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, however the world-famous celebs were conspicuously consisted of in a slide discussion on social and sweepstakes casinos - the controversial sites offering both totally free casino-style games and financially rewarding rewards, such as cash, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are simply 2 cogs in the multibillion-dollar market that now discovers itself besieged by lawsuits. In the eyes of many gaming corporations, not to mention lawsuit complainants and state regulators, sweepstakes gambling establishments act as standard casinos, only without the oversight, consumer protections and tax laws. So not only can they prevent the steep 24-percent federal gambling levy, however sweepstakes operators aren't based on regulatory obstacles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income last year alone. Now the business faces accusations of illegal sports betting in a New York suit that claims VGW uses celebrity endorsers to 'produce a veneer of authenticity' around its item. (See VGW's declaration below)

'I'm unsure" if you do not 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 presenter, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a variety of celebs from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom provide any distinctions between conventional gaming and sweepstakes play.

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

Ryan Seacrest advises fans to play at Chumba Casino, where lots of - but not all - video games are free

Drake has an offer with social sweeps gambling establishment, Stake, that he regularly promotes on social networks

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Instead, ads typically focus around the social element of the gambling establishments, while leaving out the capacity for real sports betting losses.

Others lure customers with guarantees of rewards. One such operator, Stake, ran a social networks ad displaying Drake's cars, airplanes and mansions before pivoting to footage of the rapper playing online casino-style video games.

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

Another caption explained: 'Because I never ever provided up.'

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

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

'Most social sweeps clients never ever buy,' the SPGA spokesperson 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 sports betting sites.'

Social casinos provide consumers an opportunity to play casino-style games with pals. Players have the alternative to buy valueless currency often described as 'gold coins,' which can not be exchanged for genuine money, but can be utilized to unlock different features within the games.

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

And therein lies the potential for monetary losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York. One player told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the past year after continuing to purchase more coins in pursuit of money and other things of value.

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

Social sweeps gambling establishment Stake ran an ad revealing off Drake's cars and trucks, planes and estates

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

Traditional online gambling establishments are prohibited in all however seven states, which has actually helped to sustain the appeal of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, enable customers to submit mail-in ask for free sweeps coins, supplied the gamers follow painfully particular guidelines. What's more, gamers are frequently rewarded with sweeps coins merely for signing up, therefore providing a factor to try their hands at any number of gambling establishment video games for an opportunity to win - or lose - genuine money.

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

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

'Social sweepstakes video games are simply a type of online home entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is needed to dip into social gambling establishments with sweepstakes rewards. Consumers never need to pay for an opportunity to win prizes. That absence of a purchase requirement - or" consideration" - is a crucial distinction between social sweeps and standard online sports betting websites like casinos.'

Consider the manner in which McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and fries that provide them the chance to win rewarding rewards, such as a $1 million jackpot.

And without a purchase requirement, or 'factor to consider', the game itself does not meet the definition of gambling in the US.

'Sweepstakes are a long-standing method for promoting all kinds of daily businesses in the United States, everything from hamburgers to magazine subscriptions to coffee and home enhancement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are regularly 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 industry insiders, that argument doesn't cut it.

For beginners, video gaming lawyer Daniel Wallach points out, McDonald's Monopoly video game doesn't run forever. Rather, it has a well-defined beginning and end, therefore suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote genuine products like french fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're typically not tied to casino-style games of opportunity,' Wallach informed DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [casinos] possess none of the attributes typically connected with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments provide" casino-like" payments, generally 80 percent or more of revenues, whereas the normal payment portion for a short-lived promotional sweepstakes is a minor share of the income made by the business [usually less than one percent]'

Wallach is quick to compare the online social sweeps gambling establishments to the web coffee shops that sprang up in Florida, providing clients the possibility to play casino-style games for genuine prizes. A lot of those brick-and-mortar establishments have actually given that been shuttered over allegations of illegal gaming.

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

Now, Wallach argues, social sweeps gambling establishments should deal with similar analysis.

'These distinctions are not approximate,' Wallach said of social sweeps casinos. 'They have actually repeatedly been cited by courts and state chief law officer as key consider figuring out that a sweepstakes promotion remained in truth a guise for illegal gambling.'

One of the casino market's leading trade organizations, the American Gaming Association, is now pressing legislators to examine sweepstakes operators and, in some cases, enact new legislation on the issue.

'Consumers are being denied of securities and states are giving up considerable tax and income opportunities as this gambling replaces that performed through regulated channels,' read a well-circulated AGA memo.

And then there are the complainants who have actually taken legal action against social gambling establishments in more than a dozen states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, saying the settlement was made to prevent legal expenses and continued lawsuits.

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

In the current suit, which is largely similar to its predecessors, New York state citizens Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited gaming business. '

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

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

'We have complete self-confidence in our compliance with all laws and guidelines where we operate, and remain 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 decade, developing not just fantastic games, user experiences and entertainment, however likewise ensuring this is done securely, properly and at the greatest level of requirements.

'More broadly, we 'd repeat 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 intend to intensely defend any claim which may be brought against us.'

The issues in between standard online sports betting and sweepstakes gambling establishments might prove problematic 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 conventional gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking unlawful sports betting wagering 'sweeps' sites while at the exact same time the leagues wish to predict a strong position against prohibited sports betting - particularly when trying to tamp down the occasional gaming scandal,' Glaser informed DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter got 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 gambling establishments.

Along with VGW, Apple and Google are being taken legal action against for hosting allegedly illegal gambling sites

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

'I 'd expect that a league crackdown on professional athletes backing sweepstakes sites refers when, not if,' Glaser added.

Neither an NBA representative nor the gamers' representatives responded to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise neglected to react to DailyMail.com emails.

Asked if their celebrity endorsers have an obligation to explain to consumers the distinctions and similarities between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is absolutely nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the representative said. 'A few of our worths are" our players come initially" and" we do what's right", and we put our values at the core of everything we do.'

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

'Celebrities who lend their names to shady prohibited sports betting sites are, at a minimum, putting their track records at risk in addition to courting civil and class actions by customers who allege damage,' Glaser stated. 'There is also some threat that state regulators and state attorneys general rope celeb endorsers into enforcement efforts for helping with prohibited sports betting.'

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