide" casino-like" payments, usually 80 percent or more of earnings, whereas the typical payout percentage for a short-lived advertising sweepstakes is a minor share of the income earned by the company [generally less than one percent]'

Wallach is quick to liken the online social sweeps casinos to the internet cafes that emerged in Florida, using clients the opportunity to play casino-style games for real rewards. A lot of those brick-and-mortar facilities have actually given that been shuttered over allegations of illegal gambling.

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

Now, Wallach argues, social sweeps casinos should face similar scrutiny.

'These differences are not arbitrary,' Wallach stated of social sweeps casinos. 'They have repeatedly been cited by courts and state chief law officer as crucial consider figuring out that a sweepstakes promo remained in reality a guise for illegal sports betting.'

Among the casino market's leading trade companies, 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 deprived of defenses and states are giving up considerable tax and earnings chances as this gaming changes that carried out through managed channels,' read a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in four separate cases in Kentucky without admitting 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 prevent legal costs and continued lawsuits.

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

In the current claim, which is mainly comparable to its predecessors, New York state citizens Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is described in the filing as an 'illegal gaming business. '

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

'We generally don't comment on matters before the courts,' a VGW representative informed DailyMail.com through email. 'However, we keep in mind that this claim has only just been submitted with the court and VGW has not been officially served.

'We have full confidence in our compliance with all laws and regulations where we run, and remain confident about the future,' the spokesperson continued. 'We continue to offer our free-to-play games across the majority of The United States and Canada, as we have for more than a decade, creating not only excellent video games, user experiences and entertainment, but likewise guaranteeing 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 relatively common across the online social video games industry (and the US more broadly), and our standard practice is that we plan to vigorously protect any claim which may be brought against us.'

The issues in between standard online gambling and sweepstakes casinos might show troublesome for some star endorsers.

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

'It's ironic that expert athletes are hawking unlawful sports betting wagering 'sweeps' websites while at the very same time the leagues desire to predict a strong position versus prohibited gaming - particularly when attempting to tamp down the occasional sports betting scandal,' Glaser told DailyMail.com.

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

Together with VGW, Apple and Google are being sued for hosting allegedly illegal gambling websites

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

'I 'd anticipate that a league crackdown on athletes backing sweepstakes websites refers when, not if,' Glaser added.

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 likewise disregarded to react to DailyMail.com emails.

Asked if their star endorsers have a responsibility to describe to clients the differences and resemblances 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 collaborations, and our business practices more broadly,' the spokesperson said. 'Some of our worths are" our gamers come first" 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 in a different way.
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'Celebrities who provide their names to dubious prohibited gaming sites are, at a minimum, putting their track records at risk as well as courting civil and class actions by customers who declare damage,' Glaser stated. 'There is likewise some danger that state regulators and state attorneys general rope celeb endorsers into enforcement efforts for assisting in unlawful gaming.'

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