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, but the world-famous stars were conspicuously included in a slide discussion on social and sweepstakes gambling establishments - the controversial sites providing both totally free casino-style games and lucrative rewards, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are just two cogs in the multibillion-dollar industry that now finds itself besieged by claims. In the eyes of lots of gaming corporations, not to discuss suit complainants and state regulators, sweepstakes gambling establishments function as conventional gambling establishments, only without the oversight, consumer securities and tax laws. So not just can they avoid the high 24-percent federal sports betting levy, however sweepstakes operators aren't subject to regulatory difficulties like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the company deals with accusations of prohibited sports betting in a New York lawsuit that claims VGW utilizes celebrity endorsers to a veneer of legitimacy' around its product. (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 companies operating multibillion-dollar unlawful 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 series of celebs from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom use any differences between conventional 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 many - however not all - games are complimentary
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Drake has a handle social sweeps gambling establishment, Stake, that he routinely promotes on social media

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Instead, advertisements typically center around the social element of the casinos, while leaving out the capacity for real gambling losses.

Others tempt clients with guarantees of prizes. One such operator, Stake, ran a social media advertisement revealing off Drake's automobiles, aircrafts and mansions before pivoting to footage of the rap artist playing online casino-style games.

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

Another caption discussed: 'Because I never quit.'

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

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, most of the players on social-sweepstakes gambling establishments are sports betting complimentary.

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

Social gambling establishments use consumers a chance to play casino-style video games with pals. Players have the choice to buy valueless currency often described as 'gold coins,' which can not be exchanged for genuine cash, but can be used to unlock numerous features within the games.

But within the world of social gambling establishments exists sweepstakes gaming, enabling consumers to acquire other currency known as 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the capacity for monetary losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York City. 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 value.

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

Social sweeps casino 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 banned 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 websites, which don't require typically require identification. However, sites like Chumba will request for IDs from players trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, allow clients to submit mail-in demands for complimentary sweeps coins, offered the gamers follow painfully particular directions. What's more, gamers are frequently rewarded with sweeps coins simply for signing up, consequently providing a factor to try their hands at any number of gambling establishment video games for a possibility to win - or lose - real cash.

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

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

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

Think of the way that McDonald's uses its yearly Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and french fries that provide them the chance to win lucrative 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 sports betting in the US.

'Sweepstakes are a long-standing method for promoting all sort of daily businesses in the United States, whatever from hamburgers to magazine subscriptions to coffee and home improvement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are routinely used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many gambling industry experts, that argument does not cut it.

For starters, video gaming lawyer Daniel Wallach mentions, McDonald's Monopoly video game does not run indefinitely. Rather, it has a well-defined start and end, thus recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote genuine items like french fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [casinos] possess none of the attributes frequently related to McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments use" casino-like" payments, usually 80 percent or more of profits, whereas the common payment percentage for a short-term marketing sweepstakes is a trivial share of the income made by the business [usually less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the web cafes that emerged in Florida, providing consumers the opportunity to play casino-style games for real prizes. Much of those brick-and-mortar facilities have actually since been shuttered over claims of unlawful gaming.

DJ Khaled is among several star spokespeople for VGW's Global Poker brand name

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

'These differences are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have repeatedly been mentioned by courts and state chief law officer as essential elements in determining that a sweepstakes promotion remained in truth a guise for illegal gambling.'

Among the casino industry's leading trade companies, the American Gaming Association, is now pressing legislators to investigate sweepstakes operators and, sometimes, enact brand-new legislation on the problem.

'Consumers are being denied of securities and states are giving up significant tax and revenue opportunities as this sports betting replaces that conducted through regulated channels,' checked out a well-circulated AGA memo.

And then there are the complainants who have actually sued social gambling establishments in more than a lots states.

Sweepstakes casino operators paid a combined $14.2 million in 4 different 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 lawsuits.

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

In the most recent suit, which is mostly similar to its predecessors, New york city state citizens Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is described in the filing as an 'illegal gaming business. '

Apple and Google have actually also been called as offenders in claims for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for comment.

'We usually don't talk about matters before the courts,' a VGW spokesperson told DailyMail.com via e-mail. 'However, we note that this claim has only just been submitted with the court and VGW has not been officially served.

'We have full confidence in our compliance with all laws and policies where we run, and remain confident about the future,' the spokesperson continued. 'We continue to offer our free-to-play video games across the majority of North America, as we have for more than a years, creating not just terrific video games, user experiences and home entertainment, however likewise ensuring this is done safely, responsibly and at the greatest level of requirements.
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'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are fairly typical throughout the online social video games market (and the US more broadly), and our standard practice is that we mean to intensely defend any claim which might be brought versus us.'

The problems between conventional online gaming and sweepstakes casinos might show bothersome for some star endorsers.
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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 paradoxical that professional athletes are hawking prohibited sports betting wagering 'sweeps' sites while at the exact same time the leagues want to predict a strong stance against unlawful gaming - particularly when trying to tamp down the periodic gaming scandal,' Glaser informed DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter received a life time restriction from the NBA over claims he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes gambling establishments.

In addition to VGW, Apple and Google are being taken legal action against for hosting allegedly illegal gambling websites

Regardless, Glaser sees sweepstakes casinos as a major issue for leagues such as the NBA.

'I 'd expect that a league crackdown on athletes backing sweepstakes websites refers 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 also neglected to respond to DailyMail.com e-mails.

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

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the representative said. 'Some of our values are" our players come first" and" we do what's right", and we put our values at the core of everything we do.'

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

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

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