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

No, they weren't personally in attendance, but the world-famous celebs were notably consisted of in a slide discussion on social and sweepstakes gambling establishments - the controversial sites using both complimentary casino-style video games and profitable prizes, such as money, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet 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 industry that now discovers itself besieged by claims. In the eyes of lots of video gaming corporations, not to discuss suit complainants and state regulators, sweepstakes gambling establishments act as conventional gambling establishments, just without the oversight, customer protections and tax laws. So not only can they prevent the steep 24-percent federal gambling levy, but sweepstakes operators aren't subject to regulatory hurdles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the business faces accusations of prohibited gaming in a New York claim that claims VGW uses celeb endorsers to 'produce a veneer of legitimacy' around its item. (See VGW's declaration below)

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

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

Paris Hilton is seen plugging Wow Vegas, among lots of sweepstakes gambling establishments found online

Ryan Seacrest urges fans to play at Chumba Casino, where numerous - however not all - video games are totally free

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

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Instead, ads normally focus around the social aspect of the gambling establishments, while leaving out the potential for real gambling losses.

Others tempt clients with guarantees of rewards. One such operator, Stake, ran a social networks advertisement showing off Drake's cars and trucks, aircrafts and estates before rotating to video of the rapper playing online casino-style games.

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

Another caption discussed: 'Because I never ever quit.'

The inconsistency between gaming websites and social or sweepstakes gambling establishments is a bit intricate, however operators of the latter insist they're not included with the previous.

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), discussed 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 gambling establishments are sports betting free.

'Most social sweeps consumers never ever purchase,' the SPGA spokesperson told DailyMail.com. 'The minority of customers who make purchases do so in amounts far smaller than the normal deposit or wager size at real-money online gambling sites.'
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Social casinos offer clients a possibility to play casino-style video games with good friends. Players have the alternative to purchase worthless currency frequently described as 'gold coins,' which can not be exchanged genuine cash, however can be used to open different features within the games.

But within the world of social casinos exists sweepstakes video gaming, enabling consumers 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 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 previous year after continuing to buy more coins in pursuit of money and other things of worth.

The Philadelphia 76ers' Paul George is seen promoting a Worldwide Poker occasion
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Social sweeps casino Stake ran an advertisement flaunting Drake's automobiles, aircrafts and estates

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 helped to sustain the appeal of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes sites, which don't need generally require identification. However, websites like Chumba will ask for IDs from players trying to withdraw any funds.
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Many sites, like the crypto-compatible Stake, allow consumers to send mail-in demands for complimentary sweeps coins, supplied the players follow painfully specific directions. What's more, players are often rewarded with sweeps coins merely for signing up, consequently providing a reason to attempt their hands at any variety of casino video games for a chance to win - or lose - real cash.

So why are sweepstakes sites allowed to operate in 48 states, while online casinos are banned in all however 7?

According to the stakeholders, their product is the totally free casino-style gaming, and the real-stakes competition is just a method of promoting their bread and butter.
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'Social sweepstakes video games are merely a type of online home entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is required to dip into social casinos with sweepstakes rewards. Consumers never ever need to pay for an opportunity to win rewards. That lack of a purchase requirement - or" factor to consider" - is a crucial difference in between social sweeps and conventional online gambling sites like gambling establishments.'

Consider the manner in which McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and french fries that offer them the opportunity to win financially rewarding prizes, such as a $1 million prize.

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

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

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

For starters, gaming lawyer Daniel Wallach points out, McDonald's Monopoly game does not run indefinitely. Rather, it has a well-defined start and end, therefore suggesting the sweepstakes is not the fast-food giant's main item. Instead, the is being utilized to promote genuine items like fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're typically not tied to casino-style games of chance,' Wallach informed DailyMail.com. 'They're simply cash giveaways.

'The sweepstakes [gambling establishments] have none of the characteristics typically related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes casinos offer" casino-like" payments, normally 80 percent or more of incomes, whereas the common payment percentage for a short-term promotional sweepstakes is a trivial share of the earnings earned 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 customers the chance to play casino-style video games for real rewards. Much of those brick-and-mortar facilities have actually since been shuttered over allegations of unlawful gambling.

DJ Khaled is among numerous star spokespeople for VGW's Global Poker brand

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

'These differences are not arbitrary,' Wallach said of social sweeps casinos. 'They have actually consistently been mentioned by courts and state chief law officer as key factors in determining that a sweepstakes promo remained in truth a guise for unlawful gaming.'

One of the gambling establishment industry's leading trade companies, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, in many cases, enact brand-new legislation on the concern.

'Consumers are being denied of protections and states are giving up substantial tax and income chances as this gambling changes that carried out through controlled channels,' checked out a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in four separate cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action suit, saying the settlement was made to avoid legal costs and continued lawsuits.

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

In the most recent suit, which is mainly 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 explained in the filing as an 'prohibited sports betting enterprise. '

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

'We normally don't talk about matters before the courts,' a VGW spokesperson informed DailyMail.com via email. 'However, we note that this claim has only just been filed 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 remain confident about the future,' the spokesperson continued. 'We continue to use our free-to-play games across many of North America, as we have for more than a years, developing not just great video games, user experiences and home entertainment, but also guaranteeing this is done safely, properly and at the highest level of requirements.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are fairly typical throughout the online social video games industry (and the US more broadly), and our basic practice is that we plan to strongly safeguard any claim which might be brought against us.'

The issues in between traditional online gaming and sweepstakes gambling establishments could prove troublesome for some star endorsers.

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

'It's ironic that professional athletes are hawking prohibited sports betting wagering 'sweeps' sites while at the exact same time the leagues wish to project a strong position versus illegal gambling - specifically when trying to tamp down the occasional gaming scandal,' Glaser told DailyMail.com.

It was simply eight months ago that Toronto Raptors forward Jontay Porter received a lifetime restriction from the NBA over claims he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes gambling establishments.

Together with VGW, Apple and Google are being sued for hosting apparently prohibited gambling sites

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

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

Neither an NBA spokesperson nor the players' representatives reacted to DailyMail.com's requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to react to DailyMail.com emails.

Asked if their star endorsers have an obligation to explain to customers the differences and resemblances between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is absolutely nothing more that needs to be done.

'We have full self-confidence in our influencer and ambassadorial collaborations, and our organization practices more broadly,' the spokesperson said. 'Some of our worths are" our players come first" 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 differently.
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'Celebrities who lend their names to shady illegal sports betting sites are, at a minimum, putting their reputations at danger in addition to courting civil and class actions by consumers who allege harm,' Glaser stated. 'There is likewise some risk that state regulators and state attorneys basic rope celeb endorsers into enforcement efforts for helping with unlawful sports betting.'

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