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 presence, however the world-famous celebs were conspicuously consisted of in a slide presentation on social and sweepstakes gambling establishments - the questionable sites offering both free casino-style games and financially rewarding prizes, such as cash, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are simply two cogs in the multibillion-dollar market that now discovers itself besieged by lawsuits. In the eyes of numerous gaming corporations, not to discuss claim complainants and state regulators, sweepstakes gambling establishments function as conventional gambling establishments, just without the oversight, consumer defenses and tax laws. So not only can they prevent the steep 24-percent federal sports betting levy, however sweepstakes operators aren't subject to regulative difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the company faces allegations of prohibited gambling in a New york city suit that declares VGW utilizes celebrity endorsers to 'produce a veneer of authenticity' around its product. (See VGW's statement below)

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

Sweepstakes endorsers include a variety of stars from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul none of whom offer any distinctions in between traditional sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of lots of sweepstakes casinos discovered online

Ryan Seacrest urges fans to dip into Chumba Casino, where many - however not all - video games are complimentary

Drake has a handle social sweeps gambling establishment, Stake, that he frequently touts on social networks

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Instead, advertisements normally focus around the social element of the casinos, while omitting the capacity for real gaming losses.

Others tempt customers with pledges of rewards. One such operator, Stake, ran a social networks ad flaunting Drake's automobiles, planes and estates before rotating to video footage of the rapper playing online casino-style video games.

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

Another caption explained: 'Because I never quit.'

The discrepancy between sports betting sites and social or sweepstakes casinos is a bit complicated, however operators of the latter insist they're not involved with the former.

A representative for a market 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, the majority of the players on social-sweepstakes gambling establishments are playing for free.
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'Most social sweeps clients never ever buy,' the SPGA representative told DailyMail.com. 'The minority of consumers who make purchases do so in amounts far smaller than the typical deposit or wager size at real-money online gaming sites.'

Social casinos use consumers an opportunity to play casino-style games with pals. Players have the option to buy valueless currency often referred to as 'gold coins,' which can not be exchanged genuine money, but can be used to open numerous features within the games.

But within the world of social casinos exists sweepstakes video gaming, permitting clients to get other currency known as 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the potential for monetary losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York. One player informed the Washington Post he lost more than $100,000 on sweepstakes casinos 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 an International Poker event

Social sweeps casino Stake ran an ad flaunting Drake's cars and trucks, airplanes and mansions

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

Traditional online casinos are banned in all however seven states, which has helped to fuel the appeal of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, enable clients to submit mail-in ask for free sweeps coins, offered the gamers follow painfully specific directions. What's more, players are often rewarded with sweeps coins just for signing up, thus offering them a reason to attempt their hands at any number of gambling establishment video games for a possibility to win - or lose - genuine cash.

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

According to the stakeholders, their item is the totally free casino-style gaming, and the real-stakes competition is just a means of promoting their bread and butter.

'Social sweepstakes video games are merely a kind of online entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is needed to play at social casinos with sweepstakes prizes. Consumers never ever have to pay for an opportunity to win prizes. That lack of a purchase requirement - or" factor to consider" - is a vital difference between social sweeps and traditional online gambling sites like gambling establishments.'

Consider the manner in which McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're buying hamburgers and french fries that provide them the chance to win lucrative rewards, such as a $1 million prize.

And without a purchase requirement, or 'factor to consider', the game itself doesn't meet the meaning of gaming in the US.

'Sweepstakes are an enduring approach for promoting all sort of everyday businesses in the United States, whatever from hamburgers to magazine memberships to coffee and home enhancement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are regularly utilized by a who's who of family 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, video gaming lawyer Daniel Wallach mentions, McDonald's Monopoly game doesn't run forever. Rather, it has a distinct start and end, therefore suggesting the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being used to promote real items like french fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're typically not connected to casino-style games of opportunity,' Wallach informed DailyMail.com. 'They're just money giveaways.

'The sweepstakes [casinos] possess none of the attributes commonly connected with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments provide" casino-like" payouts, typically 80 percent or more of incomes, whereas the normal payment percentage for a short-term promotional sweepstakes is a trivial share of the earnings made by the company [typically less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the web coffee shops that emerged in Florida, using clients the chance to play casino-style video games for real rewards. A number of those brick-and-mortar establishments have given that been shuttered over claims of unlawful sports betting.

DJ Khaled is among several celebrity spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps gambling establishments ought to face similar scrutiny.

'These differences are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have actually repeatedly been mentioned by courts and state attorney general of the United States as essential factors in determining that a sweepstakes promo remained in fact a guise for unlawful gambling.'

Among the casino market's leading trade organizations, the American Gaming Association, is now pushing lawmakers to examine sweepstakes operators and, in many cases, enact brand-new legislation on the concern.

'Consumers are being denied of protections and states are giving up significant tax and earnings chances as this gambling changes that conducted through controlled channels,' read a well-circulated AGA memo.

And after that there are the complainants who have actually sued social casinos in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in four different cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action suit, stating the settlement was made to prevent legal expenses and continued litigation.
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Michael Phelps has actually signed a handle the VGW Group, which owns Global Poker

In the most recent suit, which is mostly similar to its predecessors, New york city state homeowners 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 sports betting business. '
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Apple and Google have actually likewise been named as accuseds in suits for hosting the sweepstakes websites. But unlike VGW, neither tech company responded to DailyMail.com's ask for comment.

'We generally do not comment on matters before the courts,' a VGW spokesperson told DailyMail.com via e-mail. 'However, we note that this claim has 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 stay positive about the future,' the representative continued. 'We continue to use our free-to-play video games across most of The United States and Canada, as we have for more than a years, producing not just fantastic games, user experiences and home entertainment, however also guaranteeing this is done safely, responsibly and at the highest level of requirements.

'More broadly, we 'd restate that class actions and other litigations and arbitrations are fairly typical across the online social games industry (and the US more broadly), and our standard practice is that we intend to intensely defend any claim which might be brought versus us.'

The problems between standard online sports betting and sweepstakes gambling establishments could prove bothersome for some star endorsers.
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Towns, a star center with the Knicks, and the 76ers' George both endorse VGW's Global Poker brand while the NBA is partnered with traditional video gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking unlawful sports betting 'sweeps' websites while at the very same time the leagues want to predict a strong stance against illegal gambling - specifically when attempting to tamp down the periodic sports betting scandal,' Glaser told DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter got a life time ban from the NBA over allegations he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes casinos.

In addition to VGW, Apple and Google are being demanded hosting presumably unlawful gambling websites
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Regardless, Glaser sees sweepstakes gambling establishments as a significant concern for leagues such as the NBA.
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'I 'd anticipate that a league crackdown on professional athletes backing sweepstakes websites refers when, not if,' Glaser added.

Neither an NBA representative nor the gamers' agents responded to DailyMail.com's demands 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 an obligation to discuss to customers the differences and resemblances between iGaming and sweepstakes casinos, VGW firmly insisted there is absolutely nothing more that needs to be done.

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

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

'Celebrities who provide their names to dubious prohibited gaming sites are, at a minimum, putting their reputations at danger along with courting civil and class actions by consumers who declare damage,' Glaser stated. 'There is likewise some risk that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for assisting in prohibited sports betting.'

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