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

No, they weren't personally in attendance, however the world-famous celebs were notably consisted of in a slide presentation on social and sweepstakes gambling establishments - the questionable websites using both complimentary casino-style video games and lucrative prizes, such as cash, present cards or cryptocurrency. In one advertisement, 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 websites are simply 2 cogs in the multibillion-dollar market that now finds itself besieged by suits. In the eyes of lots of video gaming corporations, not to discuss lawsuit complainants and state regulators, sweepstakes gambling establishments function as standard casinos, just without the oversight, customer defenses and tax laws. So not only can they prevent the high 24-percent federal sports betting levy, but sweepstakes operators aren't subject to regulative obstacles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings last year alone. Now the business faces allegations of prohibited gaming in a New york city lawsuit that claims VGW uses star endorsers to 'develop a veneer of authenticity' around its item. (See VGW's declaration below)

'I'm uncertain" 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 places like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.
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Sweepstakes endorsers consist of a variety of celebs from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions between conventional gambling and sweepstakes play.

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

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

Drake has a handle social sweeps gambling establishment, Stake, that he frequently promotes on social media

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Instead, ads usually center around the social element of the gambling establishments, while omitting the potential for real sports betting losses.

Others lure clients with guarantees of prizes. One such operator, Stake, ran a social networks advertisement showing off Drake's automobiles, aircrafts and estates before rotating to video of the rapper playing online casino-style games.

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

Another caption discussed: 'Because I never quit.'

The discrepancy in between gaming websites and social or sweepstakes gambling establishments is a bit complex, 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), discussed its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, many of the players on social-sweepstakes casinos are playing for free.
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'Most social sweeps consumers never ever make a purchase,' the SPGA representative informed DailyMail.com. 'The minority of consumers who make purchases do so in quantities far smaller sized than the typical deposit or wager size at real-money online sports betting sites.'
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Social gambling establishments provide clients an opportunity to play casino-style video games with friends. Players have the choice to buy worthless currency frequently described as 'gold coins,' which can not be exchanged genuine money, however can be utilized to open numerous functions within the video games.

But within the world of social casinos exists sweepstakes gaming, permitting clients to acquire other currency referred to as 'sweeps coins' that can be exchanged for cash or other prizes.
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And therein lies the capacity for monetary losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York. One gamer told the Washington Post he lost more than $100,000 on sweepstakes casinos in the past year after continuing to purchase more coins in pursuit of cash and other things of value.

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

Social sweeps casino Stake ran an advertisement flaunting Drake's cars, planes and estates

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 7 states, which has actually assisted to sustain the popularity of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, allow customers to submit mail-in ask for free sweeps coins, provided the players follow painfully specific directions. What's more, players are often rewarded with sweeps coins simply for signing up, thus offering them a factor to attempt their hands at any variety of casino video games for a possibility to win - or lose - genuine money.

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

According to the stakeholders, their product is the complimentary casino-style video gaming, and the real-stakes competitors is merely a means of promoting their bread and butter.

'Social sweepstakes video games are simply a form of online home entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is required to dip into social gambling establishments with sweepstakes prizes. Consumers never ever have to spend for an opportunity to win rewards. That lack of a purchase requirement - or" factor to consider" - is an essential distinction in between social sweeps and conventional online sports betting websites like casinos.'

Consider the method that McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and fries that use them the possibility to win lucrative rewards, such as a $1 million prize.

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

'Sweepstakes are an enduring approach for promoting all kinds of daily businesses in the United States, everything from hamburgers to magazine subscriptions to coffee and home improvement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are frequently used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting industry experts, that argument does not cut it.

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

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

'The sweepstakes [casinos] have none of the attributes commonly associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos offer" casino-like" payments, typically 80 percent or more of earnings, whereas the typical payout percentage for a short-lived advertising sweepstakes is an unimportant share of the revenue earned by the business [normally less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the web cafes that sprang up in Florida, offering clients the possibility to play casino-style video games for real rewards. A lot of those brick-and-mortar facilities have actually considering that been shuttered over allegations of prohibited sports betting.

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

Now, Wallach argues, social sweeps casinos need to deal with similar scrutiny.
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'These differences are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have actually consistently been pointed out by courts and state lawyer generals as essential consider figuring out that a sweepstakes promotion was in fact a guise for unlawful gaming.'

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

'Consumers are being denied of securities and states are passing up substantial tax and profits opportunities as this gambling replaces that conducted through managed channels,' read a well-circulated AGA memo.

And then there are the complainants who have actually sued social casinos in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action claim, 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 current suit, which is mostly similar to its predecessors, New york city state locals 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 offenders in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's request for remark.

'We normally do not comment on matters before the courts,' a VGW spokesperson informed DailyMail.com via email. 'However, we note that this claim has actually only simply been submitted with the court and VGW has not been officially served.

'We have full self-confidence in our compliance with all laws and guidelines where we run, and remain confident about the future,' the spokesperson continued. 'We continue to offer our free-to-play games throughout many of The United States and Canada, as we have for more than a decade, developing not only fantastic video games, user experiences and home entertainment, however also guaranteeing this is done securely, responsibly and at the greatest level of standards.

'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 plan to strongly defend any claim which might be brought against us.'

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

'It's ironic that expert athletes are hawking prohibited sports betting wagering 'sweeps' websites while at the same time the leagues want to project a strong position against prohibited sports betting - especially when attempting to tamp down the occasional sports betting scandal,' Glaser told DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter got a life time ban from the NBA over claims he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes casinos.

Along with VGW, Apple and Google are being demanded hosting presumably illegal gambling sites
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Regardless, Glaser sees sweepstakes casinos as a major concern for leagues such as the NBA.

'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 gamers' agents responded to DailyMail.com's requests for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also ignored to respond to DailyMail.com e-mails.

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

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the spokesperson stated. 'A few of our worths are" our players precede" and" we do what's right", and we put our worths at the core of everything we do.'

Glaser, an outspoken opponent of sweepstakes websites, sees things in a different way.

'Celebrities who lend their names to shady illegal gaming sites are, at a minimum, putting their credibilities at threat in addition to courting civil and class actions by customers who allege harm,' Glaser said. 'There is likewise some threat that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for helping with prohibited gambling.'

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