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

No, they weren't personally in attendance, however the world-famous stars were conspicuously consisted of in a slide presentation on social and sweepstakes gambling establishments - the questionable websites offering both totally free casino-style games and financially rewarding rewards, such as money, present cards or cryptocurrency. In one advertisement, 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 simply two cogs in the multibillion-dollar industry that now discovers itself besieged by claims. In the eyes of lots of video gaming corporations, not to point out suit plaintiffs and state regulators, sweepstakes gambling establishments serve as standard gambling establishments, only without the oversight, consumer securities and tax laws. So not only can they prevent the high 24-percent federal gambling levy, but sweepstakes operators aren't based on regulatory obstacles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the business faces allegations of illegal gaming in a New york city suit that claims VGW utilizes celeb endorsers to 'create a veneer of legitimacy' around its product. (See VGW's statement below)

'I'm unsure" if you do not trust us, you can trust Paris Hilton" is a winning message for business running multibillion-dollar unlawful operations out of locations 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 variety of stars from sports betting 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 between conventional gaming and sweepstakes play.

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

Ryan Seacrest urges fans to play at Chumba Casino, where many - but not all - video games are complimentary

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

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Instead, advertisements typically focus around the social element of the gambling establishments, while omitting the potential for real gambling losses.

Others lure consumers with guarantees of prizes. One such operator, Stake, ran a social media advertisement displaying Drake's vehicles, planes and estates before pivoting to footage of the rap artist playing online casino-style video games.

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

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

The inconsistency between sports betting websites and social or sweepstakes gambling establishments is a bit complicated, but operators of the latter insist they're not involved with the previous.

A representative for an industry 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 gamers on social-sweepstakes gambling establishments are sports betting complimentary.

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

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

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

And therein lies the potential for monetary losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York City. One gamer told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the previous year after continuing to buy more coins in pursuit of cash and other things of worth.

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

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake's cars and trucks, airplanes and estates

Karl-Anthony Towns of the New York Knicks is another NBA star plugging VGW's Global Poker
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Traditional online casinos are banned in all but seven states, which has assisted to sustain the popularity of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, allow consumers to send mail-in ask for free sweeps coins, provided the gamers follow painfully specific guidelines. What's more, players are frequently rewarded with sweeps coins just for registering, consequently giving them a factor to attempt their hands at any variety of gambling establishment games for a chance to win - or lose - real cash.

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

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

'Social sweepstakes video games are just a form of online home entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is needed to dip into social gambling establishments with sweepstakes rewards. Consumers never have to pay for a chance to win rewards. That absence of a purchase requirement - or" consideration" - is a crucial difference in between social sweeps and traditional online gaming sites like gambling establishments.'

Think of the way that McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and french fries that use them the chance to win rewarding rewards, such as a $1 million jackpot.
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And without a purchase requirement, or 'factor to consider', the video game itself doesn't fulfill the definition of gaming in the US.

'Sweepstakes are a long-standing method for promoting all sort of daily services in the United States, whatever from burgers to publication subscriptions to coffee and home enhancement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are frequently used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'
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But to numerous sports betting market insiders, that argument does not cut it.

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

'They do not last permanently and they're normally not tied to casino-style games of chance,' Wallach informed DailyMail.com. 'They're just money free gifts.

'The sweepstakes [casinos] have none of the attributes frequently associated with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos offer" casino-like" payouts, generally 80 percent or more of profits, whereas the normal payment portion for a short-lived promotional sweepstakes is a trivial share of the revenue earned by the business [usually less than one percent]'

Wallach is quick to compare the online social sweeps casinos to the internet cafes that sprang up in Florida, using consumers the possibility to play casino-style games for genuine rewards. A number of those brick-and-mortar establishments have actually because been shuttered over claims of illegal gambling.

DJ Khaled is amongst numerous star spokespeople for VGW's Global Poker brand

Now, Wallach argues, social sweeps casinos need to face comparable examination.
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'These distinctions are not approximate,' Wallach stated of social sweeps casinos. 'They have actually repeatedly been mentioned by courts and state chief law officer as key factors in determining that a sweepstakes promotion remained in fact a guise for illegal gambling.'

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

'Consumers are being denied of securities and states are giving up significant tax and income opportunities as this sports betting 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 casinos in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any misdeed, 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 costs and continued lawsuits.

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

In the current claim, which is mainly comparable to its predecessors, New York state homeowners Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is explained in the filing as an 'illegal sports betting enterprise. '

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

'We typically don't talk about matters before the courts,' a VGW representative informed DailyMail.com by means of e-mail. 'However, we note that this claim has actually only just been filed with the court and VGW has not been officially served.

'We have complete self-confidence in our compliance with all laws and policies where we run, and stay confident about the future,' the representative continued. 'We continue to offer our free-to-play games throughout many of North America, as we have for more than a years, producing not just fantastic video games, user experiences and home entertainment, however also ensuring this is done securely, properly and at the highest level of requirements.

'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are fairly typical across the online social games market (and the US more broadly), and our standard practice is that we plan to vigorously safeguard any claim which might be brought versus us.'

The problems in between traditional online gaming and sweepstakes casinos could show 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 gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking prohibited sports betting 'sweeps' sites while at the very same time the leagues desire to forecast a strong stance versus unlawful gambling - particularly when trying to tamp down the occasional sports betting scandal,' Glaser told DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter got a life time restriction from the NBA over accusations he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes casinos.

Along with VGW, Apple and Google are being demanded hosting presumably illegal sports betting sites

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

'I 'd anticipate that a league crackdown on athletes endorsing sweepstakes websites refers when, not if,' Glaser included.

Neither an NBA spokesperson nor the players' agents responded to DailyMail.com's requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also overlooked to react to DailyMail.com emails.

Asked if their celebrity endorsers have a responsibility to discuss to consumers the distinctions and resemblances in between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is 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 said. '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 sites, sees things in a different way.
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'Celebrities who provide their names to shady illegal gambling sites are, at a minimum, putting their credibilities at danger as well as courting civil and class actions by customers who declare damage,' Glaser stated. 'There is likewise some risk that state regulators and state lawyers general rope star endorsers into enforcement efforts for helping with unlawful gaming.'

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