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

No, they weren't personally in attendance, however the world-famous stars were conspicuously consisted of in a slide discussion on social and sweepstakes casinos - the controversial websites using both totally free casino-style games and lucrative rewards, such as cash, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone 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 suits. In the eyes of numerous video gaming corporations, not to mention suit plaintiffs and state regulators, sweepstakes casinos function as traditional casinos, only without the oversight, consumer protections and tax laws. So not only can they avoid 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 earnings last year alone. Now the company faces allegations of illegal gaming in a New York claim that claims VGW utilizes celebrity endorsers to 'create a veneer of legitimacy' around its product. (See VGW's statement listed below)

'I'm uncertain" 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 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 celebrities from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom provide any distinctions in between conventional sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among many sweepstakes gambling establishments discovered online

Ryan Seacrest advises fans to play at Chumba Casino, where many - but not all - games are complimentary

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

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Instead, advertisements normally center around the social aspect of the casinos, while leaving out the potential for real gaming losses.

Others lure customers with guarantees of rewards. One such operator, Stake, ran a social networks ad displaying Drake's cars and trucks, airplanes and estates before pivoting to video of the rapper playing online casino-style video games.

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

Another caption explained: 'Because I never ever provided up.'

The disparity between gaming sites and social or sweepstakes casinos is a bit complicated, however operators of the latter insist they're not included with the former.

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA information, most of the players on social-sweepstakes gambling establishments are playing for totally free.

'Most social sweeps consumers never ever purchase,' the SPGA representative told DailyMail.com. 'The minority of clients who make purchases do so in quantities far smaller than the typical deposit or bet size at real-money online gambling websites.'

Social gambling establishments offer customers a possibility to play casino-style games with buddies. Players have the option to buy worthless currency often referred to as 'gold coins,' which can not be exchanged genuine cash, however can be utilized to unlock various functions within the video games.

But within the world of social casinos exists sweepstakes gaming, permitting clients to obtain other currency called 'sweeps coins' that can be exchanged for cash or other prizes.

And therein lies the potential for monetary losses, like the ones claimed 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 gambling establishments in the past year after continuing to purchase more coins in pursuit of money and other things of worth.
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The Philadelphia 76ers' Paul George is seen promoting an International Poker occasion

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

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

Traditional online casinos are banned in all but seven states, which has actually assisted to fuel the popularity of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes websites, which don't require usually require identification. However, websites like Chumba will request for IDs from players trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, allow consumers to send mail-in requests for complimentary sweeps coins, supplied the players follow painfully particular directions. What's more, gamers are typically rewarded with sweeps coins just for registering, thereby providing a factor to attempt their hands at any number of casino video games for a chance to win - or lose - real cash.

So why are sweepstakes sites allowed to run in 48 states, while online gambling establishments are banned in all but 7?
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According to the stakeholders, their item is the totally free casino-style video gaming, and the real-stakes competitors is just a way of promoting their bread and butter.

'Social sweepstakes games are simply a kind 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 an opportunity to win prizes. That absence of a purchase requirement - or" factor to consider" - is a crucial difference in between social sweeps and conventional online sports betting websites like casinos.'

Think of the manner in which McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and fries that use them the possibility to win rewarding rewards, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the game itself doesn't satisfy the definition of gambling in the US.

'Sweepstakes are an enduring approach for promoting all kinds of daily companies in the United States, everything from hamburgers to publication memberships to coffee and home enhancement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are regularly used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many sports betting industry experts, that argument doesn't cut it.

For beginners, gaming lawyer Daniel Wallach mentions, McDonald's Monopoly game does not run forever. 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 real items like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [casinos] possess none of the characteristics commonly related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments provide" casino-like" payouts, generally 80 percent or more of revenues, whereas the typical payout portion for a short-lived promotional sweepstakes is an insignificant share of the profits earned by the business [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 games for genuine prizes. A number of those brick-and-mortar establishments have actually given that been shuttered over accusations of illegal sports betting.

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

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

'These distinctions are not approximate,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been cited by courts and state attorney generals as consider figuring out that a sweepstakes promo remained in reality a guise for prohibited gaming.'

Among the gambling establishment market's leading trade companies, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, sometimes, enact brand-new legislation on the problem.

'Consumers are being deprived of protections and states are giving up considerable tax and profits opportunities as this sports betting replaces that conducted through managed channels,' checked out a well-circulated AGA memo.

And after that there are the complainants who have taken legal action against social gambling establishments in more than a lots states.

Sweepstakes casino operators paid a combined $14.2 million in four different cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action suit, saying the settlement was made to prevent legal expenses and continued lawsuits.

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

In the most recent suit, which is mostly comparable to its predecessors, New york city state homeowners Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'unlawful gambling business. '

Apple and Google have actually also been named as defendants in suits for hosting the sweepstakes sites. But unlike VGW, neither tech business responded to DailyMail.com's demand for comment.

'We usually don't discuss matters before the courts,' a VGW representative informed DailyMail.com by means of e-mail. 'However, we keep in mind that this claim has only simply been submitted with the court and VGW has actually not been officially served.

'We have complete confidence in our compliance with all laws and regulations where we run, and stay confident about the future,' the representative continued. 'We continue to offer our free-to-play games throughout most of The United States and Canada, as we have for more than a decade, producing not only terrific video games, user experiences and entertainment, but also ensuring this is done safely, properly and at the highest level of standards.

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

The problems between traditional online gaming and sweepstakes casinos could prove bothersome 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 unlawful sports betting 'sweeps' sites while at the same time the leagues wish to project a strong stance versus unlawful gambling - especially when attempting to tamp down the occasional sports betting scandal,' Glaser informed DailyMail.com.

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

Along with VGW, Apple and Google are being taken legal action against for hosting presumably illegal sports betting websites

Regardless, Glaser sees sweepstakes casinos as a significant concern for leagues such as the NBA.

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

Neither an NBA spokesperson nor the gamers' agents reacted to DailyMail.com's demands for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to react to DailyMail.com emails.
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Asked if their celebrity endorsers have a responsibility to describe to consumers the differences and similarities in between iGaming and sweepstakes casinos, VGW firmly insisted there is 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 stated. 'Some of our worths are" our players precede" and" we do what's right", and we put our values at the core of whatever we do.'

Glaser, an outspoken challenger of sweepstakes sites, sees things in a different way.

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

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