The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on illegal 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 casinos - the questionable websites offering 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 anybody can 'play for totally 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 claims. In the eyes of numerous gaming corporations, not to discuss lawsuit plaintiffs and state regulators, sweepstakes casinos serve as traditional gambling establishments, just without the oversight, consumer defenses and tax laws. So not only can they prevent the steep 24-percent federal gambling levy, but sweepstakes operators aren't based on regulative obstacles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the company deals with allegations of unlawful gambling in a New York suit that claims VGW utilizes celeb endorsers to 'develop a veneer of authenticity' around its item. (See VGW's declaration listed 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, informed DailyMail.com.

Sweepstakes endorsers consist of a variety of celebrities 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 in between conventional gambling and sweepstakes play.

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

Ryan Seacrest prompts fans to dip into Chumba Casino, where lots of - but not all - games are free

Drake has an offer with social sweeps casino, Stake, that he regularly promotes on social media

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Instead, ads usually center around the social element of the casinos, while omitting the capacity for actual gaming losses.

Others tempt clients with promises of rewards. One such operator, Stake, ran a social media advertisement flaunting Drake's cars and trucks, airplanes and mansions before pivoting to video of the rap artist playing online casino-style video games.

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

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

The disparity in between gaming websites and social or sweepstakes casinos is a bit complex, however operators of the latter insist they're not included with the previous.

A spokesperson for a market 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, most of the gamers on social-sweepstakes gambling establishments are playing for free.

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

Social casinos use customers an opportunity to play casino-style games with friends. Players have the choice to buy valueless currency often described as 'gold coins,' which can not be exchanged genuine money, however can be utilized to unlock different features within the games.

But within the world of social casinos exists sweepstakes video gaming, enabling customers to acquire other currency understood as 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the potential for financial losses, like the ones claimed 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 worth.

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

Social sweeps casino Stake ran an advertisement showing off Drake's vehicles, aircrafts and estates

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

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

Anyone over the age of 18 can access the sweepstakes websites, which do not 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, permit consumers to submit mail-in requests for totally free sweeps coins, supplied the players follow painfully particular guidelines. What's more, players are typically rewarded with sweeps coins just for registering, thereby providing a factor to try their hands at any number of casino games for a chance to win - or lose - real money.

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

According to the stakeholders, their product is the free casino-style video gaming, and the real-stakes competition is merely a method of promoting their support.

'Social sweepstakes games are just a type of online home entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is required to play at social gambling establishments with sweepstakes prizes. Consumers never ever need to pay for a chance to win rewards. That lack of a purchase requirement - or" consideration" - is a vital difference between social sweeps and standard online gaming websites like casinos.'

Think of the method that McDonald's uses 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 chance to win lucrative rewards, such as a $1 million jackpot.

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

'Sweepstakes are a long-standing technique for promoting all type of daily businesses in the United States, whatever from hamburgers to magazine subscriptions to coffee and home improvement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are regularly used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For starters, gaming attorney Daniel Wallach points out, McDonald's Monopoly video game does not run forever. Rather, it has a well-defined start and end, thereby suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote genuine products like fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're generally not tied to casino-style video games of opportunity,' Wallach informed DailyMail.com. 'They're just cash free gifts.

'The sweepstakes [casinos] possess none of the qualities commonly connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes casinos use" casino-like" payments, usually 80 percent or more of revenues, whereas the common payout percentage for a short-term marketing sweepstakes is a minor share of the income made by the company [usually less than one percent]'

Wallach is quick to liken the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, providing customers the chance to play casino-style video games for genuine prizes. A number of those brick-and-mortar establishments have given that been shuttered over allegations of illegal gaming.

DJ Khaled is amongst a number of celebrity spokespeople for VGW's Global Poker brand name

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

'These distinctions are not approximate,' Wallach said of social sweeps gambling establishments. 'They have consistently been mentioned by courts and state lawyer generals as crucial consider determining that a sweepstakes promotion remained in reality a guise for illegal gambling.'

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

'Consumers are being deprived of securities and states are forgoing significant tax and profits opportunities as this gambling replaces that carried out through managed channels,' read a well-circulated AGA memo.

And after that there are the plaintiffs who have taken legal action against 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 suit, saying the settlement was made to avoid legal expenses and continued lawsuits.

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

In the most current suit, which is mostly similar to its predecessors, New York state locals Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'unlawful gambling business. '

Apple and Google have actually also been called as accuseds in suits for hosting the sweepstakes sites. But unlike VGW, neither tech company responded to DailyMail.com's ask for remark.

'We generally do not talk about matters before the courts,' a VGW spokesperson informed DailyMail.com through 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 full confidence in our compliance with all laws and guidelines where we run, and remain confident about the future,' the spokesperson continued. 'We continue to offer our free-to-play video games across the majority of North America, as we have for more than a years, creating not only fantastic games, user experiences and home entertainment, but also ensuring this is done securely, responsibly and at the highest level of requirements.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are fairly common across the online social games market (and the US more broadly), and our basic practice is that we intend to vigorously protect any claim which might be brought against us.'

The issues between traditional online sports betting and sweepstakes gambling establishments might prove troublesome for some star 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 standard video gaming titans like FanDuel and DraftKings.

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

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

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

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

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

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

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

'We have complete confidence in our influencer and ambassadorial collaborations, and our service practices more broadly,' the representative stated. 'Some of our worths are" our gamers precede" and" we do what's right", and we put our worths at the core of everything we do.'

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

'Celebrities who lend their names to dubious illegal gambling sites are, at a minimum, putting their track records at danger as well as courting civil and class actions by customers who declare damage,' Glaser said. 'There is also some danger that state regulators and state chief law officers rope star endorsers into enforcement efforts for assisting in prohibited sports betting.'

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