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

No, they weren't personally in attendance, however the world-famous celebs were conspicuously included in a slide presentation on social and sweepstakes casinos - the controversial websites providing both totally free casino-style games and prizes, such as money, present cards or cryptocurrency. In one advertisement, 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 two cogs in the multibillion-dollar industry that now finds itself besieged by claims. In the eyes of numerous gaming corporations, not to discuss lawsuit complainants and state regulators, sweepstakes casinos serve as standard gambling establishments, just without the oversight, consumer protections and tax laws. So not just can they avoid the steep 24-percent federal gaming 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 earnings in 2015 alone. Now the business deals with allegations of illegal gaming in a New york city suit that claims VGW utilizes celeb endorsers to 'develop a veneer of authenticity' around its item. (See VGW's declaration listed 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 illegal operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of video gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a range of stars from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom use any differences between traditional gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of numerous sweepstakes casinos found online

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

Drake has a handle social sweeps gambling establishment, Stake, that he regularly promotes on social media
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Instead, ads usually focus around the social element of the gambling establishments, while omitting the potential for actual sports betting losses.

Others lure customers with pledges of prizes. One such operator, Stake, ran a social networks ad revealing off Drake's vehicles, airplanes and mansions before pivoting to footage of the rapper playing online casino-style video games.

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

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

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

A representative for an industry trade group, the Social and Promotional Gaming Association (SPGA), described 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 sports betting free.

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

Social casinos offer clients a possibility to play casino-style video games with friends. Players have the choice to buy valueless currency frequently referred to as 'gold coins,' which can not be exchanged genuine cash, but can be used to open various functions within the video games.

But within the world of social casinos exists sweepstakes video gaming, allowing clients to acquire other currency known 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 plaintiffs 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 previous 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

Social sweeps gambling establishment Stake ran an advertisement flaunting 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 banned in all but seven states, which has helped to sustain the appeal of sweepstakes casinos.
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Anyone over the age of 18 can access the sweepstakes websites, which don't require normally need identification. However, websites like Chumba will ask for IDs from players trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, allow consumers to send mail-in demands for totally free sweeps coins, offered the players follow painfully specific directions. What's more, gamers are typically rewarded with sweeps coins merely for signing up, thus providing a factor to attempt their hands at any number of gambling establishment video games for a possibility to win - or lose - genuine cash.

So why are sweepstakes sites allowed 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 video gaming, and the real-stakes competitors is merely a means of promoting their bread and butter.
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'Social sweepstakes games are just a type of online home entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is required to play at social casinos with sweepstakes prizes. Consumers never ever have to spend for a chance to win rewards. That absence of a purchase requirement - or" factor to consider" - is an essential difference in between social sweeps and conventional online sports betting websites like casinos.'

Think about 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 offer them the chance to win rewarding rewards, such as a $1 million prize.
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And without a purchase requirement, or 'consideration', the game itself doesn't satisfy the meaning of gaming in the US.

'Sweepstakes are a long-standing technique for promoting all sort of everyday businesses in the United States, everything from hamburgers to publication memberships to coffee and home enhancement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are routinely utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many gambling market insiders, that argument doesn't cut it.

For beginners, video gaming lawyer Daniel Wallach explains, McDonald's Monopoly video game does not run indefinitely. Rather, it has a distinct beginning and end, therefore suggesting the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being used to promote real products like french fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're usually not tied to casino-style video games of chance,' Wallach informed DailyMail.com. 'They're just cash free gifts.

'The sweepstakes [casinos] possess none of the characteristics commonly connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments offer" casino-like" payments, generally 80 percent or more of incomes, whereas the normal payout percentage for a temporary promotional sweepstakes is an insignificant share of the profits earned by the company [generally less than one percent]'

Wallach is fast to compare the online social sweeps casinos to the internet coffee shops that emerged in Florida, using customers the possibility to play casino-style games for real prizes. Many of those brick-and-mortar facilities have given that been shuttered over allegations of illegal gaming.

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

Now, Wallach argues, social sweeps casinos ought to deal with similar scrutiny.

'These distinctions are not approximate,' Wallach said of social sweeps gambling establishments. 'They have consistently been mentioned by courts and state lawyer generals as crucial consider figuring out that a sweepstakes promotion was in truth a guise for illegal gaming.'

One of the gambling establishment industry's leading trade companies, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, sometimes, enact new legislation on the issue.

'Consumers are being denied of protections and states are giving up considerable tax and profits opportunities as this gambling replaces that conducted through controlled channels,' checked out a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in 4 separate cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action claim, saying the settlement was made to prevent legal costs and continued lawsuits.

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

In the most recent suit, which is largely similar to its predecessors, New york city state locals Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'prohibited gambling enterprise. '

Apple and Google have actually likewise been named as defendants in claims for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for remark.

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

'We have complete self-confidence in our compliance with all laws and regulations where we run, and remain confident about the future,' the representative continued. 'We continue to use our free-to-play video games across many of North America, as we have for more than a years, producing not only great games, user experiences and home entertainment, however likewise ensuring this is done securely, responsibly and at the greatest level of requirements.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are reasonably common across the online social video games industry (and the US more broadly), and our standard practice is that we mean to intensely defend any claim which may be brought against us.'

The problems in between standard online gambling and sweepstakes gambling establishments might show bothersome for some celeb endorsers.
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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 standard video gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking illegal sports betting 'sweeps' websites while at the very same time the leagues want to project a strong stance versus prohibited gaming - especially when trying to tamp down the occasional gambling scandal,' Glaser told DailyMail.com.

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

Along with VGW, Apple and Google are being sued for hosting apparently prohibited sports betting sites

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

'I 'd anticipate that a league crackdown on athletes endorsing sweepstakes sites refers when, not if,' Glaser added.

Neither an NBA representative 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 disregarded to react to DailyMail.com emails.

Asked if their star endorsers have a responsibility to discuss to customers the differences and resemblances between iGaming and sweepstakes casinos, VGW firmly insisted there is absolutely nothing more that requires to be done.

'We have full self-confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the spokesperson said. 'Some of our worths are" our gamers precede" 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 lend their names to shady unlawful sports betting websites are, at a minimum, putting their credibilities at danger along with courting civil and class actions by customers who allege harm,' Glaser stated. 'There is also some threat that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for helping with illegal sports betting.'

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