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

No, they weren't personally in presence, but the world-famous celebs were notably consisted of in a slide presentation on social and sweepstakes casinos - the questionable sites using both free casino-style games and financially rewarding rewards, such as money, gift cards or cryptocurrency. In one advertisement, 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 sites are simply two cogs in the multibillion-dollar market that now finds itself besieged by lawsuits. In the eyes of lots of gaming corporations, not to discuss suit plaintiffs and state regulators, sweepstakes casinos serve as conventional casinos, just without the oversight, customer defenses and tax laws. So not just can they prevent the steep 24-percent federal sports betting levy, but sweepstakes operators aren't based on regulatory 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 faces allegations of unlawful gaming in a New York suit that declares VGW utilizes celeb endorsers to 'create a veneer of authenticity' around its item. (See VGW's declaration listed below)

'I'm not exactly sure" if you do not 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 video gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a series of celebrities from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom offer any differences in between conventional gambling and sweepstakes play.

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

Ryan Seacrest urges fans to dip into Chumba Casino, where lots of - however not all - video games are totally free

Drake has an offer with social sweeps casino, Stake, that he routinely promotes on social media

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Instead, advertisements usually center around the social element of the casinos, while leaving out the capacity for real gambling losses.

Others tempt clients with promises of rewards. One such operator, Stake, ran a social media ad displaying Drake's automobiles, aircrafts and estates before rotating to video of the rap artist playing online casino-style video games.
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'Daddy, why do we have so much cash?' check out the first caption on the screen.

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

The disparity in between gambling websites and social or sweepstakes casinos 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), described its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA data, the majority of the players on social-sweepstakes gambling establishments are playing for free.

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

Social casinos offer customers a chance to play casino-style video games with good friends. Players have the alternative to buy worthless currency frequently described as 'gold coins,' which can not be exchanged genuine cash, but can be used to open numerous functions within the games.

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

And therein lies the capacity for monetary losses, like the ones declared by plaintiffs 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 past year after continuing to buy more coins in pursuit of cash and other things of worth.

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

Social sweeps gambling establishment Stake ran an advertisement revealing off Drake's cars, airplanes and mansions

Karl-Anthony Towns of the New York City Knicks is another NBA star plugging VGW's Global Poker
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Traditional online casinos are banned in all but seven states, which has actually assisted to sustain the appeal of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes websites, which don't need usually need identification. However, websites like Chumba will ask for IDs from players trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, permit clients to submit mail-in ask for free sweeps coins, provided the players follow painfully specific directions. What's more, gamers are typically rewarded with sweeps coins simply for signing up, therefore providing a reason to attempt their hands at any variety of gambling establishment games for a chance to win - or lose - real cash.

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

According to the stakeholders, their product is the totally free casino-style video gaming, and the real-stakes competitors is merely a means of promoting their bread and butter.
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'Social sweepstakes video games are just a form of online entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is needed to dip into social casinos with sweepstakes prizes. Consumers never ever have to spend for an opportunity to win prizes. That lack of a purchase requirement - or" factor to consider" - is an essential difference between social sweeps and conventional online gaming websites like gambling establishments.'

Think of the manner in which McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're buying hamburgers and french fries that provide them the chance to win lucrative prizes, such as a $1 million jackpot.

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 approach for promoting all kinds of daily businesses in the United States, everything from burgers to publication memberships to coffee and home improvement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are frequently used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many sports betting industry experts, that argument doesn't cut it.

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

'They don't last permanently and they're usually not connected to casino-style video games of possibility,' Wallach told DailyMail.com. 'They're simply cash giveaways.

'The sweepstakes [casinos] have none of the characteristics typically connected with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes casinos offer" casino-like" payments, usually 80 percent or more of profits, whereas the normal payment percentage for a momentary promotional sweepstakes is a trivial share of the profits earned by the business [usually less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the web coffee shops that emerged in Florida, offering clients the possibility to play casino-style games for real prizes. A lot of those brick-and-mortar establishments have considering that been shuttered over accusations of prohibited sports betting.

DJ Khaled is amongst numerous celebrity spokespeople for VGW's Global Poker brand

Now, Wallach argues, social sweeps casinos ought to face similar examination.

'These distinctions are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been cited by courts and state chief law officer as crucial factors in determining that a sweepstakes promo remained in truth a guise for illegal gaming.'

Among the casino industry's leading trade companies, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, in some cases, enact brand-new legislation on the concern.

'Consumers are being denied of defenses and states are passing up significant tax and earnings opportunities as this sports betting changes that carried out through controlled channels,' checked out a well-circulated AGA memo.

And after that there are the complainants who have actually sued social casinos in more than a dozen states.

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

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

In the most recent suit, which is mostly comparable to its predecessors, New york city state residents 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 'unlawful sports betting enterprise. '

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

'We generally don't discuss matters before the courts,' a VGW representative told DailyMail.com via e-mail. 'However, we note that this claim has only simply been submitted with the court and VGW has actually not been formally served.

'We have complete self-confidence in our compliance with all laws and guidelines where we run, and stay confident about the future,' the representative continued. 'We continue to provide our free-to-play video games across most of North America, as we have for more than a decade, producing not only terrific games, user experiences and home entertainment, but also ensuring this is done securely, properly and at the highest level of requirements.

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

The problems between standard online sports betting and sweepstakes gambling establishments might prove bothersome for some celeb 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 traditional gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking prohibited sports betting wagering 'sweeps' sites while at the very same time the leagues want to predict a strong stance versus unlawful gambling - particularly when trying to tamp down the periodic gaming scandal,' Glaser told DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter received a lifetime ban from the NBA over claims he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes gambling establishments.

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

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

'I 'd expect that a league crackdown on professional athletes backing sweepstakes sites refers when, not if,' Glaser included.

Neither an NBA spokesman nor the players' agents reacted to DailyMail.com's requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise ignored to respond to .com emails.

Asked if their star endorsers have a responsibility to explain to consumers the differences and similarities in between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that requires to be done.

'We have full self-confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the representative stated. 'Some of our worths are" our players precede" 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 differently.

'Celebrities who provide their names to shady unlawful gaming sites are, at a minimum, putting their track records at danger along with courting civil and class actions by customers who allege harm,' Glaser said. 'There is also some risk that state regulators and state attorneys basic rope star endorsers into enforcement efforts for facilitating illegal gambling.'

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