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

No, they weren't personally in participation, but the world-famous celebrities were conspicuously consisted of in a slide discussion on social and sweepstakes casinos - the questionable websites offering both totally free casino-style video games and lucrative prizes, such as money, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The websites are simply 2 cogs in the multibillion-dollar industry that now finds itself besieged by claims. In the eyes of many gaming corporations, not to discuss lawsuit complainants and state regulators, sweepstakes gambling establishments function as conventional gambling establishments, just without the oversight, consumer protections and tax laws. So not only can they avoid the high 24-percent federal gaming levy, however sweepstakes operators aren't based on regulative obstacles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the company deals with accusations of illegal gambling in a New york city lawsuit that claims VGW uses celeb endorsers to 'develop a veneer of authenticity' around its product. (See VGW's declaration below)

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

Sweepstakes endorsers include a variety of stars 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 use any differences between conventional gambling and sweepstakes play.

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

Ryan Seacrest advises fans to dip into Chumba Casino, where numerous - but not all - video games are totally free

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

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Instead, ads generally center around the social element of the gambling establishments, while leaving out the capacity for real gambling losses.

Others lure customers with pledges of prizes. One such operator, Stake, ran a social networks ad displaying Drake's automobiles, airplanes and mansions before rotating to footage of the rap artist playing online casino-style games.

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

Another caption described: 'Because I never quit.'

The disparity in between gambling websites and social or sweepstakes gambling establishments is a bit complex, but operators of the latter insist they're not included with the former.

A representative for an industry 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, the majority of the gamers on social-sweepstakes gambling establishments are playing for totally free.

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

Social gambling establishments provide customers an opportunity to play casino-style video games with friends. Players have the choice to buy worthless currency often described as 'gold coins,' which can not be exchanged for genuine cash, however can be used to unlock numerous functions within the video games.

But within the world of social casinos exists sweepstakes gaming, allowing consumers to get other currency referred to as 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the potential for financial losses, like the ones declared by complainants 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 past year after continuing to purchase more coins in pursuit of cash and other things of worth.

The Philadelphia 76ers' Paul George is seen promoting an International Poker event
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Social sweeps gambling establishment Stake ran an advertisement flaunting Drake's vehicles, airplanes and mansions

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

Traditional online casinos are prohibited in all however 7 states, which has assisted to sustain 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 sites, like the crypto-compatible Stake, allow clients to send mail-in requests for free sweeps coins, supplied the gamers follow painfully specific instructions. What's more, gamers are frequently rewarded with sweeps coins simply for registering, thus offering them a reason to try their hands at any variety of casino games for a possibility to win - or lose - genuine money.

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

According to the stakeholders, their item is the totally free casino-style gaming, and the real-stakes competitors is merely a method of promoting their bread and butter.

'Social sweepstakes games are just a form 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 need to pay for a chance to win rewards. That lack of a purchase requirement - or" factor to consider" - is a crucial distinction between social sweeps and conventional online sports betting sites like casinos.'

Think of the manner in which McDonald's utilizes its annual Monopoly game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and fries that provide them the possibility to win financially rewarding prizes, such as a $1 million prize.

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

'Sweepstakes are a long-standing technique for promoting all sort of everyday companies in the United States, everything from hamburgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are regularly used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many gambling industry experts, that argument doesn't cut it.

For starters, video gaming attorney Daniel Wallach mentions, McDonald's Monopoly game doesn't run forever. Rather, it has a distinct beginning and end, thereby recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote real products like fries, shakes, and the Filet-O-Fish.
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'They don't last forever and they're generally not connected to casino-style games of opportunity,' Wallach DailyMail.com. 'They're simply cash giveaways.

'The sweepstakes [casinos] possess none of the attributes typically related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes casinos use" casino-like" payments, generally 80 percent or more of earnings, whereas the typical payout percentage for a short-term promotional sweepstakes is a minor share of the earnings made by the business [generally less than one percent]'
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Wallach fasts to compare the online social sweeps gambling establishments to the web cafes that emerged in Florida, using clients the possibility to play casino-style video games for genuine prizes. A number of those brick-and-mortar establishments have actually given that been shuttered over claims of unlawful gambling.

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

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

'These distinctions are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have consistently been mentioned by courts and state attorney general of the United States as essential aspects in determining that a sweepstakes promotion remained in reality a guise for illegal gambling.'

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

'Consumers are being denied of protections and states are passing up considerable tax and revenue opportunities as this sports betting changes that carried out through regulated channels,' checked out a well-circulated AGA memo.

And after that there are the plaintiffs who have actually sued social gambling establishments in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in four separate cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, stating the settlement was made to avoid legal costs and continued litigation.

Michael Phelps has actually signed a handle the VGW Group, which owns Global Poker
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In the current suit, which is largely similar to its predecessors, New York state locals Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is described in the filing as an 'prohibited sports betting enterprise. '

Apple and Google have actually also been named as accuseds in suits for hosting the sweepstakes websites. But unlike VGW, neither tech business responded to DailyMail.com's demand for comment.

'We normally do not talk about matters before the courts,' a VGW representative told DailyMail.com via e-mail. 'However, we keep in mind that this claim has only simply been filed with the court and VGW has not been officially served.

'We have full self-confidence in our compliance with all laws and regulations where we operate, and remain positive about the future,' the spokesperson continued. 'We continue to offer our free-to-play video games throughout the majority of The United States and Canada, as we have for more than a decade, creating not only fantastic video games, user experiences and entertainment, however also ensuring this is done safely, responsibly and at the highest level of requirements.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are fairly typical across the online social video games market (and the US more broadly), and our basic practice is that we mean to strongly defend any claim which may be brought against us.'

The problems between conventional online gambling and sweepstakes gambling establishments might show troublesome for some star endorsers.

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

'It's ironic that professional athletes are hawking prohibited sports betting 'sweeps' sites while at the very same time the leagues desire to project a strong stance versus prohibited sports betting - particularly when trying to tamp down the occasional gambling scandal,' Glaser informed DailyMail.com.

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

Along with VGW, Apple and Google are being sued for hosting presumably unlawful gambling websites

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

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

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

Asked if their celeb endorsers have an obligation to discuss to clients the differences and resemblances between iGaming and sweepstakes casinos, VGW insisted there is nothing more that needs to be done.

'We have full confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the spokesperson said. 'A few of our values are" our players come initially" and" we do what's right", and we put our worths at the core of everything we do.'
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Glaser, an outspoken opponent of sweepstakes sites, sees things in a different way.

'Celebrities who lend their names to shady unlawful gambling websites are, at a minimum, putting their reputations at danger as well as courting civil and class actions by customers who allege harm,' Glaser stated. 'There is also some danger that state regulators and state chief law officers rope star endorsers into enforcement efforts for facilitating unlawful sports betting.'

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