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

No, they weren't personally in presence, however the world-famous celebrities were notably consisted of in a slide discussion on social and sweepstakes casinos - the questionable sites offering both complimentary casino-style games and profitable prizes, such as cash, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet complimentary,' 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 discovers itself besieged by claims. In the eyes of many gaming corporations, not to discuss lawsuit plaintiffs and state regulators, sweepstakes casinos function as standard gambling establishments, only without the oversight, consumer defenses and tax laws. So not just can they avoid the steep 24-percent federal gaming levy, however sweepstakes operators aren't subject to regulatory hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the business deals with allegations of prohibited sports betting in a New York lawsuit that claims VGW uses celeb endorsers to 'create a veneer of legitimacy' around its product. (See VGW's statement listed below)

'I'm not exactly sure" if you don't trust us, you can trust 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 celebs 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 use any distinctions in between standard gaming 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 many - but not all - games are complimentary

Drake has a handle social sweeps gambling establishment, Stake, that he regularly touts on social networks

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Instead, advertisements typically focus around the social aspect of the casinos, while leaving out the capacity for actual sports betting losses.

Others lure customers with promises of prizes. One such operator, Stake, ran a social media advertisement revealing off Drake's cars, airplanes and estates before pivoting to footage of the rap artist playing online casino-style games.

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

Another caption discussed: 'Because I never provided up.'

The discrepancy in between gambling websites and social or sweepstakes casinos is a bit complex, however operators of the latter insist they're not involved with the previous.

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), explained 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 casinos are sports betting totally free.

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

Social casinos use customers a possibility to play casino-style video games with friends. Players have the alternative to purchase valueless currency frequently referred to as 'gold coins,' which can not be exchanged for real cash, but can be used to open numerous functions within the video games.

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

And therein lies the potential for monetary 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 casinos in the past year after continuing to purchase more coins in pursuit of cash and other things of worth.

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

Social sweeps casino Stake ran an advertisement showing off Drake's cars and trucks, aircrafts and mansions

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

Traditional online casinos are prohibited in all but 7 states, which has actually assisted to fuel the appeal of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes websites, which do not need typically need recognition. However, sites like Chumba will request IDs from players attempting to withdraw any funds.

Many websites, like the crypto-compatible Stake, enable customers to send mail-in ask for free sweeps coins, offered the gamers follow painfully particular instructions. What's more, gamers are frequently rewarded with sweeps coins just for signing up, thus providing a factor to attempt their hands at any variety of casino games for an opportunity to win - or lose - genuine cash.

So why are sweepstakes websites allowed to operate in 48 states, while online gambling establishments are banned in all however 7?

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

'Social sweepstakes games are merely a form of online home entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is required to play at social casinos 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 between social sweeps and traditional online gaming sites like casinos.'

Consider the method that McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're buying hamburgers and fries that use them the chance to win lucrative rewards, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the game itself does not satisfy the definition of sports betting in the US.

'Sweepstakes are a long-standing approach for promoting all sort of daily companies in the United States, whatever from burgers to publication memberships to coffee and home enhancement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are routinely used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous sports betting industry insiders, that argument does not cut it.

For starters, video gaming attorney Daniel Wallach mentions, McDonald's Monopoly game does not run forever. Rather, it has a well-defined beginning and end, therefore recommending the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being used to promote real products like french fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're generally not tied to casino-style games of opportunity,' Wallach informed DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [gambling establishments] have none of the characteristics typically related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos use" casino-like" payments, typically 80 percent or more of incomes, whereas the normal payout percentage for a short-lived marketing sweepstakes is a minor share of the income made by the company [normally less than one percent]'

Wallach is quick to compare the online social sweeps gambling establishments to the internet coffee shops that emerged in Florida, offering consumers the possibility to play casino-style games for genuine rewards. Much of those brick-and-mortar facilities have given that been shuttered over allegations of unlawful sports betting.

DJ Khaled is among several celeb 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 gambling establishments. 'They have repeatedly been mentioned by courts and state attorney general of the United States as crucial aspects in figuring out that a sweepstakes promotion remained in truth a guise for prohibited gaming.'

One of the gambling establishment industry's leading trade companies, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, in many cases, enact brand-new legislation on the concern.

'Consumers are being deprived of securities and states are passing up significant tax and earnings chances as this gambling changes that carried out through controlled channels,' read a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in four separate cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action suit, saying 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 most current claim, which is mostly comparable to its predecessors, New york city state locals 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 sports betting enterprise. '

Apple and Google have likewise been called as offenders in suits for hosting the sweepstakes sites. But unlike VGW, neither tech business responded to DailyMail.com's request for comment.

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

'We have complete confidence in our compliance with all laws and regulations where we run, and stay positive about the future,' the spokesperson continued. 'We continue to use our free-to-play games across many of North America, as we have for more than a years, creating not only terrific games, user experiences and entertainment, but likewise guaranteeing this is done safely, responsibly and at the greatest level of requirements.

'More broadly, we 'd restate that class actions and other litigations and arbitrations are reasonably typical across the online social games industry (and the US more broadly), and our basic practice is that we plan to vigorously defend any claim which might be brought versus us.'

The problems between conventional online sports betting and sweepstakes casinos might prove bothersome for some celeb 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 conventional video gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking unlawful sports betting 'sweeps' websites while at the very same time the leagues want to forecast a strong stance versus prohibited sports betting - especially 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 got a life time ban from the NBA over claims he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes casinos.

In addition to VGW, Apple and Google are being sued for hosting presumably illegal sports betting sites

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

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

Neither an NBA representative nor the gamers' agents reacted to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise disregarded to react to DailyMail.com e-mails.

Asked if their celeb endorsers have an obligation to describe to customers the differences and resemblances 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 company practices more broadly,' the spokesperson stated. 'Some of our values are" our gamers precede" and" we do what's right", and we put our worths at the core of everything we do.'

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

'Celebrities who lend their names to dubious prohibited sports betting sites are, at a minimum, putting their track records at threat as well as courting civil and class actions by customers who declare harm,' Glaser stated. 'There is likewise some danger that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for helping with unlawful gaming.'

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