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

No, they weren't personally in attendance, however the world-famous stars were conspicuously consisted of in a slide presentation on social and sweepstakes casinos - the questionable sites offering both free casino-style video games and lucrative prizes, such as cash, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet complimentary,' 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 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 traditional casinos, only without the oversight, customer defenses and tax laws. So not only can they avoid the high 24-percent federal sports betting levy, but 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 profits last year alone. Now the business deals with allegations of illegal gaming in a New York suit that declares VGW utilizes celeb endorsers to 'create a veneer of legitimacy' around its product. (See VGW's declaration below)

'I'm not sure" if you don't trust us, you can rely on Paris Hilton" is a winning message for business operating multibillion-dollar unlawful operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a variety of celebrities from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Towns and Paul George - none of whom provide any differences between conventional gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among many sweepstakes gambling establishments found online

Ryan Seacrest prompts fans to play at Chumba Casino, where numerous - however not all - games are free
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Drake has a handle social sweeps casino, Stake, that he regularly promotes on social networks

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Instead, advertisements typically focus around the social aspect of the casinos, while omitting the potential for real gaming losses.

Others tempt customers with promises of prizes. One such operator, Stake, ran a social media advertisement displaying Drake's cars and trucks, planes and mansions before pivoting to video footage of the rap artist playing online casino-style video games.

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

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

The inconsistency in between sports betting sites and social or sweepstakes gambling establishments is a bit intricate, but operators of the latter insist they're not included with the former.

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

'Most social sweeps consumers never ever buy,' the SPGA representative informed DailyMail.com. 'The minority of consumers who make purchases do so in amounts far smaller sized than the typical deposit or bet size at real-money online gambling websites.'
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Social casinos provide consumers a chance to play casino-style games with good friends. Players have the choice to buy valueless currency frequently described as 'gold coins,' which can not be exchanged genuine cash, however can be used to open different functions within the games.

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

And therein lies the potential for monetary losses, like the ones claimed by plaintiffs 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 buy more coins in pursuit of money and other things of value.

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

Social sweeps casino Stake ran an ad flaunting Drake's cars and trucks, planes and estates

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

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

Anyone over the age of 18 can access the sweepstakes sites, which don't require generally need recognition. However, sites like Chumba will request IDs from players trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, permit consumers to submit mail-in demands for complimentary sweeps coins, supplied the players follow painfully particular instructions. What's more, gamers are frequently rewarded with sweeps coins merely for registering, therefore offering them a factor to attempt their hands at any variety of casino video games for a chance to win - or lose - genuine cash.

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

According to the stakeholders, their item is the free casino-style gaming, and the real-stakes competition is merely a way of promoting their support.

'Social sweepstakes games are just a kind 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 rewards. Consumers never ever have to spend for an opportunity to win prizes. That absence of a purchase requirement - or" consideration" - is an important difference between social sweeps and standard online sports betting websites like casinos.'

Think about the manner in which McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and french fries that use them the chance to win profitable prizes, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the video game itself does not satisfy the definition of sports betting in the US.
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'Sweepstakes are a long-standing approach for promoting all type of daily organizations in the United States, whatever from hamburgers to magazine memberships to coffee and home improvement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are frequently 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 insiders, that argument does not cut it.

For beginners, video gaming attorney Daniel Wallach mentions, McDonald's Monopoly game does not run indefinitely. Rather, it has a well-defined beginning and end, consequently suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote genuine items like french fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're generally not connected to casino-style video games of chance,' Wallach told DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [casinos] have none of the qualities frequently connected with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos provide" casino-like" payments, generally 80 percent or more of earnings, whereas the normal payout percentage for a temporary advertising sweepstakes is a trivial share of the income earned by the company [normally less than one percent]'

Wallach is fast to compare the online social sweeps casinos to the web coffee shops that emerged in Florida, using customers the chance to play casino-style games for genuine rewards. A lot of those brick-and-mortar facilities have actually because been shuttered over claims of unlawful gambling.

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

Now, Wallach argues, social sweeps casinos need to face similar scrutiny.

'These differences are not arbitrary,' Wallach stated of social sweeps casinos. 'They have actually repeatedly been mentioned by courts and state attorney general of the United States as key consider determining that a sweepstakes promo remained in fact a guise for prohibited gambling.'

One of the casino industry's leading trade organizations, the American Gaming Association, is now pushing lawmakers to examine sweepstakes operators and, in many cases, enact brand-new legislation on the concern.

'Consumers are being deprived of securities and states are forgoing considerable tax and revenue chances as this sports betting changes that carried out through regulated channels,' read a well-circulated AGA memo.

And after that there are the complainants who have sued social casinos in more than a dozen states.

Sweepstakes casino operators paid a combined $14.2 million in four different cases in Kentucky without admitting any misbehavior, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, stating the settlement was made to prevent legal expenses and continued litigation.

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

In the current claim, which is mainly 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 explained in the filing as an 'prohibited sports betting enterprise. '

Apple and Google have actually also been named as accuseds in suits for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com's ask for comment.

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

'We have full confidence in our compliance with all laws and guidelines where we run, and remain positive about the future,' the spokesperson continued. 'We continue to use our free-to-play video games throughout the majority of North America, as we have for more than a decade, creating not only excellent video games, user experiences and entertainment, however likewise guaranteeing this is done securely, responsibly and at the highest level of requirements.

'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are fairly common throughout the online social games industry (and the US more broadly), and our standard practice is that we plan to strongly safeguard any claim which may be brought versus us.'

The issues between conventional online gaming and sweepstakes gambling establishments could prove problematic for some celebrity 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 traditional gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking prohibited sports betting 'sweeps' websites while at the same time the leagues desire to predict a strong stance against prohibited gambling - particularly when trying to tamp down the occasional gambling scandal,' Glaser informed DailyMail.com.

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

Together with VGW, Apple and Google are being demanded hosting apparently prohibited sports betting websites

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

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

Neither an NBA spokesman nor the players' agents responded to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also overlooked to react to DailyMail.com emails.

Asked if their celeb endorsers have a responsibility to discuss to consumers the differences and similarities in between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the representative said. 'Some of our values are" our gamers come initially" and" we do what's right", and we put our worths at the core of everything we do.'

Glaser, an outspoken challenger of sweepstakes sites, sees things differently.

'Celebrities who lend their names to dubious illegal sports betting websites are, at a minimum, putting their credibilities at risk in addition to courting civil and class actions by consumers who allege damage,' 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 prohibited gaming.'

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