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

No, they weren't personally in participation, however the world-famous celebs were conspicuously included in a slide discussion on social and sweepstakes casinos - the controversial sites offering both free casino-style video games and financially rewarding prizes, such as cash, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for totally 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 market that now finds itself besieged by suits. In the eyes of lots of gaming corporations, not to point out lawsuit plaintiffs and state regulators, sweepstakes gambling establishments serve as conventional casinos, only without the oversight, customer protections and tax laws. So not only can they prevent the steep 24-percent federal sports betting levy, however sweepstakes operators aren't subject to regulative difficulties like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the company deals with allegations of illegal sports betting in a New York claim that declares VGW uses star endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's declaration listed below)

'I'm not sure" if you do not trust us, you can trust Paris Hilton" is a winning message for companies operating multibillion-dollar prohibited operations out of places 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 consist of a variety of stars from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom provide any distinctions in between traditional gaming and sweepstakes play.

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

Ryan Seacrest urges fans to play at Chumba Casino, where lots of - however not all - games are complimentary

Drake has an offer with social sweeps gambling establishment, Stake, that he routinely touts on social networks

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Instead, ads normally focus around the social element of the casinos, while omitting the capacity for actual gaming losses.

Others tempt clients with guarantees of rewards. One such operator, Stake, ran a social networks advertisement flaunting Drake's automobiles, airplanes and mansions before rotating to video footage of the rap artist casino-style video games.

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

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

The disparity in between gaming sites and social or sweepstakes gambling establishments is a bit intricate, but operators of the latter insist they're not involved with the previous.

A spokesperson for a market trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, the majority of the players on social-sweepstakes casinos are sports betting totally free.

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

Social casinos offer clients a possibility to play casino-style video games with buddies. Players have the choice to purchase worthless currency often referred to as 'gold coins,' which can not be exchanged for real cash, however can be utilized to open different features within the video games.

But within the world of social gambling establishments exists sweepstakes gaming, permitting customers to obtain other currency called 'sweeps coins' that can be exchanged for cash or other rewards.

And therein lies the capacity for financial losses, like the ones declared by plaintiffs 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 cash and other things of worth.

The Philadelphia 76ers' Paul George is seen promoting a Global Poker event

Social sweeps gambling establishment Stake ran an advertisement showing off Drake's vehicles, airplanes and estates

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 fuel the appeal of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes websites, which don't require typically need identification. However, websites like Chumba will ask for IDs from gamers trying to withdraw any funds.
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Many websites, like the crypto-compatible Stake, permit consumers to send mail-in ask for complimentary sweeps coins, offered the players follow painfully specific instructions. What's more, players are frequently rewarded with sweeps coins merely for signing up, therefore offering them a factor to attempt their hands at any number of casino video games for an opportunity to win - or lose - genuine cash.

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

According to the stakeholders, their product is the free casino-style video gaming, and the real-stakes competitors is simply a means of promoting their support.

'Social sweepstakes video games are merely a form of online entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is needed to play at social casinos with sweepstakes prizes. Consumers never ever have to spend for an opportunity to win prizes. That lack of a purchase requirement - or" consideration" - is an important distinction in between social sweeps and traditional online gambling websites like gambling establishments.'

Think of the manner in which McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and fries that provide them the chance to win lucrative prizes, such as a $1 million prize.

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

'Sweepstakes are an enduring technique for promoting all kinds of daily organizations in the United States, everything from hamburgers to publication memberships to coffee and home enhancement stores,' the SPGA spokesperson informed 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 numerous gambling market experts, that argument doesn't cut it.

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

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

'The sweepstakes [casinos] possess none of the qualities commonly related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments provide" casino-like" payments, normally 80 percent or more of incomes, whereas the normal payout percentage for a momentary marketing sweepstakes is a trivial share of the profits earned by the company [generally less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the internet coffee shops that sprang up in Florida, using clients the opportunity to play casino-style video games for real rewards. A number of those brick-and-mortar establishments have actually given that been shuttered over claims of unlawful gaming.

DJ Khaled is amongst numerous star spokespeople for VGW's Global Poker brand

Now, Wallach argues, social sweeps casinos ought to deal with comparable examination.

'These distinctions are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have actually consistently been pointed out by courts and state chief law officer as key aspects in identifying that a sweepstakes promotion remained in fact a guise for illegal gambling.'

Among the gambling establishment industry's leading trade companies, the American Gaming Association, is now pushing lawmakers to examine sweepstakes operators and, in some cases, enact brand-new legislation on the issue.

'Consumers are being deprived of protections and states are giving up significant tax and earnings chances as this sports betting changes that performed through regulated channels,' read a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in four separate cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action suit, saying the settlement was made to avoid legal expenses and continued litigation.

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

In the most recent claim, which is mainly comparable to its predecessors, New York state homeowners Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'unlawful gaming enterprise. '
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Apple and Google have actually likewise been named as accuseds in suits for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's demand for comment.

'We normally don't talk about matters before the courts,' a VGW spokesperson informed DailyMail.com via email. 'However, we note that this claim has actually only simply been filed with the court and VGW has not been officially served.

'We have complete confidence in our compliance with all laws and regulations where we operate, and remain confident about the future,' the spokesperson continued. 'We continue to use our free-to-play games throughout the majority of The United States and Canada, as we have for more than a years, creating not only terrific video games, user experiences and entertainment, but likewise ensuring this is done securely, responsibly and at the greatest level of standards.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are relatively common across the online social games market (and the US more broadly), and our basic practice is that we intend to vigorously safeguard any claim which may be brought versus us.'

The issues in between conventional online gaming and sweepstakes gambling establishments might prove bothersome for some celeb 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 standard gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking prohibited sports betting 'sweeps' websites while at the same time the leagues want to project a strong stance against unlawful gaming - particularly when attempting to tamp down the periodic sports betting scandal,' Glaser told DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter got a lifetime ban from the NBA over claims 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 unlawful gambling websites

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

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

Neither an NBA spokesperson nor the gamers' 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 a duty to describe to customers the distinctions and resemblances in between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that requires to be done.

'We have full self-confidence in our influencer and ambassadorial partnerships, and our business 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 whatever we do.'

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

'Celebrities who lend their names to dubious illegal gaming sites are, at a minimum, putting their track records at danger in addition to courting civil and class actions by consumers who allege damage,' Glaser said. 'There is also some threat that state regulators and state lawyers basic rope celeb endorsers into enforcement efforts for facilitating prohibited gaming.'

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