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, however the world-famous celebrities were notably included in a slide discussion on social and sweepstakes gambling establishments - the controversial websites providing both totally free casino-style games and rewarding rewards, such as money, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for 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 finds itself besieged by lawsuits. In the eyes of numerous video gaming corporations, not to mention claim complainants and state regulators, sweepstakes gambling establishments function as standard casinos, only without the oversight, consumer securities and tax laws. So not only can they avoid the steep 24-percent federal gambling levy, but sweepstakes operators aren't subject to regulative difficulties 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 accusations of prohibited sports betting in a New york city suit that claims VGW uses star endorsers to 'develop a veneer of legitimacy' around its product. (See VGW's statement below)

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

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

Paris Hilton is seen plugging Wow Vegas, one of many sweepstakes casinos found online

Ryan Seacrest urges fans to play at Chumba Casino, where many - however not all - video games are totally free

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

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Instead, advertisements normally center around the social aspect of the casinos, while leaving out the potential for real gaming losses.

Others tempt clients with pledges of prizes. One such operator, Stake, ran a social media advertisement displaying Drake's automobiles, airplanes and mansions before rotating to video footage of the rapper playing online casino-style games.

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

Another caption described: 'Because I never ever offered 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 involved with the former.

A spokesperson for a market trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, most of the players on social-sweepstakes gambling establishments are playing for free.

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

Social casinos use consumers a chance to play casino-style games with buddies. Players have the choice to buy worthless currency frequently described as 'gold coins,' which can not be exchanged for real money, however can be used to open different functions within the video games.

But within the world of social casinos exists sweepstakes gaming, permitting clients to obtain other currency called 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the potential for monetary losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York City. One gamer informed the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the previous 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 occasion

Social sweeps gambling establishment Stake ran an advertisement displaying Drake's cars and trucks, aircrafts and mansions

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

Traditional online gambling establishments are prohibited in all however seven states, which has assisted to sustain the popularity of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, allow customers to send mail-in ask for totally free sweeps coins, offered the gamers follow painfully specific directions. What's more, players are often rewarded with sweeps coins merely for signing up, thereby providing a reason to try their hands at any number of casino video games for a possibility to win - or lose - real money.

So why are sweepstakes websites enabled to operate in 48 states, while online casinos are prohibited in all but 7?

According to the stakeholders, their item is the complimentary casino-style video gaming, and the real-stakes competition is simply a way of promoting their support.

'Social sweepstakes games are just a kind of online home entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is needed to dip into social casinos with sweepstakes rewards. Consumers never ever have to pay for an opportunity to win prizes. That lack of a purchase requirement - or" consideration" - is a crucial distinction between social sweeps and conventional online gaming sites like casinos.'

Consider the method that McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and fries that use them the possibility to win profitable prizes, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the video game itself doesn't meet the meaning of gambling in the US.

'Sweepstakes are an enduring approach for promoting all sort of daily companies in the United States, everything from hamburgers to magazine memberships to coffee and home improvement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are routinely used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling market insiders, that argument does not cut it.

For beginners, gaming lawyer Daniel Wallach mentions, McDonald's Monopoly video game does not run forever. Rather, it has a distinct start and end, consequently suggesting the sweepstakes is not the fast-food giant's main product. 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 usually not tied to casino-style video games of opportunity,' Wallach informed DailyMail.com. 'They're just money free gifts.

'The sweepstakes [gambling establishments] possess none of the characteristics frequently associated with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments use" casino-like" payments, typically 80 percent or more of earnings, whereas the common payment percentage for a momentary advertising sweepstakes is an unimportant share of the income made by the company [usually less than one percent]'

Wallach is fast to liken the online social sweeps casinos to the web coffee shops that emerged in Florida, providing consumers the opportunity to play casino-style video games for genuine prizes. Many of those brick-and-mortar facilities have given that been shuttered over accusations of prohibited sports betting.

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

Now, Wallach argues, social sweeps gambling establishments ought to deal with similar examination.

'These differences are not approximate,' Wallach stated of social sweeps casinos. 'They have actually consistently been cited by courts and state attorney generals as essential elements in identifying that a sweepstakes promo was in fact a guise for prohibited sports betting.'

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 new legislation on the issue.

'Consumers are being deprived of protections and states are passing up substantial tax and earnings chances as this gambling replaces that conducted through controlled channels,' checked out a well-circulated AGA memo.

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

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

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

In the most recent suit, which is mostly similar to its predecessors, New York state citizens Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is described in the filing as an 'unlawful gaming business. '

Apple and Google have actually also been called as accuseds in claims for hosting the sweepstakes sites. But unlike VGW, neither tech business responded to DailyMail.com's ask for comment.

'We generally don't comment on matters before the courts,' a VGW spokesperson informed DailyMail.com by means of email. 'However, we note that this claim has actually only simply been submitted with the court and VGW has not been officially served.

'We have complete confidence in our compliance with all laws and guidelines where we operate, and remain confident about the future,' the spokesperson continued. 'We continue to provide our free-to-play video games throughout the majority of North America, as we have for more than a years, producing not just great games, user experiences and entertainment, however likewise ensuring 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 market (and the US more broadly), and our basic practice is that we intend to vigorously defend any claim which might be brought against us.'

The issues in between conventional online gaming and sweepstakes gambling establishments might show troublesome for some celebrity 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 conventional video gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking prohibited sports betting wagering 'sweeps' websites while at the exact same time the leagues wish to predict a strong stance against prohibited gaming - especially when attempting to tamp down the periodic gambling scandal,' Glaser told DailyMail.com.

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

Together with VGW, Apple and Google are being demanded hosting apparently illegal gambling sites

Regardless, Glaser sees sweepstakes gambling establishments as a significant concern 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 added.

Neither an NBA spokesperson nor the gamers' agents responded to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise overlooked to respond to DailyMail.com emails.

Asked if their celebrity endorsers have a responsibility to explain to customers the differences and resemblances in 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 company practices more broadly,' the spokesperson stated. 'Some of our values are" our players precede" and" we do what's right", and we put our values at the core of everything we do.'

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

'Celebrities who lend their names to dubious unlawful gambling websites are, at a minimum, putting their credibilities at danger along with courting civil and class actions by customers who declare harm,' Glaser stated. 'There is likewise some risk that state regulators and state attorneys basic rope celebrity endorsers into enforcement efforts for helping with unlawful sports betting.'

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