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 celebrities were notably consisted of in a slide discussion on social and sweepstakes gambling establishments - the controversial sites providing both free casino-style video games and lucrative prizes, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for free,' 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 industry that now discovers itself besieged by claims. In the eyes of lots of gaming corporations, not to discuss lawsuit complainants and state regulators, sweepstakes gambling establishments act as standard casinos, just without the oversight, customer protections and tax laws. So not just can they avoid the high 24-percent federal gambling levy, however sweepstakes operators aren't subject to regulatory obstacles 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 business faces accusations of illegal sports betting in a New york city claim that declares VGW utilizes celebrity endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's statement below)

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

Sweepstakes endorsers include a variety of celebrities from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom provide any distinctions between standard gambling and sweepstakes play.
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Paris Hilton is seen plugging Wow Vegas, one of lots of sweepstakes casinos found online

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

Drake has a sweeps gambling establishment, Stake, that he routinely touts on social media
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Instead, ads typically focus around the social element of the gambling establishments, while omitting the capacity for actual gaming losses.

Others lure clients with pledges of rewards. One such operator, Stake, ran a social media advertisement displaying Drake's cars, airplanes and estates before rotating to video of the rap artist playing online casino-style video games.

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

Another caption discussed: 'Because I never quit.'

The discrepancy between sports betting websites and social or sweepstakes gambling establishments is a bit intricate, 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 competitors with online casinos and sportsbooks. Furthermore, according to SPGA data, the majority of the gamers on social-sweepstakes gambling establishments are playing for free.

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

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

But within the world of social gambling establishments exists sweepstakes gaming, enabling customers to acquire other currency understood as 'sweeps coins' that can be exchanged for cash or other rewards.
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And therein lies the capacity 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 past year after continuing to purchase more coins in pursuit of money and other things of worth.

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

Social sweeps gambling establishment Stake ran an ad flaunting Drake's vehicles, planes 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 but 7 states, which has assisted to fuel the appeal of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, permit consumers to submit mail-in ask for complimentary sweeps coins, provided the players follow painfully particular guidelines. What's more, players are typically rewarded with sweeps coins just for signing up, therefore providing a reason to attempt their hands at any variety of gambling establishment games for a chance to win - or lose - genuine cash.

So why are sweepstakes sites allowed to operate in 48 states, while online gambling establishments are prohibited in all but 7?

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

'Social sweepstakes video games are merely 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 have to spend for an opportunity to win prizes. That lack of a purchase requirement - or" factor to consider" - is a vital difference in between social sweeps and conventional online gaming sites like casinos.'

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 buying hamburgers and fries that provide them the possibility to win rewarding rewards, such as a $1 million jackpot.

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

'Sweepstakes are a long-standing method for promoting all kinds of daily services in the United States, whatever from hamburgers to publication memberships to coffee and home improvement shops,' the SPGA representative 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 lots of sports betting market experts, that argument does not cut it.
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For beginners, gaming attorney Daniel Wallach explains, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a well-defined start and end, therefore suggesting the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being utilized to promote real items like french fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're usually not connected to casino-style video games of opportunity,' Wallach told DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [casinos] possess none of the qualities commonly associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos provide" casino-like" payouts, usually 80 percent or more of revenues, whereas the typical payment percentage for a short-term marketing sweepstakes is a trivial share of the earnings made by the business [usually less than one percent]'

Wallach is fast to compare the online social sweeps gambling establishments to the web cafes that sprang up in Florida, providing consumers the chance to play casino-style video games for genuine rewards. Much of those brick-and-mortar facilities have because been shuttered over allegations of illegal gaming.

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

Now, Wallach argues, social sweeps gambling establishments should face similar analysis.

'These differences are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have actually repeatedly been pointed out by courts and state attorney general of the United States as key consider determining that a sweepstakes promotion was in fact a guise for unlawful sports betting.'

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

'Consumers are being deprived of securities and states are forgoing substantial tax and profits opportunities as this gambling replaces that conducted through managed channels,' read a well-circulated AGA memo.

And after that there are the plaintiffs who have 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 confessing any wrongdoing, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action lawsuit, stating the settlement was made to avoid legal expenses and continued litigation.

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

In the current suit, which is mainly comparable to its predecessors, New York state locals Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'illegal gambling enterprise. '

Apple and Google have actually likewise been named as accuseds in suits for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's request for comment.

'We generally do not talk about matters before the courts,' a VGW spokesperson informed DailyMail.com via e-mail. 'However, we keep in mind that this claim has only just been submitted with the court and VGW has actually not been officially served.

'We have full self-confidence in our compliance with all laws and policies where we run, and remain positive about the future,' the representative continued. 'We continue to use our free-to-play games across many of North America, as we have for more than a years, creating not only great games, user experiences and home entertainment, however likewise ensuring this is done securely, responsibly and at the greatest level of standards.

'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are reasonably typical across the online social games industry (and the US more broadly), and our standard practice is that we mean to strongly safeguard any claim which may be brought against us.'

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

Towns, a star center with the Knicks, and the 76ers' George both endorse VGW's Global Poker brand name while the NBA is partnered with traditional video gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking unlawful sports betting 'sweeps' websites while at the very same time the leagues wish to forecast a strong stance versus prohibited sports betting - particularly when attempting to tamp down the periodic sports betting scandal,' Glaser informed DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter got a life time restriction from the NBA over claims he conspired with bettors. 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 apparently illegal gambling sites

Regardless, Glaser sees sweepstakes gambling establishments as a major concern 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' representatives responded to DailyMail.com's requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also ignored to respond to DailyMail.com e-mails.

Asked if their celeb endorsers have a responsibility to explain to customers the distinctions and resemblances in between iGaming and sweepstakes casinos, VGW firmly insisted there is absolutely nothing more that requires to be done.

'We have full self-confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the spokesperson stated. 'Some of our worths are" our gamers precede" 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.
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'Celebrities who lend their names to dubious illegal gambling sites are, at a minimum, putting their credibilities at risk in addition to courting civil and class actions by customers who declare harm,' Glaser said. 'There is also some threat that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for assisting in unlawful gambling.'

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