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 presence, but the world-famous celebs were conspicuously included in a slide discussion on social and sweepstakes casinos - the questionable sites providing both complimentary casino-style video games and rewarding prizes, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet totally free,' 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 finds itself besieged by suits. In the eyes of lots of video gaming corporations, not to mention claim plaintiffs and state regulators, sweepstakes casinos function as traditional gambling establishments, just without the oversight, consumer securities and tax laws. So not only can they prevent the high 24-percent federal sports betting levy, however sweepstakes operators aren't based on regulative difficulties 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 prohibited gambling in a New York suit that declares VGW utilizes star endorsers to 'create a veneer of legitimacy' around its item. (See VGW's statement listed below)

'I'm not sure" if you don't trust us, you can trust Paris Hilton" is a winning message for business 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 consist of a range of celebrities from gambling enthusiasts 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 in between conventional gambling and sweepstakes play.

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

Ryan Seacrest urges fans to play at Chumba Casino, where numerous - but not all - games are free

Drake has a handle social sweeps gambling establishment, Stake, that he routinely promotes on social networks
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Instead, ads generally center around the social aspect of the gambling establishments, while leaving out the capacity for real sports betting losses.

Others tempt consumers with guarantees of rewards. One such operator, Stake, ran a social media ad displaying Drake's vehicles, aircrafts and mansions before pivoting to footage of the rap artist 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 ever gave up.'

The discrepancy in between sports betting websites and social or sweepstakes gambling establishments is a bit complex, however operators of the latter insist they're not involved with the previous.

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

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

Social gambling establishments offer clients a chance to play casino-style games with friends. Players have the option to purchase valueless currency typically referred to as 'gold coins,' which can not be exchanged genuine cash, but can be used to unlock numerous features within the games.

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

And therein lies the capacity for financial losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York. One gamer informed the Washington Post he lost more than $100,000 on sweepstakes casinos in the past year after continuing to purchase more coins in pursuit of cash and other things of worth.
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The Philadelphia 76ers' Paul George is seen promoting a Worldwide Poker event

Social sweeps casino Stake ran an advertisement displaying Drake's cars and trucks, planes and mansions

of the New York Knicks is another NBA star plugging VGW's Global Poker

Traditional online casinos are banned in all but 7 states, which has helped to fuel the popularity of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes sites, which don't require normally require identification. However, sites like Chumba will request IDs from players trying to withdraw any funds.
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Many websites, like the crypto-compatible Stake, allow customers to send mail-in demands for totally free sweeps coins, offered the gamers follow painfully particular guidelines. What's more, players are frequently rewarded with sweeps coins simply for registering, thus providing a factor to try 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 prohibited in all however 7?

According to the stakeholders, their item is the complimentary casino-style gaming, and the real-stakes competition is just a way of promoting their support.

'Social sweepstakes video games are simply a kind of online entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is required to dip into social gambling establishments with sweepstakes prizes. Consumers never have to spend for a chance to win rewards. That absence of a purchase requirement - or" consideration" - is an essential difference between social sweeps and standard online sports betting websites like gambling establishments.'

Think of 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 purchasing hamburgers and fries that offer them the opportunity to win profitable rewards, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the game itself doesn't meet the definition of gambling in the US.
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'Sweepstakes are an enduring approach for promoting all type of everyday services in the United States, whatever from burgers to publication memberships to coffee and home improvement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are routinely utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For beginners, video gaming lawyer Daniel Wallach explains, McDonald's Monopoly video game doesn't run forever. Rather, it has a well-defined beginning and end, consequently recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote genuine products like fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're typically not connected to casino-style games of chance,' Wallach told DailyMail.com. 'They're just cash free gifts.

'The sweepstakes [gambling establishments] possess none of the characteristics commonly related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments offer" casino-like" payouts, generally 80 percent or more of revenues, whereas the normal payout percentage for a temporary advertising sweepstakes is an insignificant share of the income made by the company [usually less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the internet coffee shops that sprang up in Florida, using customers the chance to play casino-style games for genuine prizes. Many of those brick-and-mortar facilities have considering that been shuttered over allegations of unlawful gaming.

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

Now, Wallach argues, social sweeps gambling establishments ought to deal with comparable examination.

'These distinctions are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have repeatedly been cited by courts and state chief law officer as crucial elements in determining that a sweepstakes promotion was in truth a guise for prohibited gambling.'

Among the casino industry's leading trade organizations, the American Gaming Association, is now pressing lawmakers to investigate sweepstakes operators and, in many cases, enact new legislation on the concern.

'Consumers are being denied of protections and states are passing up considerable tax and revenue chances as this gaming replaces that performed through regulated channels,' read 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 dozen states.
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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 consented to pay $11.75 million in one class-action lawsuit, stating the settlement was made to prevent legal expenses and continued lawsuits.

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

In the current claim, which is largely similar to its predecessors, New York state residents Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is explained in the filing as an 'unlawful sports betting business. '

Apple and Google have likewise been called as accuseds in claims for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for comment.

'We normally don't talk about matters before the courts,' a VGW representative informed DailyMail.com via email. 'However, we note 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 regulations where we operate, and remain confident about the future,' the representative continued. 'We continue to use our free-to-play games throughout many of The United States and Canada, as we have for more than a decade, producing not just great video games, user experiences and entertainment, however also ensuring this is done securely, responsibly and at the highest level of requirements.

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

The concerns in between traditional online gambling and sweepstakes casinos could show bothersome for some celeb endorsers.

Towns, a star center with the Knicks, and the 76ers' George both endorse VGW's Global Poker brand while the NBA is partnered with conventional gaming titans like FanDuel and DraftKings.
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'It's paradoxical that professional athletes are hawking prohibited sports betting wagering 'sweeps' websites while at the exact same time the leagues wish to project a strong stance against illegal sports betting - especially when attempting to tamp down the occasional gambling scandal,' Glaser told DailyMail.com.

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

Together with VGW, Apple and Google are being demanded hosting presumably illegal gambling sites

Regardless, Glaser sees sweepstakes gambling establishments as a major issue for leagues such as the NBA.

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

Neither an NBA spokesman nor the players' agents reacted to DailyMail.com's demands for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also disregarded to respond to DailyMail.com e-mails.

Asked if their celebrity endorsers have a responsibility to explain to customers the differences and resemblances between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that requires to be done.

'We have full self-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 whatever we do.'

Glaser, an outspoken challenger of sweepstakes sites, sees things differently.
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'Celebrities who lend their names to dubious prohibited gaming websites are, at a minimum, putting their reputations at danger as well as courting civil and class actions by consumers who allege harm,' Glaser said. 'There is likewise some risk that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for helping with unlawful gaming.'

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