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

No, they weren't personally in presence, but the world-famous celebrities were conspicuously consisted of in a slide discussion on social and sweepstakes casinos - the controversial websites using both complimentary casino-style video games and lucrative prizes, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are just 2 cogs in the multibillion-dollar market that now finds itself besieged by suits. In the eyes of lots of video gaming corporations, not to discuss claim complainants and state regulators, sweepstakes gambling establishments act as conventional casinos, just without the oversight, consumer protections and tax laws. So not just can they avoid the high 24-percent federal gambling levy, but sweepstakes operators aren't subject to regulative hurdles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the business faces accusations of prohibited gaming in a New york city claim that claims VGW uses star endorsers to 'produce a veneer of legitimacy' around its item. (See VGW's statement listed below)

'I'm not exactly sure" if you don't trust us, you can rely on Paris Hilton" is a winning message for business running multibillion-dollar prohibited operations out of places 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 consist of a variety of stars from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom offer any differences in between traditional gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of many sweepstakes gambling establishments discovered online

Ryan Seacrest prompts fans to play at Chumba Casino, where numerous - however not all - video games are complimentary

Drake has a deal with social sweeps gambling establishment, Stake, that he frequently touts on social networks

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Instead, advertisements typically center around the social aspect of the casinos, while omitting the capacity for real gambling losses.

Others lure consumers with pledges of rewards. One such operator, Stake, ran a social media ad revealing off Drake's automobiles, planes and mansions before rotating to video footage of the rapper playing online casino-style games.

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

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

The discrepancy in between gambling sites and social or sweepstakes casinos is a bit complicated, however operators of the latter insist they're not involved with the previous.

A representative for an industry trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA information, the majority of the players on social-sweepstakes casinos are playing for complimentary.

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

Social gambling establishments use clients a chance to play casino-style video games with buddies. Players have the option to purchase valueless currency frequently described as 'gold coins,' which can not be exchanged for genuine cash, however can be used to open various features within the games.

But within the world of social gambling establishments exists sweepstakes video gaming, allowing clients to get 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 claimed by complainants in Florida, Georgia, New Jersey and New York City. One gamer informed 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 money and other things of value.

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

Social sweeps casino Stake ran an ad revealing off Drake's cars and trucks, airplanes 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 but 7 states, which has assisted to sustain the appeal of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, permit clients to send mail-in demands for totally free sweeps coins, offered the gamers follow painfully specific instructions. What's more, gamers are often rewarded with sweeps coins simply for registering, therefore providing a factor to attempt their hands at any number of casino video games for a possibility to win - or lose - real money.

So why are sweepstakes sites allowed to operate in 48 states, while online gambling establishments are prohibited in all however 7?

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

'Social sweepstakes games are merely a form of online home entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is needed to play at social gambling establishments with sweepstakes prizes. Consumers never have to spend 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 conventional online gaming websites like casinos.'

Think about the method that McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to gamble, but rather they're buying hamburgers and french fries that offer them the possibility to win profitable prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'factor to consider', the game itself doesn't meet the meaning of gambling in the US.

'Sweepstakes are an enduring technique for promoting all kinds of daily companies 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 household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting market insiders, that argument doesn't cut it.

For starters, video gaming attorney Daniel Wallach mentions, McDonald's Monopoly game does not run indefinitely. Rather, it has a distinct beginning and end, thereby recommending the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being utilized to promote genuine products like french fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're usually not tied to casino-style video games of chance,' Wallach informed DailyMail.com. 'They're simply cash giveaways.

'The sweepstakes [casinos] have none of the qualities commonly related to McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments use" casino-like" payouts, generally 80 percent or more of revenues, whereas the common payment percentage for a momentary advertising sweepstakes is a minor share of the profits made by the business [normally less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the web coffee shops that emerged in Florida, using clients the chance to play casino-style games for real prizes. Many of those brick-and-mortar facilities have actually considering that been shuttered over allegations of illegal gambling.

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

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

'These distinctions are not approximate,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been cited by courts and state attorney general of the United States as essential aspects in identifying that a sweepstakes promotion was in fact a guise for prohibited sports betting.'

One of the casino market's leading trade companies, the American Gaming Association, is now pressing lawmakers to investigate sweepstakes operators and, in some cases, enact new legislation on the concern.

'Consumers are being deprived of protections and states are forgoing considerable tax and income chances as this sports betting replaces that carried out through regulated channels,' checked out a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action lawsuit, stating the settlement was made to avoid legal costs and continued lawsuits.

Michael Phelps has actually signed an offer with the VGW Group, which owns Global Poker

In the current lawsuit, which is mostly similar to its predecessors, New york city state citizens Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'illegal gambling enterprise. '

Apple and Google have actually also been called as defendants in suits for hosting the sweepstakes sites. But unlike VGW, neither tech company responded to DailyMail.com's demand for comment.

'We generally do not comment on matters before the courts,' a VGW spokesperson told DailyMail.com through email. 'However, we note that this claim has actually only just been filed with the court and VGW has not been officially served.

'We have full confidence in our compliance with all laws and regulations where we run, and stay confident about the future,' the spokesperson continued. 'We continue to provide our free-to-play video games throughout many of The United States and Canada, as we have for more than a years, producing not just fantastic video games, user experiences and home entertainment, but also guaranteeing this is done safely, responsibly and at the greatest level of requirements.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are relatively common throughout the online social video games market (and the US more broadly), and our basic practice is that we plan to strongly safeguard any claim which might be brought against us.'

The concerns in between traditional online gambling and sweepstakes gambling establishments could prove 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 standard video gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking illegal sports betting 'sweeps' websites while at the exact same time the leagues wish to predict a strong position against unlawful sports betting - particularly when attempting to tamp down the occasional gambling scandal,' Glaser informed DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter got a life time ban from the NBA over accusations he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes casinos.

Along with VGW, Apple and Google are being demanded hosting supposedly unlawful sports betting websites

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 endorsing sweepstakes sites refers when, not if,' Glaser included.

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

Asked if their star endorsers have a duty to describe to consumers the differences and similarities in between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that requires 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 values are" our gamers come first" 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 provide their names to dubious prohibited gambling sites are, at a minimum, putting their track records at danger in addition to courting civil and class actions by consumers who declare harm,' Glaser said. 'There is likewise some danger that state regulators and state lawyers basic rope celebrity endorsers into enforcement efforts for facilitating illegal sports betting.'

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