The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on prohibited gaming.
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No, they weren't personally in participation, however the world-famous celebs were notably consisted of in a slide discussion on social and sweepstakes gambling establishments - the questionable sites providing both free casino-style games and rewarding prizes, such as cash, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are just two cogs in the multibillion-dollar industry that now discovers itself besieged by lawsuits. In the eyes of many gaming corporations, not to mention lawsuit plaintiffs and state regulators, sweepstakes gambling establishments act as conventional gambling establishments, only without the oversight, consumer defenses and tax laws. So not just can they avoid the high 24-percent federal gambling levy, however sweepstakes operators aren't based on regulatory difficulties like anti-money laundering and responsible-gaming protections.

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

'I'm unsure" if you do not 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 video gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers consist of a variety of celebs from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom provide any distinctions between traditional sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of numerous sweepstakes gambling establishments discovered online

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

Drake has a deal with social sweeps casino, Stake, that he frequently touts on social media

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Instead, ads typically focus around the social element of the casinos, while omitting the potential for real sports betting losses.

Others tempt customers with pledges of prizes. One such operator, Stake, ran a social networks advertisement flaunting Drake's vehicles, aircrafts and mansions before rotating to footage of the rap artist playing online casino-style video games.

'Daddy, why do we have so much money?' read the very first caption on the screen.

Another caption explained: 'Because I never offered up.'

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

A representative for an industry 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 data, most of the players on social-sweepstakes casinos are sports betting free.

'Most social sweeps customers never ever purchase,' the SPGA representative informed 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 gambling sites.'

Social gambling establishments offer customers an opportunity to play casino-style games with friends. Players have the option to buy valueless currency often referred to as 'gold coins,' which can not be exchanged for genuine cash, but can be utilized to unlock numerous functions within the games.

But within the world of social gambling establishments exists sweepstakes video gaming, allowing customers to acquire 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 claimed 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 gambling establishments in the previous year after continuing to buy more coins in pursuit of money and other things of worth.

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

Social sweeps gambling establishment Stake ran an advertisement revealing off Drake's automobiles, aircrafts and estates

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

Traditional online casinos are prohibited in all but seven states, which has assisted to fuel the appeal of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, enable customers to send mail-in ask for complimentary sweeps coins, provided the gamers follow painfully particular instructions. What's more, gamers are often rewarded with sweeps coins merely for signing up, thus providing a factor to attempt their hands at any number of games for a chance to win - or lose - real money.

So why are sweepstakes sites allowed to operate in 48 states, while online gambling establishments are prohibited in all but 7?
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According to the stakeholders, their product is the totally free casino-style gaming, and the real-stakes competition is just a way of promoting their bread and butter.

'Social sweepstakes games are simply a kind of online home entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is required to dip into social casinos with sweepstakes rewards. Consumers never have to pay for an opportunity to win rewards. That absence of a purchase requirement - or" consideration" - is an important distinction between social sweeps and conventional online gambling websites like gambling establishments.'

Think about the manner in which McDonald's uses its yearly Monopoly 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 lucrative rewards, such as a $1 million jackpot.

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

'Sweepstakes are an enduring method for promoting all kinds of everyday businesses in the United States, whatever from burgers to publication subscriptions to coffee and home improvement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are routinely used by a who's who of household 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.

For starters, video gaming lawyer Daniel Wallach points out, McDonald's Monopoly game doesn't run forever. Rather, it has a well-defined beginning and end, thereby suggesting the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being used to promote genuine products like french fries, shakes, and the Filet-O-Fish.
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'They do not last forever and they're normally not tied to casino-style games of chance,' Wallach informed DailyMail.com. 'They're simply money free gifts.

'The sweepstakes [gambling establishments] have none of the qualities frequently associated with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos use" casino-like" payouts, normally 80 percent or more of incomes, whereas the common payout portion for a short-lived advertising sweepstakes is a trivial share of the profits made by the company [normally less than one percent]'

Wallach is quick to compare the online social sweeps casinos to the internet coffee shops that sprang up in Florida, using customers the opportunity to play casino-style video games for real rewards. Much of those brick-and-mortar facilities have actually considering that been shuttered over claims of prohibited gambling.

DJ Khaled is amongst a number of star spokespeople for VGW's Global Poker brand

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

'These differences are not approximate,' Wallach said of social sweeps gambling establishments. 'They have consistently been mentioned by courts and state attorney general of the United States as essential consider identifying that a sweepstakes promotion was in fact a guise for unlawful gambling.'

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

'Consumers are being deprived of securities and states are passing up considerable tax and profits opportunities as this sports betting changes that performed through controlled channels,' checked out a well-circulated AGA memo.

And then there are the complainants who have actually taken legal action against social gambling establishments in more than a dozen states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 different cases in Kentucky without admitting any misdeed, 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 expenses and continued lawsuits.

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

In the most recent lawsuit, which is mainly similar to its predecessors, New York state homeowners Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited gambling business. '

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

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

'We have full self-confidence in our compliance with all laws and policies where we run, and stay positive about the future,' the representative continued. 'We continue to use our free-to-play games across many of The United States and Canada, as we have for more than a decade, creating not just excellent games, user experiences and home entertainment, but likewise guaranteeing this is done securely, properly and at the highest level of requirements.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are reasonably common throughout the online social video games market (and the US more broadly), and our basic practice is that we mean to intensely defend any claim which may be brought versus us.'

The problems in between traditional online sports betting and sweepstakes gambling establishments might prove problematic 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 standard video gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking prohibited sports betting 'sweeps' sites while at the same time the leagues desire to project a strong stance versus unlawful gaming - especially when attempting to tamp down the periodic gambling 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 claims he conspired with bettors. 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 apparently unlawful sports betting websites

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

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

Neither an NBA representative nor the players' agents responded to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also ignored to react to DailyMail.com emails.

Asked if their star endorsers have an obligation to describe to clients the distinctions and resemblances between iGaming and sweepstakes casinos, VGW firmly insisted there is absolutely nothing more that needs to be done.

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the representative said. 'Some of our worths are" our gamers come initially" and" we do what's right", and we put our worths at the core of whatever we do.'

Glaser, an outspoken opponent of sweepstakes websites, sees things in a different way.
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'Celebrities who lend their names to shady illegal gaming sites are, at a minimum, putting their credibilities at risk as well as courting civil and class actions by consumers who allege damage,' Glaser stated. 'There is likewise some danger that state regulators and state attorneys basic rope star endorsers into enforcement efforts for assisting in illegal sports betting.'

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