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

No, they weren't personally in participation, however the world-famous celebrities were conspicuously consisted of in a slide presentation on social and sweepstakes gambling establishments - the controversial websites providing both complimentary casino-style video games and rewarding rewards, such as cash, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet 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 industry that now discovers itself besieged by claims. In the eyes of numerous gaming corporations, not to mention lawsuit complainants and state regulators, sweepstakes gambling establishments serve as standard gambling establishments, just without the oversight, customer securities and tax laws. So not just can they prevent the steep 24-percent federal gaming levy, however sweepstakes operators aren't subject to regulatory obstacles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits last year alone. Now the business deals with accusations of unlawful gambling in a New York suit that claims VGW utilizes celeb endorsers to 'create a veneer of legitimacy' around its product. (See VGW's declaration listed below)

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

Sweepstakes endorsers consist of 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 offer any distinctions in between standard gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among many sweepstakes casinos discovered online

Ryan Seacrest advises fans to play at Chumba Casino, where lots of - but not all - video games are free

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

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Instead, advertisements usually focus around the social aspect of the gambling establishments, while omitting the potential for real gaming losses.

Others lure customers with pledges of prizes. One such operator, Stake, ran a social media ad showing off Drake's automobiles, airplanes and estates before pivoting to footage of the rapper playing online casino-style games.

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

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

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

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, the majority of the gamers on social-sweepstakes gambling establishments are playing for totally free.

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

Social casinos offer clients a chance to play casino-style games with friends. Players have the alternative to buy valueless currency often described as 'gold coins,' which can not be exchanged genuine cash, but can be used to unlock different functions within the games.

But within the world of social gambling establishments exists sweepstakes video gaming, allowing clients to get other currency referred to as 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the capacity for financial losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York. One gamer told 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 value.

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

Social sweeps gambling establishment Stake ran an ad revealing off Drake's vehicles, aircrafts 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 seven states, which has actually helped to sustain the popularity of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes sites, which do not need generally require identification. However, sites like Chumba will request for IDs from players trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, enable consumers to send mail-in demands for complimentary sweeps coins, supplied the gamers follow painfully specific directions. What's more, players are frequently rewarded with sweeps coins simply for signing up, thereby giving them a factor to try their hands at any number of casino games for a chance to win - or lose - real money.

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

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

'Social sweepstakes games are simply a form of online home entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is required to play at social casinos with sweepstakes prizes. Consumers never ever have to pay for an opportunity to win prizes. That lack of a purchase requirement - or" consideration" - is an important distinction between social sweeps and standard online gambling sites like gambling establishments.'

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

And without a purchase requirement, or 'consideration', the game itself does not meet the meaning of gambling in the US.

'Sweepstakes are a long-standing approach for promoting all sort of everyday companies in the United States, everything from hamburgers to magazine memberships to coffee and home enhancement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are frequently utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For starters, gaming attorney Daniel Wallach mentions, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a distinct start and end, therefore suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote real items like fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're normally not tied to casino-style video games of opportunity,' Wallach told DailyMail.com. 'They're just cash free gifts.

'The sweepstakes [casinos] have none of the qualities frequently related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments provide" casino-like" payments, generally 80 percent or more of profits, whereas the typical payment portion for a momentary marketing sweepstakes is a minor share of the earnings made by the business [generally less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the web coffee shops that emerged in Florida, providing customers the chance to play casino-style video games for real prizes. Much of those brick-and-mortar establishments have since been shuttered over claims of unlawful sports betting.

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

Now, Wallach argues, social sweeps gambling establishments must deal with similar examination.

'These distinctions are not arbitrary,' Wallach stated of social sweeps casinos. 'They have actually consistently been pointed out by courts and state chief law officer as essential consider determining that a sweepstakes promo was in reality a guise for illegal gaming.'

One of the gambling establishment market's leading trade companies, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, sometimes, enact new legislation on the concern.

'Consumers are being deprived of defenses and states are passing up substantial tax and earnings opportunities as this gambling changes that carried out through controlled channels,' checked out a well-circulated AGA memo.

And after that 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 wrongdoing, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action lawsuit, saying the settlement was made to avoid legal expenses and continued litigation.

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

In the most recent claim, which is mostly comparable to its predecessors, New York state residents Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited gambling enterprise. '

Apple and Google have also been called as accuseds in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech company responded to DailyMail.com's demand for remark.

'We usually do not talk about matters before the courts,' a VGW representative informed DailyMail.com via e-mail. 'However, we note that this claim has actually only just been filed with the court and VGW has not been formally served.

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

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are fairly common across the online social games market (and the US more broadly), and our basic practice is that we mean to strongly defend any claim which may be brought versus us.'

The issues between traditional online gaming and sweepstakes gambling establishments might prove bothersome for some celebrity 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 gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking prohibited sports betting wagering 'sweeps' websites while at the same time the leagues want to predict a strong stance versus prohibited gambling - especially when trying to tamp down the periodic gambling scandal,' Glaser told DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter got a lifetime restriction from the NBA over claims he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes gambling establishments.

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

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

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

Neither an NBA spokesperson nor the gamers' agents responded to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise overlooked to react to DailyMail.com emails.

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

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our business practices more broadly,' the representative stated. 'A few of our values are" our players precede" 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 in a different way.

'Celebrities who provide their names to shady illegal gaming sites are, at a minimum, putting their credibilities at threat along with courting civil and class actions by customers who declare harm,' Glaser stated. 'There is also some risk that state regulators and state attorneys basic rope celeb endorsers into enforcement efforts for facilitating unlawful sports betting.'

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