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

No, they weren't personally in attendance, but the world-famous celebs were notably consisted of in a slide discussion on social and sweepstakes gambling establishments - the controversial websites providing both free casino-style games and rewarding prizes, such as cash, gift cards or cryptocurrency. In one advertisement, 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 sites are just two cogs in the multibillion-dollar market that now discovers itself besieged by suits. In the eyes of many video gaming corporations, not to discuss lawsuit plaintiffs and state regulators, sweepstakes gambling establishments act as standard casinos, just without the oversight, consumer defenses and tax laws. So not only can they avoid the steep 24-percent federal sports betting levy, however sweepstakes operators aren't based on regulatory difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the company faces accusations of unlawful gambling in a New york city lawsuit that declares VGW uses star endorsers to 'produce a veneer of legitimacy' around its item. (See VGW's declaration below)

'I'm unsure" if you don't trust us, you can rely on Paris Hilton" is a winning message for business 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, informed DailyMail.com.

Sweepstakes endorsers include a series of stars from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom provide any differences between standard sports betting and sweepstakes play.

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

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

Drake has a handle social sweeps casino, Stake, that he regularly touts on social media

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Instead, advertisements generally focus around the social element of the casinos, while leaving out the potential for actual sports betting losses.

Others tempt customers with pledges of prizes. One such operator, Stake, ran a social media ad flaunting Drake's cars and trucks, airplanes and estates before rotating to video of the rapper playing online casino-style games.

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

Another caption discussed: 'Because I never ever quit.'

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

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

'Most social sweeps consumers never ever make a purchase,' the SPGA spokesperson told DailyMail.com. 'The minority of customers who make purchases do so in quantities far smaller sized than the common deposit or wager size at real-money online gambling sites.'

Social gambling establishments provide consumers a chance to play casino-style games with buddies. Players have the option to buy worthless currency frequently described as 'gold coins,' which can not be exchanged genuine cash, but can be used to unlock various features within the games.

But within the world of social casinos exists sweepstakes gaming, permitting clients to obtain other currency known as 'sweeps coins' that can be exchanged for cash or other prizes.

And therein lies the potential for financial losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York. One player informed 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 worth.

The Philadelphia 76ers' Paul George is seen promoting a Worldwide Poker occasion

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

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

Traditional online casinos are banned in all however 7 states, which has actually helped to fuel the appeal of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, permit clients to submit mail-in requests for totally free sweeps coins, offered the gamers follow painfully particular instructions. What's more, gamers are often rewarded with sweeps coins simply for registering, thus providing a reason to attempt their hands at any variety of casino games for an opportunity to win - or lose - real money.

So why are sweepstakes sites enabled to run in 48 states, while online gambling establishments are banned in all but 7?

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

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

Think about the method that McDonald's utilizes its annual Monopoly game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and french fries that use them the opportunity to win rewarding rewards, such as a $1 million prize.

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

'Sweepstakes are a long-standing technique for promoting all type of everyday businesses in the United States, whatever from hamburgers to magazine memberships to coffee and home enhancement shops,' 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 lots of gambling industry experts, that argument does not cut it.

For starters, video gaming lawyer Daniel Wallach mentions, McDonald's Monopoly game doesn't run forever. Rather, it has a well-defined start and end, thus suggesting the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being utilized to promote real products like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [gambling establishments] have none of the attributes commonly associated with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes casinos offer" casino-like" payments, typically 80 percent or more of revenues, whereas the typical payment portion for a short-term advertising sweepstakes is an unimportant share of the revenue earned by the company [usually less than one percent]'

Wallach is fast to compare the online social sweeps casinos to the web cafes that sprang up in Florida, using clients the possibility to play casino-style games for real prizes. A number of those brick-and-mortar facilities have actually considering that been shuttered over allegations of prohibited gambling.

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

Now, Wallach argues, social sweeps gambling establishments need to deal with similar scrutiny.

'These differences are not arbitrary,' Wallach stated of social sweeps casinos. 'They have actually repeatedly been pointed out by courts and state chief law officer as key aspects in determining that a sweepstakes promo 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 investigate sweepstakes operators and, sometimes, enact brand-new legislation on the issue.

'Consumers are being deprived of protections and states are giving up considerable tax and earnings opportunities as this gambling changes that performed through controlled channels,' checked out a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 different cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action claim, saying the settlement was made to avoid legal costs and continued litigation.

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

In the most recent suit, which is mainly comparable to its predecessors, New york city state homeowners Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is described in the filing as an 'prohibited sports betting enterprise. '

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

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

'We have full confidence in our compliance with all laws and regulations where we operate, and stay confident about the future,' the representative continued. 'We continue to use our free-to-play games throughout many of The United States and Canada, as we have for more than a years, developing not only fantastic games, user experiences and home entertainment, however also guaranteeing this is done safely, properly and at the highest level of requirements.

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

The problems in between standard online gambling and sweepstakes gambling establishments might prove problematic for some star 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 traditional video gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking prohibited sports betting wagering 'sweeps' websites while at the very same time the leagues wish to forecast a strong stance versus unlawful gaming - particularly when trying to tamp down the occasional gambling scandal,' Glaser told DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter received a lifetime 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.

Together with VGW, Apple and Google are being taken legal action against for hosting apparently illegal gambling websites

Regardless, Glaser sees sweepstakes gambling establishments as a major problem for leagues such as the NBA.

'I 'd anticipate that a league crackdown on athletes backing sweepstakes websites is a matter of when, not if,' Glaser included.

Neither an NBA spokesman nor the gamers' representatives reacted to DailyMail.com's requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise neglected to react to DailyMail.com e-mails.

Asked if their star endorsers have a duty to explain to customers the distinctions and similarities in between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that requires to be done.

'We have full confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the spokesperson said. 'A few of our worths are" our players precede" and" we do what's right", and we put our worths at the core of whatever we do.'

Glaser, an outspoken challenger of sweepstakes websites, sees things in a different way.

'Celebrities who lend their names to shady prohibited sports betting sites are, at a minimum, putting their credibilities at threat along with courting civil and class actions by consumers who allege harm,' Glaser stated. 'There is likewise some threat that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for assisting in illegal gambling.'

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