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

No, they weren't personally in participation, but the world-famous celebs were conspicuously consisted of in a slide presentation on social and sweepstakes casinos - the controversial sites providing both totally free casino-style video games and rewarding rewards, such as money, present cards or cryptocurrency. In one ad, 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 sites are simply two cogs in the multibillion-dollar industry that now discovers itself besieged by claims. In the eyes of numerous video gaming corporations, not to discuss suit complainants and state regulators, sweepstakes casinos function as standard gambling establishments, only without the oversight, consumer protections and tax laws. So not just can they prevent the high 24-percent federal sports betting levy, however sweepstakes operators aren't subject to regulative hurdles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the company faces allegations of prohibited gaming in a New york city claim that claims VGW utilizes celeb endorsers to 'develop a veneer of authenticity' around its product. (See VGW's statement listed below)

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

Sweepstakes endorsers consist of a variety of stars from gambling 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 many sweepstakes casinos discovered online

Ryan Seacrest prompts fans to play at Chumba Casino, where lots of - but not all - games are complimentary

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

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Instead, advertisements usually focus around the social aspect of the casinos, while omitting the capacity for real sports betting losses.

Others tempt consumers with guarantees of prizes. One such operator, Stake, ran a social networks ad displaying Drake's vehicles, airplanes and mansions before pivoting to video of the rapper playing online casino-style video games.

'Daddy, why do we have a lot cash?' check out the first caption on the screen.

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

The disparity in between sports betting websites and social or sweepstakes gambling establishments is a bit complex, 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), discussed its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA information, most of the players on social-sweepstakes casinos are sports betting totally free.

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

Social gambling establishments offer consumers a possibility to play casino-style games with friends. Players have the option to buy valueless currency frequently described as 'gold coins,' which can not be exchanged genuine money, however can be used to unlock different features within the video games.

But within the world of social gambling establishments exists sweepstakes gaming, allowing customers 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 complainants in Florida, Georgia, New Jersey and New York City. One gamer informed 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 an International Poker occasion

Social sweeps gambling establishment Stake ran an ad flaunting Drake's cars, planes and estates

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

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

Anyone over the age of 18 can access the sweepstakes sites, which don't need normally need recognition. However, websites like Chumba will request IDs from gamers attempting to withdraw any funds.

Many sites, like the crypto-compatible Stake, allow consumers to send mail-in ask for free sweeps coins, offered the players follow painfully specific instructions. What's more, gamers are typically rewarded with sweeps coins merely for signing up, consequently providing a factor to attempt their hands at any variety of gambling establishment video games for a chance to win - or lose - genuine money.

So why are sweepstakes sites enabled to run 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 competition is just a method of promoting their bread and butter.

'Social sweepstakes games are just a type of online home entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is required to play at social gambling establishments with sweepstakes rewards. Consumers never ever need to pay for a chance to win rewards. That absence of a purchase requirement - or" factor to consider" - is a vital difference between social sweeps and conventional online sports betting websites like casinos.'

Consider the way that 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 fries that offer them the chance to win profitable rewards, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the game itself does not satisfy the definition of gaming in the US.

'Sweepstakes are a long-standing technique for promoting all sort of daily services in the United States, whatever from hamburgers to magazine subscriptions to coffee and home enhancement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are regularly utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For starters, video gaming lawyer Daniel Wallach mentions, McDonald's Monopoly video game doesn't run forever. Rather, it has a distinct beginning and end, thus 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 typically not tied to casino-style games of possibility,' Wallach informed DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [gambling establishments] possess none of the qualities typically related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments use" casino-like" payouts, generally 80 percent or more of earnings, whereas the normal payment percentage for a short-lived advertising sweepstakes is a trivial share of the revenue made by the company [typically less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the internet coffee shops that emerged in Florida, offering clients the chance to play casino-style games for genuine prizes. Many of those brick-and-mortar establishments have actually since been shuttered over claims of illegal sports betting.

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

Now, Wallach argues, social sweeps gambling establishments should deal with comparable scrutiny.

'These distinctions are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have consistently been mentioned by courts and state chief law officer as crucial consider identifying that a sweepstakes promo remained in truth a guise for illegal gambling.'

One of the casino market's leading trade companies, the American Gaming Association, is now pressing legislators to investigate sweepstakes operators and, sometimes, enact brand-new legislation on the problem.

'Consumers are being deprived of defenses and states are passing up substantial tax and profits chances as this gaming changes that performed through regulated channels,' read a well-circulated AGA memo.

And then there are the complainants who have actually sued social gambling establishments in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without admitting any misbehavior, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action claim, stating the settlement was made to prevent legal expenses and continued litigation.

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

In the most current claim, which is mainly 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 described in the filing as an 'illegal gambling enterprise. '

Apple and Google have also been called as defendants in suits for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for comment.

'We usually do not comment on matters before the courts,' a VGW spokesperson 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 guidelines where we run, and remain positive about the future,' the representative continued. 'We continue to offer our free-to-play games across the majority of The United States and Canada, as we have for more than a decade, producing not only great games, user experiences and entertainment, however likewise ensuring this is done securely, properly and at the greatest level of requirements.

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

The problems between traditional online sports betting and sweepstakes casinos could show problematic for some celebrity 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 ironic that professional athletes are hawking illegal sports betting wagering 'sweeps' websites while at the same time the leagues want to predict a strong position against illegal gambling - specifically when attempting to tamp down the periodic gaming scandal,' Glaser informed DailyMail.com.

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

Along with VGW, Apple and Google are being taken legal action against for hosting supposedly unlawful gambling sites

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

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

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

Asked if their celeb endorsers have a duty to discuss to clients the differences and resemblances in between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that requires to be done.

'We have full self-confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the representative said. 'Some of our values are" our gamers precede" and" we do what's right", and we put our values at the core of whatever we do.'

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

'Celebrities who lend their names to dubious unlawful gambling websites are, at a minimum, putting their track records at risk along with courting civil and class actions by consumers who allege damage,' Glaser said. 'There is likewise some risk that state regulators and state attorneys basic rope celebrity endorsers into enforcement efforts for assisting in illegal sports betting.'

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