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

No, they weren't personally in participation, however the world-famous celebs were conspicuously included in a slide discussion on social and sweepstakes gambling establishments - the questionable websites using both free casino-style games and financially rewarding prizes, such as money, gift 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 sites are just 2 cogs in the multibillion-dollar industry that now finds itself besieged by claims. In the eyes of many gaming corporations, not to point out lawsuit plaintiffs and state regulators, sweepstakes gambling establishments serve as standard gambling establishments, just without the oversight, consumer protections and tax laws. So not only can they avoid the steep 24-percent federal sports betting levy, but sweepstakes operators aren't based on regulatory hurdles 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 company faces accusations of unlawful gambling in a New york city claim that claims VGW utilizes celebrity endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's statement below)

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

Sweepstakes endorsers consist of a series of celebs from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with 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 many sweepstakes casinos discovered online

Ryan Seacrest prompts fans to play at Chumba Casino, where many - but not all - video games are free

Drake has an offer with social sweeps casino, Stake, that he regularly promotes on social networks
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Instead, ads normally focus around the social element of the casinos, while omitting the capacity for actual sports betting losses.

Others lure clients with pledges of rewards. One such operator, Stake, ran a social networks ad revealing off Drake's automobiles, airplanes and estates before rotating to footage of the rapper playing online casino-style video games.

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

Another caption discussed: 'Because I never quit.'

The disparity between gaming websites and social or sweepstakes gambling establishments is a bit complex, but operators of the latter insist they're not involved with the previous.

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA information, the majority of the gamers on social-sweepstakes casinos are sports betting totally free.
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'Most social sweeps customers never ever buy,' the SPGA spokesperson told DailyMail.com. 'The minority of clients who make purchases do so in amounts far smaller than the typical deposit or bet size at real-money online gambling sites.'
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Social casinos offer clients a chance to play casino-style games with friends. Players have the option to purchase valueless currency frequently referred to as 'gold coins,' which can not be exchanged genuine cash, but can be utilized to unlock numerous functions within the games.

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

And therein lies the capacity for financial losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York City. 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 cash and other things of value.

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

Social sweeps casino Stake ran an advertisement flaunting Drake's automobiles, planes and mansions

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

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

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

Many sites, like the crypto-compatible Stake, allow clients to send mail-in ask for free sweeps coins, supplied the players follow painfully specific guidelines. What's more, gamers are typically rewarded with sweeps coins just for signing up, consequently providing a reason to attempt their hands at any number of casino games for a possibility to win - or lose - real cash.

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

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

'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 dip into social casinos with sweepstakes rewards. Consumers never have to pay for a chance to win rewards. That absence of a purchase requirement - or" factor to consider" - is an essential distinction between social sweeps and standard online gaming sites like gambling establishments.'

Think about the manner in which McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're buying hamburgers and french fries that use them the opportunity to win financially rewarding rewards, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the game itself does not fulfill the of gambling in the US.

'Sweepstakes are an enduring technique for promoting all type of everyday businesses in the United States, everything from burgers to publication subscriptions to coffee and home improvement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are routinely used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For starters, gaming lawyer Daniel Wallach explains, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a distinct start and end, therefore suggesting the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being utilized to promote genuine products like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [casinos] have none of the qualities frequently connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos provide" casino-like" payouts, normally 80 percent or more of revenues, whereas the normal payout percentage for a short-lived advertising sweepstakes is an insignificant share of the earnings made by the business [usually less than one percent]'

Wallach is fast to compare the online social sweeps gambling establishments to the web cafes that emerged in Florida, providing clients the possibility to play casino-style games for genuine rewards. Much of those brick-and-mortar establishments have given that been shuttered over accusations of illegal gaming.

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

Now, Wallach argues, social sweeps casinos ought to deal with similar scrutiny.

'These distinctions are not approximate,' Wallach stated of social sweeps casinos. 'They have consistently been pointed out by courts and state attorney general of the United States as key elements in determining that a sweepstakes promotion remained in reality a guise for prohibited gaming.'

Among the gambling establishment market's leading trade organizations, the American Gaming Association, is now pressing lawmakers to investigate sweepstakes operators and, in some cases, enact brand-new legislation on the concern.

'Consumers are being deprived of defenses and states are passing up substantial tax and income chances as this gaming changes that carried out through controlled channels,' checked out a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action claim, saying the settlement was made to prevent legal expenses and continued lawsuits.

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

In the most recent claim, which is mostly similar to its predecessors, New york city state homeowners 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 'prohibited 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 reacted to DailyMail.com's ask for comment.

'We typically don't talk about matters before the courts,' a VGW spokesperson informed DailyMail.com through e-mail. 'However, we keep in mind that this claim has only simply been submitted with the court and VGW has not been officially served.

'We have full 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 video games throughout the majority of North America, as we have for more than a years, creating not only terrific video games, user experiences and entertainment, however also guaranteeing this is done safely, responsibly and at the greatest level of requirements.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are fairly typical across the online social video games industry (and the US more broadly), and our standard practice is that we mean to vigorously safeguard any claim which may be brought against us.'
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The concerns in between standard online sports betting and sweepstakes casinos could prove 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 standard gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking unlawful sports betting 'sweeps' websites while at the same time the leagues wish to forecast a strong position versus illegal gaming - especially when trying to tamp down the occasional gaming scandal,' Glaser told DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter received a life time 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 gambling establishments.

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

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

'I 'd expect that a league crackdown on athletes backing sweepstakes sites is a matter of when, not if,' Glaser included.
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Neither an NBA spokesperson nor the players' representatives reacted to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also overlooked to react to DailyMail.com e-mails.

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

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the representative stated. 'A few of our worths are" our gamers come initially" and" we do what's right", and we put our worths at the core of whatever we do.'

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

'Celebrities who provide their names to shady illegal gambling sites are, at a minimum, putting their reputations at danger in addition to courting civil and class actions by customers who declare harm,' Glaser said. 'There is also some risk that state regulators and state chief law officers rope celeb endorsers into enforcement efforts for helping with prohibited gaming.'

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