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

No, they weren't personally in participation, however the world-famous celebrities were conspicuously consisted of in a slide presentation on social and sweepstakes casinos - the controversial websites providing both free casino-style video games and financially rewarding prizes, such as cash, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet complimentary,' 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 finds itself besieged by suits. In the eyes of lots of gaming corporations, not to discuss lawsuit plaintiffs and state regulators, sweepstakes gambling establishments serve as conventional gambling establishments, only without the oversight, customer securities and tax laws. So not just can they avoid the steep 24-percent federal gambling levy, however sweepstakes operators aren't subject to regulatory obstacles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings last year alone. Now the business faces accusations of prohibited sports betting in a New york city claim that claims VGW utilizes celeb endorsers to 'create a veneer of authenticity' around its product. (See VGW's statement listed below)

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

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

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

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

Drake has a handle social sweeps casino, Stake, that he regularly promotes on social media

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Instead, advertisements usually center around the social aspect of the casinos, while omitting the potential for real gaming losses.

Others tempt consumers with promises of rewards. One such operator, Stake, ran a social networks advertisement displaying Drake's automobiles, airplanes and mansions before pivoting to footage of the rapper playing online casino-style games.

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

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

The inconsistency in between gambling websites and social or sweepstakes gambling establishments is a bit complex, but 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), described its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA data, the majority of the players on social-sweepstakes casinos are sports betting totally free.

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

Social gambling establishments provide customers a chance to play casino-style games with good friends. Players have the alternative to buy worthless currency often referred to as 'gold coins,' which can not be exchanged for genuine money, but can be used to open numerous features within the video games.

But within the world of social casinos exists sweepstakes gaming, permitting customers to obtain other currency understood as 'sweeps coins' that can be exchanged for cash or other prizes.

And therein lies the potential for monetary losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York. One player 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.
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The Philadelphia 76ers' Paul George is seen promoting a Global Poker event

Social sweeps casino Stake ran an advertisement flaunting Drake's vehicles, planes 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 however 7 states, which has actually helped to sustain the appeal of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes websites, which do not require normally need identification. However, websites like Chumba will request for IDs from players attempting to withdraw any funds.
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Many sites, like the crypto-compatible Stake, enable customers to send mail-in requests for totally free sweeps coins, provided the gamers follow painfully particular guidelines. What's more, players are often rewarded with sweeps coins simply for registering, consequently offering them a reason to try their hands at any number of gambling establishment games for a chance to win - or lose - real cash.

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

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

'Social sweepstakes games are just a kind of online entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is required to play at social gambling establishments with sweepstakes prizes. Consumers never ever need to pay for an opportunity to win rewards. That lack of a purchase requirement - or" factor to consider" - is a crucial distinction between social sweeps and conventional online sports betting websites like casinos.'

Consider the way that McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and french fries that offer them the possibility to win lucrative 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 gaming in the US.

'Sweepstakes are a long-standing approach for all kinds of daily companies in the United States, whatever from burgers to publication subscriptions to coffee and home enhancement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are routinely used 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 does not cut it.

For starters, gaming attorney Daniel Wallach explains, McDonald's Monopoly video game does not run forever. Rather, it has a distinct start and end, consequently suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote real products like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [gambling establishments] have none of the characteristics frequently connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments offer" casino-like" payouts, usually 80 percent or more of incomes, whereas the normal payout percentage for a temporary promotional sweepstakes is an insignificant share of the revenue earned by the business [typically less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the internet coffee shops that emerged in Florida, offering consumers the possibility to play casino-style games for genuine rewards. A lot of those brick-and-mortar facilities have actually considering that been shuttered over allegations of prohibited gaming.

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

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

'These differences are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have consistently been pointed out by courts and state chief law officer as essential aspects in figuring out that a sweepstakes promo was in reality a guise for illegal sports betting.'

One of the casino market's leading trade organizations, the American Gaming Association, is now pressing legislators to examine sweepstakes operators and, sometimes, enact new legislation on the problem.

'Consumers are being denied of defenses and states are forgoing considerable tax and profits chances as this gambling replaces that performed through regulated channels,' read a well-circulated AGA memo.

And after that there are the complainants who have actually sued social gambling establishments in more than a lots states.
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Sweepstakes gambling establishment operators paid a combined $14.2 million in four different cases in Kentucky without admitting any misbehavior, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action suit, saying the settlement was made to prevent legal expenses and continued lawsuits.

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

In the most recent lawsuit, which is mostly similar to its predecessors, New york city state citizens Lamar Prater and Rebecca Pratt both claim 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 named as defendants in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's ask for remark.

'We usually do not talk about matters before the courts,' a VGW representative told DailyMail.com by means of email. 'However, we note that this claim has 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 guidelines where we operate, and stay positive about the future,' the spokesperson continued. 'We continue to use our free-to-play video games throughout the majority of North America, as we have for more than a decade, developing not only great video games, user experiences and home entertainment, but also ensuring this is done securely, responsibly and at the greatest level of requirements.
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'More broadly, we 'd repeat that class actions and other litigations and arbitrations are reasonably typical across the online social games industry (and the US more broadly), and our basic practice is that we intend to vigorously protect any claim which may be brought against us.'
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The issues in between conventional online gaming and sweepstakes casinos might show problematic for some star 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 ironic that professional athletes are hawking illegal sports betting wagering 'sweeps' websites while at the same time the leagues want to predict a strong stance against unlawful gambling - especially when attempting to tamp down the periodic gambling scandal,' Glaser informed DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter got a life time ban from the NBA over allegations he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes casinos.
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Along with VGW, Apple and Google are being sued for hosting allegedly prohibited gambling sites

Regardless, Glaser sees sweepstakes casinos as a major issue for leagues such as the NBA.
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'I 'd anticipate that a league crackdown on professional athletes backing sweepstakes websites is a matter of 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 ignored to react to DailyMail.com e-mails.

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

'We have full self-confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the spokesperson stated. 'Some of our values 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.

'Celebrities who lend their names to dubious prohibited gaming websites are, at a minimum, putting their track records at risk in addition to courting civil and class actions by consumers who allege harm,' Glaser stated. 'There is also some risk that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for assisting in unlawful gambling.'

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