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 presence, but the world-famous celebrities were notably consisted of in a slide discussion on social and sweepstakes gambling establishments - the controversial sites providing both free casino-style video games and lucrative rewards, such as cash, present 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 websites are simply two cogs in the multibillion-dollar industry that now discovers itself besieged by claims. In the eyes of lots of gaming corporations, not to mention suit complainants and state regulators, sweepstakes gambling establishments function as standard gambling establishments, just without the oversight, customer defenses and tax laws. So not only can they avoid the steep 24-percent federal gaming levy, however sweepstakes operators aren't based on regulative difficulties 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 company faces accusations of prohibited gambling in a New york city claim that claims VGW utilizes celeb endorsers to 'develop a veneer of legitimacy' around its item. (See VGW's statement below)

'I'm unsure" if you don't trust us, you can trust Paris Hilton" is a winning message for business running multibillion-dollar illegal operations out of locations 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 celebrities from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom provide any differences between conventional gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of lots of sweepstakes casinos discovered online

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

Drake has a handle social sweeps casino, Stake, that he routinely promotes on social networks

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Instead, advertisements normally center around the social element of the casinos, while leaving out the potential for real sports betting losses.

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

'Daddy, why do we have so much cash?' read the first caption on the screen.

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

The discrepancy in between gaming sites and social or sweepstakes gambling establishments is a bit complex, however operators of the latter insist they're not involved with the previous.

A spokesperson 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, the majority of the players on social-sweepstakes gambling establishments are playing for complimentary.

'Most social sweeps customers never buy,' the SPGA representative informed DailyMail.com. 'The minority of customers who make purchases do so in amounts far smaller than the normal deposit or wager size at real-money online gambling websites.'

Social gambling establishments provide clients a possibility to play casino-style games with friends. Players have the option to buy worthless currency typically described as 'gold coins,' which can not be exchanged for genuine cash, however can be used to unlock different features within the video games.

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

And therein lies the potential for monetary losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York City. One player informed the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the past year after continuing to purchase more coins in pursuit of money and other things of value.

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

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

Karl-Anthony Towns of the New York City Knicks is another NBA star plugging VGW's Global Poker

Traditional online gambling establishments are banned in all but 7 states, which has actually assisted to sustain the popularity of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, permit consumers to submit mail-in ask for complimentary sweeps coins, offered the gamers follow painfully particular guidelines. What's more, gamers are frequently rewarded with sweeps coins merely for signing up, therefore offering them a reason to attempt their hands at any variety of gambling establishment games for an opportunity to win - or lose - genuine money.

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

According to the stakeholders, their item is the free casino-style gaming, and the real-stakes competition is merely a way of promoting their bread and butter.

'Social sweepstakes games are just 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 rewards. Consumers never ever need to spend for a chance to win prizes. That absence of a purchase requirement - or" factor to consider" - is an essential difference in between social sweeps and standard online gambling websites like casinos.'

Think of the way that McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and fries that use them the opportunity to win profitable prizes, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the game itself doesn't fulfill the meaning of gaming in the US.

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

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

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

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

'The sweepstakes [gambling establishments] have none of the characteristics commonly associated with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes casinos provide" casino-like" payouts, normally 80 percent or more of earnings, whereas the common payout percentage for a momentary marketing sweepstakes is an unimportant share of the profits earned by the business [typically less than one percent]'

Wallach is quick to liken the online social sweeps gambling establishments to the web coffee shops that sprang up in Florida, offering clients the chance to play casino-style video games for real prizes. A lot of those brick-and-mortar establishments have actually since been shuttered over accusations of prohibited gaming.

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

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 cited by courts and state attorney general of the United States as essential factors in identifying that a sweepstakes promo remained in fact a guise for unlawful gaming.'

Among the casino industry's leading trade organizations, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, sometimes, enact brand-new legislation on the issue.

'Consumers are being deprived of defenses and states are giving up considerable tax and profits opportunities as this gambling changes that conducted through controlled channels,' read a well-circulated AGA memo.

And after that there are the complainants who have 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 confessing any misdeed, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action suit, saying the settlement was made to avoid legal costs and continued lawsuits.

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

In the current lawsuit, which is largely similar to its predecessors, New York 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 also been called as accuseds in suits for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com's ask for comment.

'We generally do not discuss matters before the courts,' a VGW spokesperson informed DailyMail.com through email. 'However, we keep in mind that this claim has actually only just been filed with the court and VGW has actually not been formally served.

'We have full confidence in our compliance with all laws and regulations where we operate, and stay confident about the future,' the spokesperson continued. 'We continue to offer our free-to-play games across most of The United States and Canada, as we have for more than a years, creating not just great video games, user experiences and entertainment, but also guaranteeing this is done safely, responsibly and at the greatest level of standards.

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

The problems between conventional online gaming and sweepstakes gambling establishments could show problematic 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 standard video gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking unlawful sports betting wagering 'sweeps' sites while at the same time the leagues desire to forecast a strong stance against prohibited sports betting - especially when trying 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 lifetime ban from the NBA over claims he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes gambling establishments.

Together with VGW, Apple and Google are being sued for hosting presumably unlawful sports betting websites

Regardless, Glaser sees sweepstakes casinos as a significant concern for leagues such as the NBA.

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

Neither an NBA spokesperson nor the gamers' representatives reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also disregarded to react to DailyMail.com emails.

Asked if their celebrity endorsers have an obligation to explain to consumers the differences and resemblances between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that needs to be done.

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our organization practices more broadly,' the representative stated. 'A few of our worths are" our gamers come first" and" we do what's right", and we put our worths at the core of whatever we do.'

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

'Celebrities who lend their names to shady prohibited gaming websites are, at a minimum, putting their reputations at danger as well as courting civil and class actions by consumers who declare damage,' Glaser stated. 'There is likewise some risk that state regulators and state lawyers general rope celeb endorsers into enforcement efforts for assisting in illegal gaming.'

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