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, but the world-famous celebrities were conspicuously included in a slide discussion on social and sweepstakes gambling establishments - the controversial websites using both 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 anybody can 'play for complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are simply 2 cogs in the multibillion-dollar market that now discovers itself besieged by suits. In the eyes of numerous gaming corporations, not to point out lawsuit complainants and state regulators, sweepstakes gambling establishments act as standard casinos, only without the oversight, customer protections and tax laws. So not just can they prevent the steep 24-percent federal gambling levy, however sweepstakes operators aren't subject to regulatory hurdles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings last year alone. Now the business faces allegations of prohibited sports betting in a New York suit that claims VGW utilizes star endorsers to 'develop a veneer of authenticity' around its item. (See VGW's declaration listed below)

'I'm not exactly sure" if you don't trust us, you can rely on Paris Hilton" is a winning message for companies operating multibillion-dollar prohibited operations out of places 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 celebs from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions in between traditional sports betting and sweepstakes play.

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

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

Drake has a deal with social sweeps casino, Stake, that he frequently touts on social media

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Instead, advertisements typically focus around the social element of the gambling establishments, while leaving out the potential for real gambling losses.

Others tempt consumers with promises of prizes. One such operator, Stake, ran a social media ad flaunting Drake's cars and trucks, planes and mansions before pivoting to footage of the rapper playing online casino-style video games.

'Daddy, why do we have a lot cash?' read the first caption on the screen.

Another caption explained: 'Because I never quit.'

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

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

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

Social casinos provide clients a possibility to play casino-style video games with good friends. Players have the option to buy worthless currency frequently referred to as 'gold coins,' which can not be exchanged genuine cash, however can be utilized to unlock numerous features within the video games.

But within the world of social gambling establishments exists sweepstakes video gaming, permitting consumers to obtain other currency understood 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 told the Washington Post he lost more than $100,000 on sweepstakes casinos in the previous 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 flaunting Drake's cars and trucks, airplanes and mansions

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

Traditional online casinos are prohibited in all but 7 states, which has actually assisted to sustain the popularity of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, enable customers to send mail-in requests for totally free sweeps coins, supplied the players follow painfully particular directions. What's more, gamers are typically rewarded with sweeps coins merely for registering, thus providing a factor to try their hands at any number of gambling establishment video games for an opportunity to win - or lose - genuine cash.

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

According to the stakeholders, their product is the totally free casino-style video gaming, and the real-stakes competition is just a means of promoting their support.

'Social sweepstakes games are simply a form of online entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is needed to dip into social gambling establishments with sweepstakes prizes. Consumers never ever have to pay for an opportunity to win rewards. That absence of a purchase requirement - or" consideration" - is a crucial distinction between social sweeps and conventional 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 gamble, however rather they're purchasing hamburgers and fries that use them the chance to win financially rewarding prizes, such as a $1 million prize.

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

'Sweepstakes are a long-standing method for promoting all sort of daily services in the United States, whatever from hamburgers to publication subscriptions to coffee and home improvement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are routinely 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 insiders, that argument doesn't cut it.

For beginners, video gaming attorney Daniel Wallach mentions, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a distinct beginning and end, thereby suggesting the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being utilized to promote real products like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [casinos] possess none of the qualities commonly related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos offer" casino-like" payouts, usually 80 percent or more of profits, whereas the typical payment percentage for a momentary promotional sweepstakes is a minor share of the income earned by the business [typically less than one percent]'

Wallach is quick to liken the online social sweeps gambling establishments to the web coffee shops that emerged in Florida, providing clients the opportunity to play casino-style video games for genuine rewards. A lot of those brick-and-mortar establishments have since 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 casinos must face similar scrutiny.

'These differences are not arbitrary,' Wallach stated of social sweeps casinos. 'They have repeatedly been cited by courts and state attorney generals as crucial elements in figuring out that a sweepstakes promo remained in reality a guise for illegal gaming.'

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

'Consumers are being deprived of protections and states are forgoing considerable tax and revenue opportunities as this gambling replaces that performed through managed channels,' checked out a well-circulated AGA memo.

And then there are the plaintiffs who have actually taken legal action against social gambling establishments 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 misbehavior, 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.

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

In the current lawsuit, which is mainly 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 'unlawful gambling business. '

Apple and Google have also been named as offenders in claims for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's demand for remark.

'We normally do not discuss matters before the courts,' a VGW representative told DailyMail.com by means of email. 'However, we note that this claim has only simply been filed with the court and VGW has actually not been officially served.

'We have full confidence in our compliance with all laws and policies where we operate, and remain confident about the future,' the spokesperson continued. 'We continue to offer our free-to-play games throughout most of North America, as we have for more than a years, developing not just fantastic games, user experiences and entertainment, however likewise guaranteeing this is done safely, properly and at the highest level of standards.

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

The issues in between traditional online gambling and sweepstakes gambling establishments could prove troublesome for some celeb endorsers.

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

'It's paradoxical that expert athletes are hawking illegal sports betting 'sweeps' websites while at the exact same time the leagues want to forecast a strong position against unlawful gambling - particularly when attempting to tamp down the periodic gambling scandal,' Glaser told DailyMail.com.

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

Together with VGW, Apple and Google are being demanded hosting apparently unlawful gambling websites

Regardless, Glaser sees sweepstakes gambling establishments as a significant problem for leagues such as the NBA.

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

Neither an NBA spokesman nor the players' agents reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise ignored to react to DailyMail.com emails.

Asked if their star endorsers have a duty to discuss to consumers the distinctions and resemblances in between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that needs to be done.

'We have full confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the representative stated. 'Some of our values 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 opponent of sweepstakes websites, sees things in a different way.

'Celebrities who lend their names to dubious prohibited gaming websites are, at a minimum, putting their track records at danger in addition to courting civil and class actions by customers who declare harm,' Glaser stated. 'There is likewise some threat that state regulators and state attorneys basic rope celebrity endorsers into enforcement efforts for assisting in prohibited sports betting.'

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