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

No, they weren't personally in attendance, however the world-famous celebrities were notably included in a slide presentation on social and sweepstakes gambling establishments - the questionable websites using both totally free casino-style games and profitable rewards, such as cash, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The sites are just 2 cogs in the multibillion-dollar industry that now discovers itself besieged by suits. In the eyes of numerous video gaming corporations, not to discuss suit plaintiffs and state regulators, sweepstakes gambling establishments serve as traditional gambling establishments, only without the oversight, customer protections and tax laws. So not only can they avoid the steep 24-percent federal gaming levy, but sweepstakes operators aren't based on regulative hurdles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the company deals with accusations of illegal gambling in a New york city suit that claims VGW utilizes star endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's declaration below)

'I'm uncertain" if you don't trust us, you can rely on Paris Hilton" is a winning message for business 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 variety of celebrities from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom offer any differences between standard sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of lots of sweepstakes casinos discovered online
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Ryan Seacrest advises fans to play at Chumba Casino, where lots of - but not all - video games are complimentary

Drake has a deal with social sweeps casino, Stake, that he routinely touts on social networks

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Instead, advertisements typically focus around the social aspect of the casinos, while omitting the capacity for actual gaming losses.

Others lure clients with guarantees of prizes. One such operator, Stake, ran a social media ad displaying Drake's cars and trucks, aircrafts and estates before rotating to footage of the rapper playing online casino-style video games.

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

Another caption discussed: 'Because I never ever offered up.'
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The discrepancy between gambling sites and social or sweepstakes casinos is a bit intricate, however operators of the latter insist they're not involved with the previous.

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

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

Social gambling establishments provide clients an opportunity to play casino-style video games with buddies. Players have the choice to purchase worthless currency typically referred to as 'gold coins,' which can not be exchanged for real money, but can be utilized to open numerous functions within the video games.

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

And therein lies the capacity for monetary losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York City. One gamer told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the past year after continuing to buy more coins in pursuit of cash and other things of worth.

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

Social sweeps gambling establishment Stake ran an advertisement revealing off Drake's cars, aircrafts and estates

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

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

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

Many websites, like the crypto-compatible Stake, allow clients to send mail-in ask for totally free sweeps coins, supplied the gamers follow painfully particular directions. What's more, gamers are frequently rewarded with sweeps coins merely for signing up, thereby giving them a reason to attempt their hands at any variety of casino video games for a chance to win - or lose - real cash.

So why are sweepstakes websites enabled to operate in 48 states, while online casinos are prohibited in all however 7?

According to the stakeholders, their item is the free casino-style video gaming, and the real-stakes competitors is simply a way of promoting their bread and butter.

'Social sweepstakes video games are merely a form of online home entertainment,' an SPGA representative 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 rewards. That lack of a purchase requirement - or" factor to consider" - is an important distinction in between social sweeps and standard online sports betting sites like gambling establishments.'

Consider the manner in which McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're buying hamburgers and french fries that use them the opportunity to win lucrative prizes, such as a $1 million prize.

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

'Sweepstakes are an enduring approach for promoting all type of daily companies in the United States, everything from hamburgers to magazine subscriptions to coffee and home improvement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are routinely utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling market insiders, that argument does not cut it.
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For starters, video gaming attorney Daniel Wallach points out, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a distinct start and end, thereby recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote genuine items like fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're generally not connected to casino-style video games of possibility,' Wallach told DailyMail.com. 'They're just money giveaways.

'The sweepstakes [casinos] possess none of the qualities commonly connected with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments provide" casino-like" payouts, normally 80 percent or more of incomes, whereas the typical payout portion for a short-lived marketing sweepstakes is a minor share of the earnings made by the company [normally less than one percent]'

Wallach is quick to liken the online social sweeps gambling establishments to the internet cafes that emerged in Florida, using clients the possibility to play casino-style video games for real prizes. A number of those brick-and-mortar facilities have considering that been shuttered over accusations of prohibited gaming.

DJ Khaled is amongst numerous star spokespeople for VGW's Global Poker brand name
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Now, Wallach argues, social sweeps casinos need to face comparable scrutiny.

'These distinctions are not arbitrary,' Wallach stated of social sweeps casinos. 'They have actually repeatedly been pointed out by courts and state attorney general of the United States as essential aspects in figuring out that a sweepstakes promo remained in truth a guise for prohibited gaming.'

One of the gambling establishment industry's leading trade companies, 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 substantial tax and income opportunities as this gaming replaces that carried out through managed channels,' checked out a well-circulated AGA memo.

And then there are the plaintiffs who have taken legal action against social casinos in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in four different cases in without admitting any misdeed, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action claim, saying the settlement was made to prevent legal costs and continued lawsuits.

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

In the most recent claim, which is mainly similar 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 explained in the filing as an 'unlawful gaming enterprise. '

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

'We generally don't talk about matters before the courts,' a VGW spokesperson informed DailyMail.com through email. 'However, we keep in mind that this claim has actually only just been filed with the court and VGW has not been officially served.

'We have complete self-confidence in our compliance with all laws and regulations where we run, and stay positive about the future,' the spokesperson continued. 'We continue to provide our free-to-play video games across the majority of The United States and Canada, as we have for more than a years, producing not just terrific video games, user experiences and home entertainment, however also guaranteeing this is done safely, properly and at the greatest level of standards.

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

The concerns between conventional online gambling and sweepstakes gambling establishments might prove 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 traditional gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking illegal sports betting 'sweeps' sites while at the very same time the leagues want to project a strong stance versus prohibited sports betting - especially when trying to tamp down the occasional gambling 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 claims he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes gambling establishments.

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

Regardless, Glaser sees sweepstakes casinos as a major problem for leagues such as the NBA.

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

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 neglected to react to DailyMail.com emails.

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

'We have complete confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the representative stated. 'Some of our values are" our players precede" and" we do what's right", and we put our worths at the core of whatever we do.'

Glaser, an outspoken opponent of sweepstakes sites, sees things differently.

'Celebrities who lend their names to shady unlawful gaming websites are, at a minimum, putting their credibilities at threat as well as courting civil and class actions by consumers who declare damage,' Glaser stated. 'There is likewise some risk that state regulators and state lawyers general rope celeb endorsers into enforcement efforts for assisting in illegal gaming.'

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