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, but the world-famous celebrities were notably consisted of in a slide presentation on social and sweepstakes gambling establishments - the questionable websites providing both video games and lucrative rewards, such as cash, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are just two cogs in the multibillion-dollar industry that now discovers itself besieged by lawsuits. In the eyes of numerous gaming corporations, not to point out claim complainants and state regulators, sweepstakes casinos act as conventional gambling establishments, just without the oversight, consumer securities and tax laws. So not just can they avoid the steep 24-percent federal sports betting levy, however sweepstakes operators aren't based on regulative hurdles 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 company deals with accusations of unlawful gaming in a New York suit that declares VGW utilizes star endorsers to 'develop a veneer of authenticity' around its item. (See VGW's statement below)

'I'm uncertain" if you don't trust us, you can trust Paris Hilton" is a winning message for business 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 series of celebs from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom provide any differences in between conventional gaming and sweepstakes play.

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

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

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

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Instead, ads usually focus around the social aspect of the casinos, while omitting the capacity for actual gaming losses.

Others tempt clients with guarantees of prizes. One such operator, Stake, ran a social media ad flaunting Drake's cars and trucks, airplanes and mansions before pivoting to footage of the rapper playing online casino-style video games.

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

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

The inconsistency between gambling websites and social or sweepstakes gambling establishments is a bit intricate, but operators of the latter insist they're not included with the previous.

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA data, many of the players on social-sweepstakes casinos are sports betting totally free.

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

Social gambling establishments provide clients a possibility to play casino-style games with pals. Players have the option to purchase worthless currency frequently referred to as 'gold coins,' which can not be exchanged for genuine cash, but can be used to open different functions within the video games.

But within the world of social casinos exists sweepstakes gaming, enabling consumers to acquire other currency called 'sweeps coins' that can be exchanged for cash or other rewards.

And therein lies the capacity for monetary losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York. One player told the Washington Post he lost more than $100,000 on sweepstakes casinos in the previous year after continuing to buy more coins in pursuit of cash and other things of value.

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

Social sweeps gambling establishment Stake ran an ad flaunting Drake's vehicles, airplanes 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 but seven states, which has assisted to fuel the popularity of sweepstakes gambling establishments.
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Anyone over the age of 18 can access the sweepstakes sites, which do not need typically need identification. However, websites like Chumba will ask for IDs from gamers attempting to withdraw any funds.

Many websites, like the crypto-compatible Stake, allow clients to submit mail-in requests for complimentary sweeps coins, supplied the players follow painfully specific instructions. What's more, players are often rewarded with sweeps coins just for signing up, thereby providing a factor to try their hands at any number of gambling establishment games for a possibility to win - or lose - real money.

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

According to the stakeholders, their item is the complimentary casino-style video gaming, and the real-stakes competitors is just a means of promoting their support.

'Social sweepstakes games are simply a form of online entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is required to play at social casinos with sweepstakes prizes. Consumers never ever need to pay for an opportunity to win prizes. That lack of a purchase requirement - or" consideration" - is a crucial distinction in between social sweeps and traditional online gambling websites like casinos.'

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 purchasing hamburgers and fries that offer them the chance to win lucrative rewards, such as a $1 million prize.

And without a purchase requirement, or 'factor to consider', the game itself does not meet the definition of gambling in the US.

'Sweepstakes are a long-standing method for promoting all sort of everyday services in the United States, everything from hamburgers to magazine subscriptions to coffee and home improvement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are regularly utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting market insiders, that argument doesn't cut it.

For beginners, video gaming lawyer Daniel Wallach explains, McDonald's Monopoly video game doesn't run forever. Rather, it has a distinct beginning and end, thus recommending the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being used to promote real items like fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're typically not tied to casino-style video games of chance,' Wallach told DailyMail.com. 'They're simply money free gifts.

'The sweepstakes [gambling establishments] possess none of the characteristics typically related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments use" casino-like" payments, generally 80 percent or more of earnings, whereas the common payment portion for a temporary marketing sweepstakes is an insignificant share of the earnings made by the business [generally less than one percent]'

Wallach is quick to liken the online social sweeps gambling establishments to the internet coffee shops that sprang up in Florida, providing clients the possibility to play casino-style games for real rewards. Much of those brick-and-mortar establishments have actually since been shuttered over claims of illegal gaming.

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

Now, Wallach argues, social sweeps casinos must deal with similar examination.

'These distinctions are not approximate,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been pointed out by courts and state attorney generals as key elements in determining that a sweepstakes promotion was in fact a guise for prohibited gaming.'

One of the casino market's leading trade organizations, the American Gaming Association, is now pushing legislators to examine sweepstakes operators and, in some cases, enact brand-new legislation on the issue.

'Consumers are being denied of securities and states are forgoing substantial tax and revenue opportunities as this gambling changes that conducted through controlled channels,' checked out a well-circulated AGA memo.

And then there are the complainants who have actually sued social gambling establishments in more than a dozen states.

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

Michael Phelps has actually signed a deal with the VGW Group, which owns Global Poker
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In the most current lawsuit, which is largely similar to its predecessors, New York state locals Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is explained in the filing as an 'unlawful sports betting enterprise. '

Apple and Google have actually likewise been named as accuseds in suits for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's request for comment.

'We typically do not comment on matters before the courts,' a VGW spokesperson informed DailyMail.com by means of e-mail. 'However, we note that this claim has only simply been filed with the court and VGW has not been officially served.

'We have full self-confidence in our compliance with all laws and regulations where we run, and stay positive about the future,' the representative continued. 'We continue to offer our free-to-play video games throughout many of The United States and Canada, as we have for more than a years, creating not just terrific games, user experiences and entertainment, however also guaranteeing this is done securely, properly and at the greatest level of standards.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are reasonably common across the online social games industry (and the US more broadly), and our basic practice is that we plan to intensely protect any claim which may be brought against us.'

The issues in between standard online gambling and sweepstakes casinos might prove bothersome 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 paradoxical that expert athletes are hawking prohibited sports betting wagering 'sweeps' websites while at the exact same time the leagues want to forecast a strong position against unlawful sports betting - especially when trying to tamp down the periodic gaming scandal,' Glaser told DailyMail.com.

It was simply eight months ago that Toronto Raptors forward Jontay Porter received a life time ban from the NBA over accusations he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes casinos.

In addition to VGW, Apple and Google are being demanded hosting allegedly prohibited gambling websites

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

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

Neither an NBA spokesperson nor the gamers' representatives reacted to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to respond to DailyMail.com e-mails.

Asked if their star endorsers have an obligation to explain to consumers the distinctions and similarities between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that requires to be done.

'We have full self-confidence in our influencer and ambassadorial collaborations, and our organization practices more broadly,' the representative said. 'Some of our worths 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 in a different way.

'Celebrities who lend their names to dubious prohibited gaming sites are, at a minimum, putting their reputations at danger as well as courting civil and class actions by consumers who allege damage,' Glaser said. 'There is likewise some threat that state regulators and state lawyers basic rope celebrity endorsers into enforcement efforts for facilitating illegal gaming.'

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