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 presence, but the world-famous celebs were notably consisted of in a slide discussion on social and sweepstakes gambling establishments - the questionable websites using both totally free casino-style games and rewarding prizes, such as cash, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are simply two cogs in the multibillion-dollar industry that now discovers itself besieged by claims. In the eyes of many gaming corporations, not to point out lawsuit complainants and state regulators, sweepstakes casinos function as conventional gambling establishments, only without the oversight, customer defenses and tax laws. So not just can they prevent the high 24-percent federal gambling levy, but sweepstakes operators aren't subject to regulatory difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits last year alone. Now the company faces accusations of prohibited sports betting in a New york city claim that declares VGW utilizes celebrity endorsers to 'create a veneer of authenticity' around its item. (See VGW's declaration below)

'I'm not exactly sure" if you do not trust us, you can rely on Paris Hilton" is a winning message for companies operating multibillion-dollar prohibited operations out of places like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of video gaming corporation Light & Wonder, told DailyMail.com.

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

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

Ryan Seacrest prompts fans to dip into Chumba Casino, where numerous - but not all - video games are totally free

Drake has an offer with social sweeps casino, Stake, that he routinely 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 actual sports betting losses.

Others lure clients with promises of rewards. One such operator, Stake, ran a social networks ad flaunting Drake's cars and trucks, aircrafts and mansions before pivoting to video footage of the rapper playing online casino-style video games.

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

Another caption discussed: 'Because I never provided up.'

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

A representative 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, the majority of the players on social-sweepstakes casinos are sports betting totally free.

'Most social sweeps consumers never buy,' the SPGA representative told DailyMail.com. 'The minority of customers who make purchases do so in quantities far smaller sized than the common deposit or bet size at real-money online sports betting websites.'

Social casinos use clients a chance to play casino-style games with buddies. Players have the alternative to purchase valueless currency frequently referred to as 'gold coins,' which can not be exchanged genuine money, however can be utilized to unlock numerous functions within the video games.

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

And therein lies the potential for monetary losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York. One player informed the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the past year after continuing to buy 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 casino Stake ran an ad revealing off Drake's vehicles, aircrafts 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 fuel the appeal of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, permit clients to send mail-in ask for free sweeps coins, provided the gamers follow painfully specific guidelines. What's more, players are often rewarded with sweeps coins just for registering, thereby offering them a reason to try their hands at any number of gambling establishment video games for a chance to win - or lose - real cash.

So why are sweepstakes sites allowed to operate in 48 states, while online gambling establishments are banned in all but 7?

According to the stakeholders, their item is the free casino-style video gaming, and the real-stakes competition is merely a way of promoting their bread and butter.

'Social sweepstakes video games are just a kind of online entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is required to play at social casinos with sweepstakes prizes. Consumers never need to spend for an opportunity to win prizes. That lack of a purchase requirement - or" factor to consider" - is an important distinction in between social sweeps and conventional online sports betting sites like casinos.'

Consider the method that McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to bet, but rather they're buying 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 'consideration', the game itself does not satisfy the definition of gambling in the US.

'Sweepstakes are a long-standing approach for promoting all kinds of everyday businesses in the United States, everything from burgers to magazine subscriptions to coffee and home improvement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are routinely 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.

For beginners, gaming attorney Daniel Wallach mentions, McDonald's Monopoly video game doesn't run forever. Rather, it has a distinct start and end, therefore recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote real products like french fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're normally not connected to casino-style video games of opportunity,' Wallach informed DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [casinos] have none of the characteristics frequently associated with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos provide" casino-like" payments, normally 80 percent or more of revenues, whereas the common payout percentage for a temporary advertising sweepstakes is an insignificant share of the earnings earned by the business [normally less than one percent]'

Wallach is fast to liken the online social sweeps gambling establishments to the that emerged in Florida, providing clients the chance to play casino-style video games for real rewards. Much of those brick-and-mortar establishments have actually because been shuttered over allegations of prohibited gambling.

DJ Khaled is amongst several celebrity spokespeople for VGW's Global Poker brand name
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Now, Wallach argues, social sweeps gambling establishments need to face similar analysis.

'These differences are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have actually consistently been pointed out by courts and state attorney generals as crucial consider figuring out that a sweepstakes promotion was in truth a guise for prohibited gambling.'

Among the gambling establishment market's leading trade companies, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, in some cases, enact new legislation on the issue.

'Consumers are being denied of protections and states are forgoing significant tax and revenue chances as this gambling changes that carried out through managed channels,' read a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action suit, 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 most current lawsuit, which is mainly similar to its predecessors, New York state homeowners Lamar Prater and Rebecca Pratt both claim 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 likewise been named as defendants in claims for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com's request for remark.

'We typically do not comment on 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 simply been submitted with the court and VGW has actually not been officially served.

'We have complete self-confidence in our compliance with all laws and guidelines where we operate, and remain positive about the future,' the spokesperson continued. 'We continue to use our free-to-play video games throughout most of North America, as we have for more than a years, creating not just fantastic games, user experiences and entertainment, but likewise ensuring this is done securely, properly and at the highest level of requirements.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are reasonably typical throughout the online social video games industry (and the US more broadly), and our standard practice is that we plan to vigorously defend any claim which may be brought versus us.'
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The problems in between standard online gambling and sweepstakes casinos could show troublesome 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 conventional video gaming titans like FanDuel and DraftKings.

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

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

In addition to VGW, Apple and Google are being sued for hosting allegedly unlawful gambling websites

Regardless, Glaser sees sweepstakes casinos as a major problem for leagues such as the NBA.

'I 'd expect that a league crackdown on athletes backing sweepstakes sites refers when, not if,' Glaser added.

Neither an NBA spokesperson 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 ignored to react to DailyMail.com e-mails.

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

'We have full confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the spokesperson stated. 'A few of our worths are" our gamers come first" 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 in a different way.
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'Celebrities who lend their names to dubious unlawful gambling websites 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 danger that state regulators and state lawyers general rope star endorsers into enforcement efforts for facilitating illegal gaming.'

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