The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on unlawful gaming.
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No, they weren't personally in attendance, but the world-famous celebrities were notably consisted of in a slide discussion on social and sweepstakes casinos - the controversial websites offering both free casino-style games and rewarding rewards, such as cash, present 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.

The websites are simply two cogs in the multibillion-dollar industry that now finds itself besieged by suits. In the eyes of lots of video gaming corporations, not to point out suit plaintiffs and state regulators, sweepstakes casinos act as traditional casinos, only 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 subject to regulative obstacles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the company faces allegations of illegal gaming in a New york city lawsuit that declares VGW uses star endorsers to 'create a veneer of authenticity' around its item. (See VGW's declaration below)

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

Sweepstakes endorsers include a variety of celebs 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 traditional sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of lots of sweepstakes casinos discovered online

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

Drake has a deal with social sweeps casino, Stake, that he frequently promotes on social networks

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Instead, advertisements normally focus around the social aspect of the casinos, while leaving out the potential for actual gambling losses.

Others tempt consumers with guarantees of prizes. One such operator, Stake, ran a social networks ad flaunting Drake's cars and trucks, airplanes and mansions before pivoting to video of the rapper playing online casino-style 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 gave up.'

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

A representative for a market 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, most of the players on social-sweepstakes casinos are playing for free.

'Most social sweeps consumers never make a purchase,' the SPGA representative informed DailyMail.com. 'The minority of consumers who make purchases do so in quantities far smaller than the normal deposit or bet size at real-money online gambling websites.'

Social gambling establishments provide clients a chance to play casino-style video games with friends. Players have the alternative to purchase worthless currency frequently referred to as 'gold coins,' which can not be exchanged for genuine cash, but can be used to open various functions within the video games.

But within the world of social gambling establishments exists sweepstakes gaming, enabling consumers to obtain other currency called 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the capacity for monetary losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York City. One player 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 money and other things of worth.

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

Social sweeps gambling establishment Stake ran an ad displaying Drake's vehicles, planes 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 seven states, which has assisted to sustain the popularity of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, enable customers to submit mail-in requests for totally free sweeps coins, supplied the players follow painfully specific directions. What's more, players are frequently rewarded with sweeps coins merely for registering, thus providing a reason to try their hands at any number of casino video games for a chance to win - or lose - genuine money.

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

According to the stakeholders, their item is the complimentary casino-style gaming, and the real-stakes competitors is just a method of promoting their support.

'Social sweepstakes games are just a kind of online home entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is required to dip into social casinos with sweepstakes rewards. Consumers never need to pay for an opportunity to win rewards. That absence of a purchase requirement - or" consideration" - is a crucial distinction in between social sweeps and traditional online sites like gambling establishments.'

Consider the method that McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to gamble, however rather they're buying hamburgers and french fries that provide them the opportunity to win financially rewarding prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'factor to consider', the video game itself does not satisfy the meaning of gaming in the US.

'Sweepstakes are an enduring approach for promoting all type of everyday businesses in the United States, everything from burgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are frequently used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous sports betting industry experts, that argument does not cut it.

For starters, gaming lawyer Daniel Wallach explains, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a distinct start and end, therefore suggesting the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being used to promote genuine products like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [gambling establishments] possess none of the characteristics typically connected with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos use" casino-like" payouts, typically 80 percent or more of incomes, whereas the typical payout portion for a momentary marketing sweepstakes is a trivial share of the profits earned by the company [normally less than one percent]'

Wallach is fast to liken the online social sweeps casinos to the internet coffee shops that emerged in Florida, offering customers the opportunity to play casino-style video games for genuine rewards. Much of those brick-and-mortar establishments have actually given that been shuttered over claims of prohibited sports betting.

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

Now, Wallach argues, social sweeps casinos need to face similar scrutiny.

'These distinctions are not arbitrary,' Wallach said of social sweeps casinos. 'They have actually consistently been mentioned by courts and state attorney generals as crucial consider determining that a sweepstakes promotion remained in fact a guise for illegal gambling.'

One of the casino industry's leading trade organizations, the American Gaming Association, is now pushing lawmakers to examine sweepstakes operators and, in some cases, enact new legislation on the concern.

'Consumers are being denied of securities and states are forgoing substantial tax and income chances as this sports betting changes that carried out through controlled channels,' read a well-circulated AGA memo.

And after that there are the complainants who have taken legal action against social gambling establishments in more than a lots states.

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

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

In the most current claim, which is mostly similar to its predecessors, New york city state locals Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is explained in the filing as an 'illegal sports betting enterprise. '

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

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

'We have full confidence in our compliance with all laws and regulations where we run, and remain confident about the future,' the representative continued. 'We continue to provide our free-to-play video games across most of The United States and Canada, as we have for more than a years, creating not just terrific games, user experiences and home entertainment, but also ensuring this is done securely, properly and at the greatest level of requirements.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are relatively typical across the online social games industry (and the US more broadly), and our basic practice is that we plan to intensely safeguard any claim which may be brought against us.'

The problems in between traditional online gaming and sweepstakes gambling establishments might show problematic 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 conventional gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking prohibited sports betting wagering 'sweeps' websites while at the same time the leagues desire to forecast a strong stance versus prohibited gambling - specifically when attempting to tamp down the occasional 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 claims he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes casinos.

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

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

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

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

Asked if their star endorsers have a duty to explain to consumers the differences and resemblances in between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that needs to be done.

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our service practices more broadly,' the spokesperson said. 'Some of our worths are" our gamers come first" and" we do what's right", and we put our worths at the core of everything we do.'

Glaser, an outspoken challenger of sweepstakes websites, sees things differently.
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'Celebrities who lend their names to dubious prohibited gambling websites are, at a minimum, putting their track records at risk along with courting civil and class actions by customers who allege damage,' Glaser stated. 'There is likewise some risk that state regulators and state chief law officers rope star endorsers into enforcement efforts for assisting in prohibited gambling.'

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