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 participation, but the world-famous celebrities were conspicuously included in a slide discussion on social and sweepstakes gambling establishments - the controversial sites offering both totally free casino-style games and profitable rewards, such as money, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are just 2 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 claim plaintiffs and state regulators, sweepstakes casinos serve as traditional gambling establishments, just without the oversight, consumer protections and tax laws. So not just can they prevent the steep 24-percent federal sports betting levy, but sweepstakes operators aren't based on regulatory difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the company faces accusations of illegal gaming in a New York claim that declares VGW utilizes celebrity endorsers to 'create a veneer of authenticity' around its item. (See VGW's statement listed below)

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

Sweepstakes endorsers consist of a variety of celebrities from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom use any differences between conventional gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among lots of sweepstakes casinos discovered online
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Ryan Seacrest urges fans to dip into Chumba Casino, where but not all - video games are complimentary

Drake has a handle social sweeps casino, Stake, that he routinely promotes on social media

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Instead, advertisements typically center around the social element of the casinos, while omitting the capacity for actual sports betting losses.

Others lure clients with pledges of prizes. One such operator, Stake, ran a social networks ad revealing off Drake's cars and trucks, airplanes and mansions before rotating to video of the rapper playing online casino-style games.
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'Daddy, why do we have a lot cash?' read the very first caption on the screen.

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

The disparity between sports betting sites and social or sweepstakes gambling establishments is a bit complex, but operators of the latter insist they're not involved with the previous.
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A representative for an industry trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA information, many of the players on social-sweepstakes gambling establishments are sports betting complimentary.

'Most social sweeps customers never ever buy,' the SPGA representative informed DailyMail.com. 'The minority of clients who make purchases do so in amounts far smaller than the typical deposit or wager size at real-money online gambling websites.'

Social gambling establishments provide consumers an opportunity to play casino-style games with good friends. Players have the choice to buy worthless currency frequently referred to as 'gold coins,' which can not be exchanged for real money, but can be utilized to open different features within the games.

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

And therein lies the capacity for monetary losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York City. One gamer 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 worth.

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

Social sweeps casino Stake ran an advertisement showing off Drake's cars and trucks, planes and mansions
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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 however seven states, which has actually assisted to sustain the appeal of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes websites, which do not need generally need recognition. However, websites like Chumba will request for IDs from players trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, permit clients to submit mail-in demands for totally free sweeps coins, offered the gamers follow painfully particular guidelines. What's more, gamers are often rewarded with sweeps coins just for signing up, thereby providing a factor to attempt their hands at any number of gambling establishment games for a chance to win - or lose - real cash.

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

According to the stakeholders, their product is the complimentary casino-style video gaming, and the real-stakes competitors is just a means of promoting their bread and butter.

'Social sweepstakes video games are just a kind of online entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is needed to play at social gambling establishments with sweepstakes rewards. Consumers never need to pay for a chance to win prizes. That absence of a purchase requirement - or" consideration" - is an important difference between social sweeps and conventional online sports betting websites like gambling establishments.'

Think about the manner in which McDonald's uses its yearly Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and french fries that offer them the chance to win profitable rewards, such as a $1 million jackpot.

And without a purchase requirement, or 'factor to consider', the game itself does not satisfy the definition of gaming in the US.

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

But to numerous sports betting industry experts, that argument does not cut it.

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

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

'The sweepstakes [gambling establishments] have none of the characteristics frequently related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments offer" casino-like" payments, generally 80 percent or more of earnings, whereas the typical payout percentage for a short-lived promotional sweepstakes is a minor share of the revenue made by the business [normally less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the internet cafes that sprang up in Florida, using clients the chance to play casino-style games for real prizes. Much of those brick-and-mortar facilities have actually given that been shuttered over accusations of unlawful gambling.

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

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

'These differences are not arbitrary,' Wallach said of social sweeps casinos. 'They have repeatedly been pointed out by courts and state chief law officer as key consider identifying that a sweepstakes promotion was in truth a guise for unlawful gaming.'

One of the casino industry's leading trade companies, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, sometimes, enact new legislation on the issue.

'Consumers are being denied of securities and states are passing up considerable tax and income opportunities as this gaming replaces that carried out through regulated channels,' read a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in four separate cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, stating the settlement was made to prevent legal expenses and continued litigation.

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

In the most recent lawsuit, which is largely comparable to its predecessors, New York state locals 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 'illegal sports betting business. '

Apple and Google have likewise been named as defendants in suits for hosting the sweepstakes sites. 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 by means of email. 'However, we keep in mind that this claim has actually only just been filed with the court and VGW has not been formally served.

'We have full self-confidence in our compliance with all laws and policies where we run, and remain positive about the future,' the spokesperson continued. 'We continue to use our free-to-play games throughout the majority of North America, as we have for more than a decade, developing not just excellent video games, user experiences and home entertainment, but likewise ensuring this is done securely, properly and at the greatest level of requirements.
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'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are relatively typical throughout the online social video games market (and the US more broadly), and our standard practice is that we intend to intensely protect any claim which might be brought against us.'

The issues in between conventional online gaming and sweepstakes gambling establishments could prove problematic 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 traditional gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking prohibited sports betting wagering 'sweeps' sites while at the same time the leagues desire to forecast a strong stance against prohibited sports betting - especially when attempting to tamp down the occasional sports betting scandal,' Glaser informed DailyMail.com.
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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 unassociated to anything involving social or sweepstakes casinos.

In addition to VGW, Apple and Google are being taken legal action against for hosting presumably prohibited gambling sites

Regardless, Glaser sees sweepstakes gambling establishments as a major issue for leagues such as the NBA.
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'I 'd anticipate that a league crackdown on athletes backing sweepstakes sites refers when, not if,' Glaser included.

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

Asked if their celebrity endorsers have a responsibility to describe to clients the differences and similarities in between iGaming and sweepstakes casinos, VGW insisted there is nothing more that needs to be done.

'We have full confidence in our influencer and ambassadorial collaborations, and our business practices more broadly,' the spokesperson said. 'Some of our worths are" our gamers come initially" and" we do what's right", and we put our worths at the core of everything we do.'

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

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

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