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

No, they weren't personally in participation, but the world-famous celebrities were conspicuously included in a slide presentation on social and sweepstakes gambling establishments - the controversial websites using both totally free casino-style video games and rewarding rewards, such as cash, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for 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 discovers itself besieged by suits. In the eyes of many gaming corporations, not to mention lawsuit plaintiffs and state regulators, sweepstakes gambling establishments function as conventional casinos, only without the oversight, customer protections and tax laws. So not just can they prevent the steep 24-percent federal gambling levy, but sweepstakes operators aren't based on regulative difficulties like anti-money laundering and responsible-gaming defenses.

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

'I'm uncertain" if you don't trust us, you can trust Paris Hilton" is a winning message for companies 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, told DailyMail.com.

Sweepstakes endorsers consist of a series of stars 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 use any distinctions between standard 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 numerous - but not all - video games are complimentary

Drake has an offer with social sweeps gambling establishment, Stake, that he regularly touts on social networks

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Instead, advertisements normally center around the social element of the gambling establishments, while omitting the potential for real sports betting losses.

Others tempt customers with guarantees of rewards. One such operator, Stake, ran a social media ad revealing off Drake's cars and trucks, aircrafts and estates before rotating to footage of the rap artist playing online casino-style games.

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

Another caption described: 'Because I never offered up.'

The disparity in between sports betting websites and social or sweepstakes gambling establishments is a bit complicated, but operators of the latter insist they're not included with the former.

A representative for a market 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 information, the majority of the gamers on social-sweepstakes casinos are sports betting free.

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

Social casinos offer customers a possibility to play casino-style video games with good friends. Players have the choice to buy worthless currency frequently described as 'gold coins,' which can not be exchanged for real money, however can be utilized to open numerous features within the games.

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

And therein lies the capacity for financial losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York. One gamer told 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 worth.

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

Social sweeps casino Stake ran an advertisement revealing off Drake's automobiles, planes and estates

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

Traditional online casinos are prohibited in all however seven states, which has actually helped to sustain the appeal of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, enable customers to submit mail-in ask for complimentary sweeps coins, supplied the gamers follow painfully specific instructions. What's more, gamers are often rewarded with sweeps coins simply for registering, therefore providing a factor to attempt their hands at any number of casino video games for an opportunity to win - or lose - real money.

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

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

'Social sweepstakes games are just a type of online home entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is needed to dip into social casinos with sweepstakes prizes. Consumers never need to pay for an opportunity to win rewards. That absence of a purchase requirement - or" consideration" - is a vital difference in between social sweeps and conventional online gaming websites like casinos.'

Think of the manner in which McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and french fries that offer them the chance to win financially rewarding prizes, such as a $1 million prize.

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

'Sweepstakes are a long-standing method for promoting all sort of daily businesses in the United States, whatever from hamburgers to publication memberships to coffee and home improvement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are regularly used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many gambling industry insiders, that argument does not cut it.

For beginners, video gaming lawyer Daniel Wallach points out, McDonald's Monopoly video game doesn't run indefinitely. 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 utilized to promote real products like french fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're usually not connected to casino-style video games of chance,' Wallach informed DailyMail.com. 'They're just cash free gifts.

'The sweepstakes [gambling establishments] have none of the qualities typically associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes casinos offer" casino-like" payments, usually 80 percent or more of incomes, whereas the common payment percentage for a temporary advertising sweepstakes is a trivial share of the earnings made by the company [normally less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, using consumers the possibility to play casino-style games for real rewards. A number of those brick-and-mortar facilities have since been shuttered over allegations of illegal gambling.

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

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

'These differences are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have consistently been pointed out by courts and state attorney generals as essential factors in determining that a sweepstakes promo was in truth a guise for unlawful gaming.'

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

'Consumers are being denied of protections and states are passing up significant tax and profits opportunities as this gaming changes that conducted through regulated channels,' read a well-circulated AGA memo.

And then there are the complainants who have taken legal action against social gambling establishments in more than a lots states.

Sweepstakes casino operators paid a combined $14.2 million in four different 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, saying 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 current claim, which is mainly comparable to its predecessors, New york city state locals Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is described in the filing as an 'unlawful gambling enterprise. '

Apple and Google have actually likewise been called as offenders in claims for hosting the sweepstakes websites. But unlike VGW, neither tech business responded to DailyMail.com's demand for comment.

'We usually don't talk about matters before the courts,' a VGW spokesperson informed DailyMail.com by means of e-mail. 'However, we keep in mind 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 policies where we run, and stay positive about the future,' the spokesperson continued. 'We continue to use our free-to-play games throughout most of The United States and Canada, as we have for more than a years, creating not only excellent games, user experiences and home entertainment, but also ensuring this is done securely, responsibly and at the highest level of standards.

'More broadly, we 'd restate 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 intend to strongly protect any claim which might be brought against us.'

The issues between standard online gaming and sweepstakes casinos could show 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 standard gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking unlawful sports betting wagering 'sweeps' websites while at the same time the leagues want to forecast a strong stance versus illegal gaming - especially when trying to tamp down the occasional gambling scandal,' Glaser informed DailyMail.com.

It was just 8 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.

Along with VGW, Apple and Google are being sued for hosting presumably unlawful 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 professional athletes backing sweepstakes websites refers when, not if,' Glaser added.

Neither an NBA spokesman nor the gamers' agents reacted to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise neglected to react to DailyMail.com e-mails.

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

'We have full self-confidence in our influencer and ambassadorial collaborations, and our service practices more broadly,' the representative 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 opponent of sweepstakes websites, sees things differently.

'Celebrities who provide their names to dubious illegal sports betting websites are, at a minimum, putting their reputations at threat as well as courting civil and class actions by consumers who declare damage,' Glaser stated. 'There is also some danger that state regulators and state chief law officers rope celeb endorsers into enforcement efforts for facilitating prohibited gambling.'

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