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 participation, but the world-famous celebs were conspicuously consisted of in a slide discussion on social and sweepstakes casinos - the controversial sites using both complimentary casino-style games and financially 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 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 industry that now finds itself besieged by claims. In the eyes of numerous video gaming corporations, not to point out suit plaintiffs and state regulators, sweepstakes casinos function as traditional gambling establishments, just without the oversight, consumer protections and tax laws. So not only can they avoid the steep 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulatory obstacles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the company deals with accusations of illegal gambling in a New York claim that declares VGW uses celebrity endorsers to 'produce a veneer of authenticity' 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 illegal operations out of places like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers include a series of celebs from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom use any differences between conventional gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of numerous sweepstakes casinos discovered online

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

Drake has a handle social sweeps casino, Stake, that he regularly promotes on social media

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

Others tempt clients with promises of rewards. One such operator, Stake, ran a social networks advertisement displaying Drake's vehicles, airplanes and mansions before rotating to video of the rap artist playing online casino-style video games.

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

Another caption explained: 'Because I never quit.'

The disparity in between sports betting websites and social or sweepstakes casinos is a bit intricate, however 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, many of the players on social-sweepstakes casinos are playing for totally free.

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

Social casinos use customers a chance to play casino-style video games with good friends. Players have the choice to buy valueless currency often described as 'gold coins,' which can not be exchanged genuine money, however can be utilized to open numerous features within the video games.

But within the world of social casinos exists sweepstakes video gaming, enabling customers to get other currency referred to as 'sweeps coins' that can be exchanged for money 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 informed the Washington Post he lost more than $100,000 on sweepstakes gambling establishments 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 Global Poker event

Social sweeps casino Stake ran an advertisement flaunting Drake's cars, airplanes 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 banned in all however 7 states, which has helped to sustain the appeal of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes websites, which don't need usually need identification. However, websites like Chumba will ask for IDs from players trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, enable customers to submit mail-in ask for totally free sweeps coins, supplied the gamers follow painfully particular instructions. What's more, gamers are often rewarded with sweeps coins merely for registering, therefore providing them a reason to try their hands at any variety of casino games for a chance to win - or lose - genuine cash.

So why are sweepstakes sites permitted to run in 48 states, while online gambling establishments are banned in all but 7?

According to the stakeholders, their product is the free casino-style gaming, and the real-stakes competitors is merely a way of promoting their bread and butter.

'Social sweepstakes games are merely a type of online home entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is needed to play at social gambling establishments with sweepstakes prizes. Consumers never ever have to spend for a chance to win rewards. That absence of a purchase requirement - or" factor to consider" - is a crucial difference between social sweeps and traditional online sports betting websites like gambling establishments.'

Consider the method that McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and french fries that offer them the chance to win financially rewarding rewards, 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.

'Sweepstakes are an enduring technique for promoting all type of everyday services in the United States, everything from hamburgers to publication memberships to coffee and home enhancement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are frequently utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For starters, gaming lawyer Daniel Wallach explains, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a well-defined start and end, therefore suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote genuine products like french fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [casinos] have none of the qualities commonly associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos provide" casino-like" payouts, usually 80 percent or more of earnings, whereas the common payment percentage for a short-lived marketing sweepstakes is a trivial share of the profits earned by the company [typically less than one percent]'

Wallach is fast to compare the online social sweeps gambling establishments to the web cafes that emerged in Florida, using consumers the possibility to play casino-style games for real rewards. Much of those brick-and-mortar establishments have actually given that been shuttered over claims of illegal sports betting.

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

Now, Wallach argues, social sweeps casinos must face similar analysis.

'These distinctions are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have repeatedly been mentioned by courts and state attorney general of the United States as essential elements in determining that a sweepstakes promotion remained in fact a guise for illegal gambling.'

One of the casino market's leading trade organizations, the American Gaming Association, is now pressing lawmakers to investigate sweepstakes operators and, sometimes, enact brand-new legislation on the problem.

'Consumers are being deprived of securities and states are forgoing significant tax and income chances as this gaming changes that conducted through regulated channels,' read 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 gambling establishment operators paid a combined $14.2 million in 4 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 avoid legal expenses and continued litigation.

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

In the newest claim, which is mostly comparable to its predecessors, New York state citizens Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited sports betting business. '

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

'We generally do not talk about matters before the courts,' a VGW representative informed DailyMail.com through email. 'However, we note that this claim has actually only just been submitted with the court and VGW has not been formally served.

'We have full self-confidence in our compliance with all laws and guidelines where we run, and remain confident about the future,' the spokesperson continued. 'We continue to use our free-to-play games across many of The United States and Canada, as we have for more than a decade, producing not just great games, user experiences and entertainment, however also ensuring this is done safely, properly and at the highest level of standards.

'More broadly, we 'd repeat 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 basic practice is that we plan to intensely safeguard any claim which might be brought against us.'

The issues in between traditional online gambling and sweepstakes gambling establishments could show problematic 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 gaming titans like FanDuel and DraftKings.

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

It was simply eight 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 involving social or sweepstakes gambling establishments.

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

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

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

Neither an NBA representative nor the players' representatives reacted to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise overlooked to respond to DailyMail.com emails.

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

'We have full confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the representative stated. 'A few of our worths 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 websites, sees things differently.

'Celebrities who provide their names to shady prohibited sports betting sites are, at a minimum, putting their track records at threat in addition to courting civil and class actions by customers who allege damage,' Glaser stated. 'There is also some danger that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for assisting in unlawful gaming.'

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