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

No, they weren't personally in participation, however the world-famous stars were conspicuously included in a slide presentation on social and sweepstakes casinos - the controversial websites providing both totally free casino-style games and profitable rewards, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are simply 2 cogs in the multibillion-dollar industry that now discovers itself besieged by suits. In the eyes of lots of video gaming corporations, not to mention suit complainants and state regulators, sweepstakes gambling establishments act as conventional gambling establishments, just without the oversight, customer protections and tax laws. So not just can they avoid the steep 24-percent federal gambling levy, however sweepstakes operators aren't subject to regulative difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the company faces allegations of illegal gaming in a New york city lawsuit that claims VGW uses celeb endorsers to 'develop a veneer of authenticity' around its item. (See VGW's declaration listed below)

'I'm not sure" if you do not trust us, you can trust Paris Hilton" is a winning message for business running 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 consist of a range 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 offer any distinctions between conventional sports betting and sweepstakes play.

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

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

Drake has a deal with social sweeps gambling establishment, Stake, that he routinely promotes on social networks

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Instead, advertisements normally focus around the social element of the casinos, while omitting the potential for real gambling losses.

Others tempt customers with guarantees of rewards. One such operator, Stake, ran a social media advertisement flaunting Drake's cars, planes and mansions before rotating to footage of the rap artist playing online casino-style video games.

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

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

The disparity between gaming 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 spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA information, many of the gamers on social-sweepstakes gambling establishments are sports betting totally free.

'Most social sweeps clients never ever buy,' the SPGA representative informed DailyMail.com. 'The minority of clients who make purchases do so in quantities far smaller than the normal deposit or bet size at real-money online sports betting sites.'

Social casinos provide clients a possibility to play casino-style video games with friends. Players have the alternative to buy worthless currency often described as 'gold coins,' which can not be exchanged for genuine cash, however can be utilized to open numerous features within the video games.

But within the world of social casinos exists sweepstakes gaming, allowing consumers to acquire other currency referred to as 'sweeps coins' that can be exchanged for cash or other prizes.

And therein lies the capacity for monetary losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York. One player 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 cash and other things of worth.

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

Social sweeps gambling establishment Stake ran an ad displaying Drake's vehicles, 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 however seven states, which has actually helped to fuel the popularity of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, permit clients to submit mail-in requests for complimentary sweeps coins, offered the gamers follow painfully specific instructions. What's more, gamers are often rewarded with sweeps coins simply for signing up, therefore providing them a reason to try their hands at any number of gambling establishment games for an opportunity to win - or lose - real cash.

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

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

'Social sweepstakes video games are just a form of online home entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is needed to play at social casinos with sweepstakes prizes. Consumers never ever have to pay for an opportunity to win prizes. That absence of a purchase requirement - or" consideration" - is an important difference in between social sweeps and standard online sports betting websites like casinos.'

Consider the manner in which McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and french fries that offer them the possibility to win lucrative prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'factor to consider', the video game itself doesn't satisfy the meaning of sports betting in the US.

'Sweepstakes are an enduring technique for promoting all kinds of daily companies in the United States, whatever from hamburgers to publication memberships to coffee and home improvement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are regularly utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For beginners, video gaming lawyer Daniel Wallach explains, McDonald's Monopoly game does not run indefinitely. Rather, it has a distinct start and end, thereby recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized 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 games of chance,' Wallach informed DailyMail.com. 'They're just cash free gifts.

'The sweepstakes [casinos] possess none of the attributes typically related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos use" casino-like" payouts, typically 80 percent or more of earnings, whereas the normal payout portion for a momentary promotional sweepstakes is a trivial share of the earnings earned by the company [generally less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the internet coffee shops that emerged in Florida, using clients the possibility to play casino-style games for real prizes. A lot of those brick-and-mortar facilities have actually given that been shuttered over allegations of illegal gaming.

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

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

'These distinctions are not approximate,' Wallach stated of social sweeps casinos. 'They have actually repeatedly been cited by courts and state attorney generals as essential factors in figuring out that a sweepstakes promotion was in fact a guise for unlawful gambling.'

Among the gambling establishment industry's leading trade organizations, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, sometimes, enact new legislation on the concern.

'Consumers are being denied of defenses and states are giving up considerable tax and revenue chances as this gambling replaces that carried out through controlled channels,' checked out a well-circulated AGA memo.

And after that there are the complainants who have sued social casinos in more than a dozen states.

Sweepstakes casino operators paid a combined $14.2 million in four different cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action suit, stating the settlement was made to prevent legal expenses and continued litigation.

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

In the most recent lawsuit, which is mostly similar to its predecessors, New york city state citizens Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'prohibited gambling business. '

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

'We generally don't discuss matters before the courts,' a VGW spokesperson informed DailyMail.com through e-mail. 'However, we keep in mind that this claim has actually only simply been submitted 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 representative continued. 'We continue to provide our free-to-play games throughout the majority of The United States and Canada, as we have for more than a years, creating not only excellent video games, user experiences and entertainment, but also guaranteeing this is done securely, responsibly and at the highest level of standards.

'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are relatively typical across the online social games market (and the US more broadly), and our basic practice is that we mean to strongly protect any claim which might be brought against us.'

The problems in between conventional online gaming and sweepstakes gambling establishments might prove problematic for some star endorsers.

Towns, a star center with the Knicks, and the 76ers' George both endorse VGW's Global Poker brand name while the NBA is partnered with traditional gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking prohibited sports betting wagering 'sweeps' sites while at the same time the leagues wish to forecast a strong stance versus unlawful gambling - specifically when attempting to tamp down the periodic sports betting scandal,' Glaser informed DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter received 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.

In addition to VGW, Apple and Google are being demanded hosting allegedly illegal sports betting websites

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

'I 'd anticipate that a league crackdown on professional athletes endorsing sweepstakes websites refers when, not if,' Glaser added.

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

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

'We have complete confidence in our influencer and ambassadorial collaborations, and our organization practices more broadly,' the representative said. 'A few of our values are" our players precede" and" we do what's right", and we put our worths at the core of whatever we do.'

Glaser, an outspoken challenger of sweepstakes websites, sees things differently.

'Celebrities who provide their names to shady illegal sports betting sites are, at a minimum, putting their track records at risk as well as courting civil and class actions by customers who allege harm,' Glaser said. 'There is also some threat that state regulators and state attorneys basic rope celebrity endorsers into enforcement efforts for helping with prohibited sports betting.'

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