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

No, they weren't personally in attendance, but the world-famous stars were conspicuously included in a slide presentation on social and sweepstakes gambling establishments - the questionable sites providing both totally free casino-style games and lucrative prizes, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet free,' 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 market that now finds itself besieged by lawsuits. In the eyes of lots of gaming corporations, not to point out lawsuit plaintiffs and state regulators, sweepstakes casinos function as standard gambling establishments, just without the oversight, consumer protections and tax laws. So not only can they avoid the steep 24-percent federal sports betting levy, however sweepstakes operators aren't subject to regulatory difficulties 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 prohibited gaming in a New york city lawsuit that claims VGW uses celebrity endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's statement listed below)

'I'm not sure" if you don't trust us, you can rely on Paris Hilton" is a winning message for companies operating multibillion-dollar unlawful operations out of places 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 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 distinctions in between conventional gambling and sweepstakes play.

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

Ryan Seacrest advises fans to play at Chumba Casino, where many - however not all - video games are totally free

Drake has a deal with social sweeps gambling establishment, Stake, that he frequently 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 real gambling losses.

Others tempt customers with pledges of rewards. One such operator, Stake, ran a social networks ad flaunting Drake's automobiles, aircrafts and mansions before pivoting to footage of the rap artist playing online casino-style games.

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

Another caption explained: 'Because I never quit.'

The discrepancy in between gambling websites and social or sweepstakes casinos is a bit intricate, but 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 competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, most of the players on social-sweepstakes gambling establishments are playing for totally free.

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

Social casinos provide consumers a chance to play casino-style video games with pals. Players have the alternative to buy valueless currency often referred to as 'gold coins,' which can not be exchanged genuine money, but can be used to unlock different features within the games.

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

And therein lies the capacity 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 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 Worldwide Poker occasion

Social sweeps casino Stake ran an ad displaying Drake's cars and trucks, aircrafts and estates

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

Traditional online casinos are banned in all however seven states, which has actually assisted to fuel the popularity of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, enable customers to send mail-in ask for totally free sweeps coins, provided the gamers follow painfully particular directions. What's more, players are often rewarded with sweeps coins simply for signing up, consequently providing a factor to attempt their hands at any variety of gambling establishment video games for a chance to win - or lose - genuine money.

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

According to the stakeholders, their item is the totally free casino-style video gaming, and the real-stakes competitors is merely a means of promoting their bread and butter.

'Social sweepstakes video games are simply a form of online entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is needed to dip into social gambling establishments with sweepstakes rewards. Consumers never ever need to spend for a chance to win rewards. That lack of a purchase requirement - or" consideration" - is a vital distinction in between social sweeps and conventional online sports betting websites like gambling establishments.'

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

And without a purchase requirement, or 'factor to consider', the video game itself does not fulfill the meaning of gaming in the US.

'Sweepstakes are an enduring method for promoting all type of daily organizations in the United States, everything from hamburgers to publication memberships to coffee and home improvement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are routinely used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For beginners, video gaming lawyer Daniel Wallach points out, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a well-defined beginning and end, thereby recommending 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 don't last forever and they're usually not connected to casino-style games of chance,' Wallach informed DailyMail.com. 'They're just money free gifts.

'The sweepstakes [casinos] possess none of the characteristics commonly associated with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments provide" casino-like" payouts, typically 80 percent or more of earnings, whereas the typical payment portion for a short-term marketing sweepstakes is an insignificant share of the income earned by the company [typically less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the web cafes that emerged in Florida, using clients the opportunity to play casino-style games for real prizes. Much of those brick-and-mortar establishments have actually given that been shuttered over accusations of prohibited gaming.

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

Now, Wallach argues, social sweeps casinos should deal with similar scrutiny.

'These distinctions are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have repeatedly been pointed out by courts and state attorney general of the United States as essential consider identifying that a sweepstakes promo remained in truth a guise for unlawful sports betting.'

Among the casino market's leading trade organizations, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, in some cases, enact brand-new legislation on the issue.

'Consumers are being denied of protections and states are forgoing substantial tax and profits chances as this gaming replaces that performed through regulated channels,' checked out a well-circulated AGA memo.

And then there are the plaintiffs who have sued social gambling establishments in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in four different cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action claim, saying the settlement was made to prevent legal costs and continued litigation.

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

In the most current claim, which is mainly similar 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 described in the filing as an 'prohibited gambling business. '

Apple and Google have actually also been named as defendants in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's request for remark.

'We usually don't talk about matters before the courts,' a VGW spokesperson told DailyMail.com by means of 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 self-confidence in our compliance with all laws and regulations where we operate, and remain positive about the future,' the spokesperson continued. 'We continue to provide our free-to-play games throughout many of North America, as we have for more than a years, developing not just great video games, user experiences and entertainment, but also guaranteeing this is done safely, responsibly and at the greatest level of standards.

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

The issues in between standard online gaming and sweepstakes casinos could prove troublesome for some celeb 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 traditional 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 wish to predict a strong stance against prohibited gaming - especially when trying 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 ban from the NBA over allegations he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes gambling establishments.

Together with VGW, Apple and Google are being demanded hosting supposedly unlawful sports betting websites

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

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

Neither an NBA spokesman nor the gamers' representatives reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also ignored to react to DailyMail.com emails.

Asked if their star endorsers have an obligation to discuss to customers the distinctions and resemblances in between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the representative stated. 'A few of our values are" our gamers come first" and" we do what's right", and we put our worths at the core of everything we do.'

Glaser, an outspoken challenger of sweepstakes websites, sees things in a different way.

'Celebrities who lend their names to dubious unlawful sports betting websites are, at a minimum, putting their credibilities at risk as well as courting civil and class actions by consumers who allege damage,' Glaser said. 'There is also some danger that state regulators and state attorneys general rope star endorsers into enforcement efforts for helping with illegal sports betting.'

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