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 presence, however the world-famous celebs were notably consisted of in a slide presentation on social and sweepstakes casinos - the controversial sites providing both free casino-style video games and financially rewarding rewards, such as cash, present 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.
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The sites are just 2 cogs in the multibillion-dollar industry that now discovers itself besieged by suits. In the eyes of numerous gaming corporations, not to point out claim complainants and state regulators, sweepstakes gambling establishments function as traditional gambling establishments, just without the oversight, consumer defenses and tax laws. So not just can they prevent the steep 24-percent federal sports betting levy, but sweepstakes operators aren't subject to regulative obstacles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings last year alone. Now the business deals with allegations of illegal sports betting in a New York suit that claims VGW utilizes celebrity endorsers to 'develop a veneer of legitimacy' around its item. (See VGW's statement listed below)

'I'm not exactly sure" 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 speaker, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers include a variety of celebrities 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 provide any differences in between standard gaming and sweepstakes play.

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

Ryan Seacrest advises fans to play at Chumba Casino, where numerous - however not all - games are complimentary

Drake has an offer with social sweeps gambling establishment, Stake, that he regularly promotes on social media

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Instead, advertisements generally focus around the social aspect of the gambling establishments, while omitting the capacity for real sports betting losses.

Others lure clients with guarantees of prizes. One such operator, Stake, ran a social networks ad displaying Drake's cars, planes and estates before pivoting to footage of the rap artist playing online casino-style video games.

'Daddy, why do we have so much money?' check out the very first caption on the screen.
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Another caption described: 'Because I never ever quit.'

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

A spokesperson for a market 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 playing for totally free.

'Most social sweeps customers never make a purchase,' the SPGA spokesperson informed DailyMail.com. 'The minority of customers who make purchases do so in amounts far smaller than the typical deposit or wager size at real-money online gaming sites.'

Social casinos use customers an opportunity to play casino-style video games with buddies. Players have the option to purchase worthless currency frequently described as 'gold coins,' which can not be exchanged for genuine cash, however can be utilized to unlock various functions within the games.

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

And therein lies the capacity for financial 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 money and other things of value.

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

Social sweeps gambling establishment Stake ran an advertisement displaying Drake's vehicles, airplanes and estates

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 helped to sustain the appeal of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes sites, which do not require typically need recognition. However, websites like Chumba will request for IDs from gamers attempting to withdraw any funds.

Many sites, like the crypto-compatible Stake, permit consumers to send mail-in demands for totally free sweeps coins, provided the gamers follow painfully specific directions. What's more, gamers are frequently rewarded with sweeps coins just for signing up, thereby providing them a factor to attempt their hands at any number of gambling establishment video games for a possibility to win - or lose - genuine cash.

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

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

'Social sweepstakes video games are merely a kind of online home entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is needed to dip into social casinos with sweepstakes rewards. Consumers never have to pay for a chance to win prizes. That lack of a purchase requirement - or" factor to consider" - is an essential distinction between social sweeps and conventional online gaming sites like gambling establishments.'

Think about the manner in which McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to gamble, however rather they're buying hamburgers and french fries that use them the opportunity to win financially rewarding prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the game itself doesn't satisfy the definition of gambling in the US.

'Sweepstakes are an enduring approach for promoting all sort of daily services in the United States, whatever from burgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are frequently utilized by a who's who of home 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.
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For starters, video gaming lawyer Daniel Wallach explains, McDonald's Monopoly game does not run indefinitely. Rather, it has a distinct start and end, thereby suggesting the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being used to promote genuine products like fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're normally not connected to casino-style video games of possibility,' Wallach told DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [gambling establishments] possess none of the characteristics commonly connected with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos provide" casino-like" payments, generally 80 percent or more of profits, whereas the common payout percentage for a temporary promotional sweepstakes is a minor share of the profits made by the business [usually 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, using clients the possibility to play casino-style games for real prizes. Many of those brick-and-mortar facilities have since been shuttered over claims of illegal sports betting.

DJ Khaled is among numerous star spokespeople for VGW's Global Poker brand

Now, Wallach argues, social sweeps gambling establishments should deal with similar analysis.

'These differences are not arbitrary,' Wallach stated of social sweeps casinos. 'They have actually repeatedly been pointed out by courts and state general of the United States as crucial consider determining that a sweepstakes promo was in truth a guise for illegal gambling.'

One of the gambling establishment market's leading trade organizations, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, in some cases, enact new legislation on the concern.

'Consumers are being denied of securities and states are passing up significant tax and earnings opportunities as this gambling replaces that carried out through managed 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 different cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, stating the settlement was made to avoid legal costs and continued litigation.

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

In the newest lawsuit, which is mostly comparable to its predecessors, New York state homeowners Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited gaming business. '

Apple and Google have likewise been called as accuseds in claims for hosting the sweepstakes sites. But unlike VGW, neither tech company responded to DailyMail.com's demand for remark.

'We normally don't talk about matters before the courts,' a VGW representative told DailyMail.com by means of email. 'However, we keep in mind that this claim has actually only just been submitted with the court and VGW has actually not been formally served.

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

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

The problems between conventional online sports betting and sweepstakes gambling establishments could prove problematic for some celeb endorsers.

Towns, a star center with the Knicks, and the 76ers' George both back 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 unlawful sports betting wagering 'sweeps' sites while at the same time the leagues want to predict a strong position versus illegal sports betting - especially when trying to tamp down the occasional gambling scandal,' Glaser told DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter got a lifetime restriction from the NBA over allegations he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes gambling establishments.

Together with VGW, Apple and Google are being taken legal action against for hosting presumably illegal gambling websites

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

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

Neither an NBA representative nor the gamers' agents reacted to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also ignored to react to DailyMail.com emails.

Asked if their celebrity endorsers have an obligation to describe to clients the differences and similarities in between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that requires to be done.

'We have full confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the spokesperson said. 'Some of our values are" our gamers come first" and" we do what's right", and we put our values at the core of whatever we do.'

Glaser, an outspoken opponent of sweepstakes sites, sees things in a different way.
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'Celebrities who lend their names to shady prohibited sports betting sites are, at a minimum, putting their credibilities at threat as well as courting civil and class actions by consumers who allege harm,' Glaser said. 'There is also some risk that state regulators and state lawyers general rope celeb endorsers into enforcement efforts for facilitating illegal sports betting.'

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