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 celebs were notably included in a slide discussion on social and sweepstakes casinos - the controversial websites offering both complimentary casino-style video games and profitable prizes, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The websites are just 2 cogs in the multibillion-dollar industry that now discovers itself besieged by lawsuits. In the eyes of numerous video gaming corporations, not to discuss lawsuit complainants and state regulators, sweepstakes gambling establishments act as conventional casinos, only without the oversight, customer securities and tax laws. So not just can they prevent the high 24-percent federal sports betting levy, but 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 income in 2015 alone. Now the business deals with accusations of prohibited gaming in a New york city claim that claims VGW utilizes celeb 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 trust Paris Hilton" is a winning message for companies running 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 sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions in between standard sports betting and sweepstakes play.
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Paris Hilton is seen plugging Wow Vegas, among numerous sweepstakes casinos found online

Ryan Seacrest advises fans to dip into Chumba Casino, where many - however not all - video games are complimentary

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

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Instead, ads usually focus around the social element of the gambling establishments, while omitting the potential for real gambling losses.

Others tempt consumers 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 rapper playing online casino-style games.

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

Another caption explained: 'Because I never offered up.'

The disparity between gaming sites and social or sweepstakes gambling establishments is a bit intricate, but 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), explained its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA data, the majority of the gamers on social-sweepstakes gambling establishments are sports betting complimentary.

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

Social casinos offer clients a possibility to play casino-style video games with pals. Players have the option to purchase valueless currency typically described as 'gold coins,' which can not be exchanged genuine cash, however can be utilized to open different functions within the games.

But within the world of social gambling establishments exists sweepstakes gaming, allowing consumers to get other currency known as 'sweeps coins' that can be exchanged for cash or other rewards.

And therein lies the capacity for monetary losses, like the ones claimed by plaintiffs 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 previous year after continuing to purchase more coins in pursuit of cash and other things of value.

The Philadelphia 76ers' Paul George is seen promoting an International Poker occasion

Social sweeps casino Stake ran an ad flaunting Drake's vehicles, airplanes and estates
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Karl-Anthony Towns of the New York Knicks is another NBA star plugging VGW's Global Poker
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Traditional online casinos are prohibited in all however seven states, which has actually helped to fuel the popularity of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes sites, which do not need generally require identification. However, sites like Chumba will request IDs from gamers trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, enable customers to submit mail-in demands for free sweeps coins, provided the players follow painfully specific directions. What's more, players are typically rewarded with sweeps coins simply for registering, consequently providing them a factor to attempt their hands at any variety of gambling establishment video games for a chance to win - or lose - real money.

So why are sweepstakes sites allowed to run in 48 states, while online casinos are banned in all but 7?

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

'Social sweepstakes games are simply a type of online entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is required to dip into social gambling establishments with sweepstakes rewards. Consumers never ever have to pay for an opportunity to win prizes. That lack of a purchase requirement - or" consideration" - is a crucial difference in between social sweeps and traditional online gaming sites like casinos.'

Think of the way that McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're buying hamburgers and fries that offer them the opportunity to win lucrative rewards, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the video game itself does not fulfill the definition of sports betting in the US.

'Sweepstakes are a long-standing method for promoting all type of everyday services in the United States, everything from hamburgers to magazine subscriptions to coffee and home improvement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are routinely used by a who's who of household 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.

For starters, video gaming lawyer Daniel Wallach points out, McDonald's Monopoly game does not run forever. Rather, it has a well-defined start and end, thereby suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote real products like french 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 simply cash giveaways.

'The sweepstakes [gambling establishments] possess none of the characteristics frequently related to McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos offer" casino-like" payouts, typically 80 percent or more of profits, whereas the normal payment percentage for a short-lived advertising sweepstakes is a trivial share of the revenue earned by the business [normally less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the web coffee shops that sprang up in Florida, using clients the opportunity to play casino-style video games for genuine rewards. Many of those brick-and-mortar establishments have considering that been shuttered over claims of illegal gambling.

DJ Khaled is amongst numerous celeb spokespeople for VGW's Global Poker brand

Now, Wallach argues, social sweeps gambling establishments ought to face similar examination.

'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 key aspects in determining that a sweepstakes promo remained in reality a guise for prohibited sports betting.'

One of the gambling establishment market's leading trade companies, the American Gaming Association, is now pressing legislators to investigate sweepstakes operators and, in many cases, enact brand-new legislation on the issue.

'Consumers are being denied of defenses and states are giving up significant tax and income opportunities as this sports betting changes that performed through controlled channels,' read a well-circulated AGA memo.

And after that there are the plaintiffs who have taken legal action against social in more than a dozen states.

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

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

In the newest claim, which is mainly similar to its predecessors, New york city state citizens 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 'illegal sports betting enterprise. '

Apple and Google have also been called as defendants in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com's demand for comment.

'We typically don't talk about matters before the courts,' a VGW spokesperson informed DailyMail.com via e-mail. 'However, we note that this claim has actually only simply been submitted with the court and VGW has not been officially served.

'We have complete confidence in our compliance with all laws and policies where we operate, and stay positive about the future,' the spokesperson continued. 'We continue to provide our free-to-play games throughout most of North America, as we have for more than a decade, creating not just terrific video games, user experiences and home entertainment, but also ensuring this is done safely, responsibly and at the greatest level of requirements.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are reasonably common across the online social games industry (and the US more broadly), and our basic practice is that we plan to vigorously defend any claim which may be brought against us.'

The concerns in between conventional online gaming and sweepstakes gambling establishments might show bothersome for some celebrity 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 video gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking prohibited sports betting wagering 'sweeps' sites while at the very same time the leagues desire to predict a strong position against illegal sports betting - specifically when attempting to tamp down the periodic sports betting scandal,' Glaser told DailyMail.com.

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

Along with VGW, Apple and Google are being demanded hosting apparently illegal gambling sites

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 backing sweepstakes websites is a matter of when, not if,' Glaser added.

Neither an NBA spokesperson nor the players' agents responded to DailyMail.com's requests for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise ignored to react to DailyMail.com e-mails.

Asked if their celeb endorsers have a duty to explain to customers the distinctions and resemblances 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 gamers come initially" and" we do what's right", and we put our worths at the core of everything we do.'

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

'Celebrities who provide their names to shady prohibited gambling sites are, at a minimum, putting their reputations at risk as well as courting civil and class actions by consumers who declare harm,' Glaser stated. 'There is also some threat that state regulators and state lawyers general rope celebrity endorsers into enforcement efforts for facilitating prohibited gaming.'

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