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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, however the world-famous celebs were conspicuously included in a slide presentation on social and sweepstakes casinos - the controversial sites offering both totally free casino-style games and profitable rewards, such as cash, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The sites are just 2 cogs in the multibillion-dollar market that now finds itself besieged by claims. In the eyes of many video gaming corporations, not to point out lawsuit complainants and state regulators, sweepstakes casinos serve as traditional gambling establishments, just without the oversight, consumer defenses and tax laws. So not just can they prevent the steep 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulative difficulties 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 business deals with allegations of unlawful gaming in a New york city suit that claims VGW uses celeb endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's statement below)

'I'm not exactly sure" if you don't trust us, you can trust Paris Hilton" is a winning message for companies running multibillion-dollar prohibited operations out of places like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of video gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers include a series of celebs from sports betting enthusiasts 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 conventional sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among lots of sweepstakes casinos found online

Ryan Seacrest advises fans to dip into Chumba Casino, where many - however not all - video games are totally free

Drake has a deal with social sweeps casino, Stake, that he regularly touts on social networks

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Instead, advertisements normally focus around the social aspect of the gambling establishments, while omitting the potential for actual sports betting losses.

Others lure customers with guarantees of rewards. One such operator, Stake, ran a social networks advertisement displaying Drake's vehicles, planes and mansions before pivoting 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 ever provided up.'

The disparity between gaming sites and social or sweepstakes casinos is a bit complicated, but operators of the latter insist they're not included with the previous.

A spokesperson for a market 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, the majority of the gamers on social-sweepstakes casinos are playing for complimentary.

'Most social sweeps customers never ever purchase,' the SPGA representative informed DailyMail.com. 'The minority of consumers who make purchases do so in amounts far smaller sized than the typical deposit or bet size at real-money online gambling websites.'

Social casinos use consumers an opportunity to play casino-style video games with buddies. Players have the option to purchase worthless currency frequently described as 'gold coins,' which can not be exchanged for real money, but can be utilized to unlock various features within the video games.

But within the world of social casinos exists sweepstakes video gaming, permitting clients to get 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 complainants in Florida, Georgia, New Jersey and New York City. One player told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the past year after continuing to buy more coins in pursuit of money and other things of value.

The Philadelphia 76ers' Paul George is seen promoting an International Poker occasion

Social sweeps casino Stake ran an ad displaying 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 gambling establishments are banned in all however 7 states, which has actually helped to sustain the popularity of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, allow consumers to send mail-in ask for complimentary sweeps coins, supplied the players follow painfully specific directions. What's more, gamers are frequently rewarded with sweeps coins just for signing up, therefore providing them a factor to attempt their hands at any number of casino games for an opportunity to win - or lose - real cash.

So why are sweepstakes sites enabled to operate in 48 states, while online gambling establishments are prohibited in all however 7?

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

'Social sweepstakes games are just a form of online entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is needed to play at social gambling establishments with sweepstakes rewards. Consumers never have to pay for a chance to win prizes. That lack of a purchase requirement - or" consideration" - is an important difference between social sweeps and conventional online sports betting websites like gambling establishments.'

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

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

'Sweepstakes are a long-standing technique for promoting all type of daily services in the United States, everything from hamburgers to publication subscriptions to coffee and home improvement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are regularly utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many sports betting industry insiders, that argument does not cut it.

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

'They don't last forever and they're normally not connected to casino-style video games of opportunity,' Wallach told DailyMail.com. 'They're just money free gifts.

'The sweepstakes [casinos] have none of the attributes frequently related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments use" casino-like" payouts, typically 80 percent or more of profits, whereas the common payment portion for a momentary marketing sweepstakes is an insignificant share of the income made by the business [typically less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the internet coffee shops that sprang up in Florida, providing customers the chance to play casino-style games for genuine rewards. Much of those brick-and-mortar establishments have since been shuttered over allegations of prohibited sports betting.

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

Now, Wallach argues, social sweeps gambling establishments need to face comparable analysis.

'These distinctions are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have repeatedly been mentioned by courts and state attorney general of the United States as essential elements in identifying that a sweepstakes promotion remained in fact a guise for .'

One of the casino market's leading trade companies, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, sometimes, enact brand-new legislation on the problem.

'Consumers are being denied of protections and states are forgoing substantial tax and revenue opportunities as this gaming changes that performed through controlled channels,' read a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in four separate cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, saying the settlement was made to avoid legal costs and continued litigation.

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

In the most recent suit, which is mostly comparable to its predecessors, New York state residents 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 gambling business. '

Apple and Google have likewise been called as defendants in claims for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for comment.

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

'We have complete self-confidence in our compliance with all laws and policies where we operate, and remain positive about the future,' the representative continued. 'We continue to use our free-to-play games throughout many of North America, as we have for more than a decade, developing not just excellent video games, user experiences and home entertainment, but also guaranteeing this is done safely, responsibly 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 intend to strongly safeguard any claim which may be brought against us.'

The problems in between standard online gambling and sweepstakes gambling establishments could show 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 standard gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking unlawful sports betting wagering 'sweeps' websites while at the same time the leagues desire to predict a strong position against prohibited gaming - especially when attempting to tamp down the periodic sports betting scandal,' Glaser informed DailyMail.com.
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It was simply 8 months ago that Toronto Raptors forward Jontay Porter received a lifetime ban from the NBA over accusations he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes casinos.

Together with VGW, Apple and Google are being sued for hosting supposedly prohibited gambling sites

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

'I 'd expect that a league crackdown on athletes backing sweepstakes sites is a matter of when, not if,' Glaser added.

Neither an NBA spokesperson 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 overlooked to react to DailyMail.com emails.

Asked if their celeb endorsers have a responsibility to discuss to clients the differences and resemblances between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial collaborations, and our organization practices more broadly,' the representative stated. 'Some of our values 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 websites, sees things differently.

'Celebrities who provide their names to shady unlawful sports betting websites are, at a minimum, putting their track records at danger in addition to courting civil and class actions by consumers who allege damage,' Glaser stated. 'There is also some threat that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for helping with illegal gaming.'

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