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

No, they weren't personally in participation, but the world-famous celebs were conspicuously consisted of in a slide presentation on social and sweepstakes casinos - the controversial sites providing both free casino-style games and profitable rewards, such as cash, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are just 2 cogs in the multibillion-dollar market that now finds itself besieged by suits. In the eyes of many video gaming corporations, not to point out lawsuit complainants and state regulators, sweepstakes gambling establishments serve as conventional gambling establishments, only without the oversight, consumer securities and tax laws. So not only can they avoid the steep 24-percent federal gambling levy, but sweepstakes operators aren't based on regulatory hurdles like anti-money laundering and responsible-gaming securities.
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One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the company faces allegations of prohibited gaming in a New York claim that declares VGW uses celeb endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's declaration listed below)

'I'm unsure" if you do not trust us, you can rely on Paris Hilton" is a winning message for companies operating multibillion-dollar prohibited operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of video gaming corporation Light & Wonder, told DailyMail.com.
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Sweepstakes endorsers include a variety of celebs 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 distinctions between standard sports betting and sweepstakes play.

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

Ryan Seacrest advises fans to dip into Chumba Casino, where numerous - however not all - video games are totally free

Drake has a deal with social sweeps gambling establishment, Stake, that he frequently promotes on social media

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

Others lure consumers with guarantees of prizes. One such operator, Stake, ran a social media ad flaunting Drake's automobiles, aircrafts and mansions before pivoting to footage of the rapper playing online casino-style games.

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

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

The inconsistency between gaming sites and social or sweepstakes casinos is a bit complicated, but operators of the latter insist they're not included with the former.

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

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

Social casinos use consumers a chance to play casino-style games with friends. Players have the option to buy valueless currency frequently described as 'gold coins,' which can not be exchanged for genuine cash, but can be utilized to open various features within the video games.

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

And therein lies the potential for financial losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York. One gamer told the Washington Post he lost more than $100,000 on sweepstakes casinos in the past 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 occasion

Social sweeps casino Stake ran an advertisement displaying Drake's cars, aircrafts 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 however 7 states, which has actually helped to sustain the popularity of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, allow clients to submit mail-in ask for complimentary sweeps coins, offered the players follow painfully specific directions. What's more, players are often rewarded with sweeps coins just for registering, therefore offering them a reason to try their hands at any number of casino games for a possibility to win - or lose - real money.

So why are sweepstakes sites enabled to operate in 48 states, while online casinos are prohibited in all however 7?

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

'Social sweepstakes games are just a form of online home entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is needed to play at social gambling establishments with sweepstakes rewards. Consumers never ever have to pay for an opportunity to win rewards. That absence of a purchase requirement - or" consideration" - is an important distinction in between social sweeps and standard online gambling websites like casinos.'
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Think of the way that McDonald's uses its annual Monopoly video game to its food: Customers aren't paying to bet, but rather they're buying hamburgers and french fries that offer them the chance to win rewarding prizes, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the video game itself does not meet the definition of sports betting in the US.
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'Sweepstakes are a long-standing technique for promoting all sort of daily companies in the United States, whatever from hamburgers to publication subscriptions to coffee and home improvement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are regularly utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of gambling market insiders, that argument does not cut it.

For beginners, gaming lawyer Daniel Wallach points out, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a distinct start and end, thus suggesting the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being used to promote genuine products like fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're typically not tied to casino-style games of chance,' Wallach told DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [gambling establishments] have none of the characteristics frequently associated with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos provide" casino-like" payments, usually 80 percent or more of revenues, whereas the normal payment percentage for a short-lived promotional sweepstakes is an insignificant share of the income made by the business [generally less than one percent]'

Wallach is quick to liken the online social sweeps gambling establishments to the internet cafes that emerged in Florida, providing customers the possibility to play casino-style games for genuine prizes. Much of those brick-and-mortar establishments have actually considering that been shuttered over accusations of prohibited gaming.

DJ Khaled is among numerous celebrity spokespeople for VGW's Global Poker brand

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

'These distinctions are not approximate,' Wallach said of social sweeps casinos. 'They have actually consistently been pointed out by courts and state attorney generals as essential elements in figuring out that a sweepstakes promotion remained in reality a guise for unlawful gambling.'

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

'Consumers are being denied of securities and states are passing up considerable tax and income chances as this gambling replaces that performed through regulated channels,' checked out a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in four separate cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action suit, stating the settlement was made to prevent legal costs and continued lawsuits.

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

In the most recent lawsuit, which is mostly comparable to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'illegal gambling business. '

Apple and Google have actually also been named as offenders in claims for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's request for remark.

'We typically 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 only just been submitted with the court and VGW has not been officially served.

'We have full self-confidence in our compliance with all laws and regulations where we run, and stay positive about the future,' the spokesperson continued. 'We continue to provide our free-to-play video games throughout most of The United States and Canada, as we have for more than a decade, creating not only fantastic games, user experiences and home entertainment, however likewise ensuring this is done securely, responsibly and at the highest level of requirements.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are fairly common throughout the online social games market (and the US more broadly), and our standard practice is that we intend to vigorously defend any claim which might be brought versus us.'

The concerns between traditional online gaming and sweepstakes casinos 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 while the NBA is partnered with standard gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking unlawful sports betting 'sweeps' sites while at the exact same time the leagues wish to project a strong position against prohibited gaming - specifically when attempting to tamp down the occasional gambling scandal,' Glaser informed DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter received a life time restriction from the NBA over accusations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes gambling establishments.
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In addition to VGW, Apple and Google are being demanded hosting allegedly unlawful gambling sites

Regardless, Glaser sees sweepstakes gambling establishments as a major issue 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 emails.

Asked if their star endorsers have a duty to discuss to consumers the distinctions and similarities between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that requires to be done.

'We have complete self-confidence in our influencer and ambassadorial collaborations, 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 values at the core of everything we do.'

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

'Celebrities who provide their names to shady prohibited sports betting sites are, at a minimum, putting their credibilities at threat as well as courting civil and class actions by consumers who declare harm,' Glaser said. 'There is also some danger that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for helping with illegal gambling.'

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