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

No, they weren't personally in participation, but the world-famous stars were notably included in a slide presentation on social and sweepstakes gambling establishments - the questionable sites offering both totally free casino-style games and financially rewarding rewards, such as money, present cards or cryptocurrency. In one ad, 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.

The websites are simply two cogs in the multibillion-dollar market that now finds itself besieged by lawsuits. In the eyes of numerous video gaming corporations, not to mention suit plaintiffs and state regulators, sweepstakes casinos function as standard gambling establishments, only without the oversight, consumer defenses and tax laws. So not only can they avoid the steep 24-percent federal gaming 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 revenue last year alone. Now the company deals with accusations of unlawful gambling in a New York lawsuit that claims VGW uses celeb endorsers to 'create a veneer of authenticity' around its item. (See VGW's declaration listed below)

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

Sweepstakes endorsers include 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 sports betting and sweepstakes play.

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

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

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

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Instead, ads usually center around the social aspect of the casinos, while omitting the capacity for real gambling losses.

Others tempt customers with pledges of rewards. One such operator, Stake, ran a social media ad displaying Drake's cars, aircrafts and estates before rotating to video of the rap artist playing online casino-style games.

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

Another caption described: 'Because I never gave up.'

The disparity in between gambling websites and social or sweepstakes gambling establishments is a bit complicated, but operators of the latter insist they're not included 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 gambling establishments are sports betting totally free.

'Most social sweeps customers never ever buy,' the SPGA spokesperson informed DailyMail.com. 'The minority of consumers who make purchases do so in quantities far smaller sized than the normal deposit or bet size at real-money online gaming websites.'

Social gambling establishments provide consumers a chance to play casino-style games with friends. Players have the alternative to buy valueless currency frequently referred to as 'gold coins,' which can not be exchanged genuine cash, however can be used to unlock various functions within the games.

But within the world of social gambling establishments exists sweepstakes video gaming, permitting consumers to get other currency called 'sweeps coins' that can be exchanged for cash or other prizes.

And therein lies the capacity for monetary losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York. One player informed the Washington Post he lost more than $100,000 on sweepstakes casinos in the previous 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 event

Social sweeps casino Stake ran an ad displaying Drake's cars, airplanes and mansions

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 helped to fuel the appeal of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, enable customers to submit mail-in demands for complimentary sweeps coins, supplied the players follow painfully specific instructions. What's more, gamers are typically rewarded with sweeps coins simply for registering, therefore providing a factor to try their hands at any variety of casino video games for an opportunity to win - or lose - genuine cash.

So why are sweepstakes websites allowed to run 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 just a way of promoting their bread and butter.

'Social sweepstakes games are simply a type of online entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is required to play at social gambling establishments with sweepstakes rewards. Consumers never have to pay for a chance to win rewards. That absence of a purchase requirement - or" factor to consider" - is a vital distinction between social sweeps and standard online gaming sites like gambling establishments.'

Think about the manner in which McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and fries that offer them the possibility to win profitable 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 a long-standing technique for promoting all sort of everyday organizations in the United States, everything from hamburgers to publication memberships to coffee and home improvement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are routinely used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For beginners, gaming lawyer Daniel Wallach explains, McDonald's Monopoly video game does not run forever. Rather, it has a distinct beginning and end, therefore recommending the sweepstakes is not the fast-food giant's primary product. 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 connected to casino-style games of opportunity,' Wallach told DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [gambling establishments] have none of the attributes commonly related to McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos offer" casino-like" payments, typically 80 percent or more of incomes, whereas the typical payout portion for a short-term marketing sweepstakes is a minor share of the income earned by the business [typically less than one percent]'

Wallach is fast to liken the online social sweeps gambling establishments to the web coffee shops that emerged in Florida, offering customers the chance to play casino-style video games for real prizes. A lot of those brick-and-mortar facilities have given that been shuttered over allegations of prohibited sports betting.

DJ Khaled is amongst several star spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps gambling establishments must face similar analysis.

'These differences are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have actually consistently been cited by courts and state chief law officer as essential aspects in figuring out that a sweepstakes promotion remained in reality a guise for illegal gaming.'

Among the gambling establishment industry's leading trade organizations, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, sometimes, enact new legislation on the issue.

'Consumers are being denied of securities and states are giving up significant tax and revenue opportunities as this sports betting changes that conducted through regulated channels,' read a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 different cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action lawsuit, saying the settlement was made to avoid legal expenses and continued litigation.

Michael Phelps has signed an offer with the VGW Group, which owns Global Poker

In the current lawsuit, which is mainly comparable to its predecessors, New york city state locals Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited gambling enterprise. '

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 usually do not discuss matters before the courts,' a VGW representative told DailyMail.com via email. 'However, we keep in mind that this claim has actually only simply been submitted with the court and VGW has actually not been officially served.

'We have complete confidence in our compliance with all laws and regulations where we run, and stay positive about the future,' the spokesperson continued. 'We continue to provide our free-to-play games across many of North America, as we have for more than a years, creating not only excellent games, user experiences and home entertainment, but likewise guaranteeing this is done securely, responsibly and at the highest level of requirements.

'More broadly, we 'd restate that class actions and other litigations and arbitrations are reasonably typical throughout the online social video games industry (and the US more broadly), and our standard practice is that we intend to vigorously protect any claim which may be brought versus us.'

The concerns between standard online sports betting and sweepstakes gambling establishments could prove troublesome for some celebrity endorsers.

Towns, a star center with the Knicks, and the 76ers' George both back 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' sites while at the exact same time the leagues desire to forecast a strong position against illegal gambling - especially when attempting to tamp down the occasional gaming scandal,' Glaser told DailyMail.com.

It was simply eight months ago that Toronto Raptors forward Jontay Porter got a life time ban from the NBA over claims 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 taken legal action against for hosting allegedly unlawful sports betting sites

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

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

Neither an NBA spokesperson nor the players' representatives reacted to DailyMail.com's demands for comment. 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 duty to describe to customers the distinctions and resemblances in between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that requires to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the representative stated. 'Some of our values are" our gamers precede" and" we do what's right", and we put our worths at the core of whatever we do.'

Glaser, an outspoken challenger of sweepstakes sites, sees things in a different way.

'Celebrities who provide their names to dubious prohibited sports betting sites are, at a minimum, putting their credibilities at danger as well as courting civil and class actions by customers who allege harm,' Glaser stated. 'There is also some threat that state regulators and state attorneys basic rope celebrity endorsers into enforcement efforts for helping with prohibited gaming.'

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