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

No, they weren't personally in participation, but the world-famous celebs were conspicuously included in a slide presentation on social and sweepstakes gambling establishments - the questionable sites using both complimentary casino-style video games and rewarding prizes, such as cash, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The websites are just two cogs in the multibillion-dollar market that now finds itself besieged by suits. In the eyes of many gaming corporations, not to mention lawsuit plaintiffs and state regulators, sweepstakes casinos act as standard casinos, only without the oversight, consumer defenses and tax laws. So not just can they prevent the steep 24-percent federal gambling levy, however sweepstakes operators aren't subject to regulatory hurdles like anti-money laundering and responsible-gaming defenses.

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

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

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

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

Ryan Seacrest advises fans to dip into Chumba Casino, where lots of - however not all - games are complimentary

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

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Instead, ads typically center around the social element of the casinos, while omitting the capacity for real gambling losses.

Others lure consumers with pledges of prizes. One such operator, Stake, ran a social networks advertisement showing off Drake's cars and trucks, airplanes and mansions before pivoting to video footage of the rapper playing online casino-style games.

'Daddy, why do we have so much money?' check out the very first caption on the screen.

Another caption discussed: 'Because I never quit.'

The disparity in between gaming sites and social or sweepstakes gambling establishments is a bit complex, 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), explained its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, many of the players on social-sweepstakes casinos are sports betting free.

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

Social gambling establishments use consumers an opportunity to play casino-style games with pals. Players have the option to buy valueless currency typically described as 'gold coins,' which can not be exchanged for real cash, but can be utilized to open various functions within the games.

But within the world of social casinos exists sweepstakes video gaming, permitting customers to acquire other currency referred to as 'sweeps coins' that can be exchanged for cash 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. 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 a Worldwide Poker event

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake's vehicles, planes 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 popularity of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes sites, which do not require typically require recognition. However, websites like Chumba will request for IDs from gamers attempting to withdraw any funds.

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

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

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

'Social sweepstakes games are merely a form of online home entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is required to dip into social casinos with sweepstakes prizes. Consumers never ever need to pay for an opportunity to win rewards. That absence of a purchase requirement - or" factor to consider" - is an important difference between social sweeps and standard online gambling websites like casinos.'

Think of the manner in which McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and fries that offer them the chance to win profitable rewards, such as a $1 million prize.

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

'Sweepstakes are an enduring technique for promoting all type of everyday services in the United States, whatever from burgers to magazine memberships to coffee and home enhancement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are frequently used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many gambling market experts, that argument does not cut it.

For beginners, gaming attorney Daniel Wallach mentions, McDonald's Monopoly video game does not run indefinitely. Rather, it has a well-defined beginning and end, therefore recommending the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being utilized to promote genuine products like french fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're usually not connected to casino-style video games of possibility,' Wallach told DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [gambling establishments] possess none of the qualities frequently related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments provide" casino-like" payments, normally 80 percent or more of profits, whereas the typical payout portion for a momentary marketing sweepstakes is an unimportant share of the earnings made by the business [generally less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the web cafes that emerged in Florida, offering customers the chance to play casino-style video games for genuine prizes. Many of those brick-and-mortar establishments have given that been shuttered over accusations of prohibited gaming.

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

Now, Wallach argues, social sweeps casinos ought to face comparable examination.

'These differences are not approximate,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been cited by courts and state attorney general of the United States as crucial consider determining that a sweepstakes promo remained in truth a guise for unlawful gambling.'

Among the gambling establishment market's leading trade organizations, the American Gaming Association, is now pushing legislators to examine sweepstakes operators and, in many cases, enact new legislation on the problem.

'Consumers are being denied of protections and states are giving up significant tax and earnings opportunities as this sports betting replaces that conducted through regulated channels,' read a well-circulated AGA memo.

And after that there are the complainants 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 admitting any wrongdoing, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action lawsuit, saying the settlement was made to avoid legal costs and continued litigation.

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

In the most recent suit, which is largely comparable to its predecessors, New york city 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 'illegal gaming business. '

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

'We usually do not comment on matters before the courts,' a VGW representative informed DailyMail.com via 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 policies where we operate, and remain confident about the future,' the spokesperson continued. 'We continue to use our free-to-play video games throughout many of North America, as we have for more than a decade, developing not only excellent video games, user experiences and home entertainment, however also guaranteeing this is done securely, responsibly and at the greatest level of .

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are reasonably typical across the online social video games industry (and the US more broadly), and our basic practice is that we plan to intensely defend any claim which may be brought against us.'

The issues in between standard online sports betting and sweepstakes casinos might show problematic 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 video gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking unlawful sports betting wagering 'sweeps' websites while at the very same time the leagues wish to project a strong position versus unlawful gambling - particularly when attempting to tamp down the periodic sports betting scandal,' Glaser told DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter got a lifetime ban from the NBA over accusations he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes casinos.

Along with VGW, Apple and Google are being demanded hosting supposedly illegal sports betting websites
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Regardless, Glaser sees sweepstakes gambling establishments as a significant concern for leagues such as the NBA.

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

Neither an NBA spokesman nor the gamers' representatives responded to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise disregarded to react to DailyMail.com e-mails.

Asked if their star endorsers have an obligation to discuss to consumers the differences and similarities between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that needs to be done.

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our service practices more broadly,' the spokesperson stated. 'Some of our worths 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 sites, sees things differently.

'Celebrities who provide their names to dubious unlawful gambling websites are, at a minimum, putting their track records at risk along with courting civil and class actions by customers who allege harm,' Glaser stated. 'There is likewise some danger that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for assisting in unlawful gambling.'

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