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

No, they weren't personally in presence, but the world-famous stars were notably consisted of in a slide discussion on social and sweepstakes gambling establishments - the controversial websites offering both free casino-style video games and profitable rewards, such as money, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are simply 2 cogs in the multibillion-dollar industry that now finds itself besieged by lawsuits. In the eyes of numerous gaming corporations, not to discuss suit complainants and state regulators, sweepstakes gambling establishments serve as traditional gambling establishments, only without the oversight, consumer protections and tax laws. So not just can they avoid the high 24-percent federal sports betting levy, but sweepstakes operators aren't based on regulative difficulties like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the business deals with allegations of unlawful gaming in a New York lawsuit that declares VGW utilizes celeb endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's declaration listed below)

'I'm unsure" if you do not trust us, you can trust Paris Hilton" is a winning message for companies operating multibillion-dollar prohibited operations out of locations 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 variety of celebrities 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 in between traditional sports betting and sweepstakes play.

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

Ryan Seacrest prompts fans to play at Chumba Casino, where lots of - however not all - games are complimentary

Drake has an offer with social sweeps gambling establishment, Stake, that he frequently promotes on social networks

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Instead, ads typically focus around the social element of the casinos, while omitting the capacity for actual gaming losses.

Others lure customers with promises of prizes. One such operator, Stake, ran a social networks advertisement displaying Drake's cars and trucks, planes and mansions before rotating to video of the rap artist playing online casino-style games.

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

Another caption explained: 'Because I never offered up.'

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

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA information, most of the players on social-sweepstakes gambling establishments are sports betting totally free.

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

Social gambling establishments offer clients an opportunity to play casino-style games with pals. Players have the choice to buy worthless currency typically described as 'gold coins,' which can not be exchanged for real money, but can be utilized to open different functions within the video games.

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

And therein lies the capacity for financial losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York. One player informed the Washington Post he lost more than $100,000 on sweepstakes casinos in the previous year after continuing to buy more coins in pursuit of cash and other things of value.

The Philadelphia 76ers' Paul George is seen promoting an International Poker occasion

Social sweeps casino Stake ran an ad flaunting Drake's cars, airplanes and estates

Karl-Anthony Towns of the New York 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 require usually need identification. However, sites like Chumba will request for IDs from players attempting to withdraw any funds.

Many websites, like the crypto-compatible Stake, allow customers to submit mail-in requests for totally free sweeps coins, provided the gamers follow painfully specific directions. What's more, players are often rewarded with sweeps coins just for signing up, thus providing a reason to attempt their hands at any number of gambling establishment games for a possibility to win - or lose - real money.

So why are sweepstakes websites allowed to run in 48 states, while online casinos are prohibited in all however 7?

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

'Social sweepstakes games are simply a form of online entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is required to dip into social gambling establishments with sweepstakes rewards. Consumers never ever have to spend for an opportunity to win prizes. That absence of a purchase requirement - or" factor to consider" - is a crucial distinction between social sweeps and conventional online gambling sites like casinos.'

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

And without a purchase requirement, or 'consideration', the video game itself doesn't fulfill the definition of gaming in the US.

'Sweepstakes are an enduring approach for promoting all kinds of daily businesses in the United States, everything from hamburgers 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 home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many sports betting market insiders, that argument doesn't cut it.

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

'They do not last forever and they're usually not tied to casino-style video games of chance,' Wallach informed DailyMail.com. 'They're simply money free gifts.

'The sweepstakes [casinos] possess none of the characteristics commonly related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos provide" casino-like" payments, typically 80 percent or more of revenues, whereas the common payout portion for a momentary promotional sweepstakes is a trivial share of the profits earned by the business [generally less than one percent]'

Wallach is fast to liken the online social sweeps casinos to the web cafes that emerged in Florida, offering clients the opportunity to play casino-style video games for genuine prizes. Much of those brick-and-mortar establishments have actually since been shuttered over claims of illegal gambling.

DJ Khaled is among a number of celeb spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps casinos should face comparable analysis.

'These distinctions are not arbitrary,' Wallach said of social sweeps casinos. 'They have actually repeatedly been cited by courts and state lawyer generals as key factors in determining that a sweepstakes promo remained in reality a guise for prohibited gambling.'

Among the casino industry's leading trade organizations, the American Gaming Association, is now pushing lawmakers to examine sweepstakes operators and, sometimes, enact brand-new legislation on the concern.

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

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 different cases in Kentucky without admitting 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 avoid legal costs and continued litigation.

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

In the current lawsuit, which is mostly comparable to its predecessors, New york city state locals 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 gambling enterprise. '

Apple and Google have actually also been called as accuseds in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for comment.

'We typically do not discuss matters before the courts,' a VGW spokesperson told DailyMail.com via 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 operate, and stay confident about the future,' the representative continued. 'We continue to offer our free-to-play video games across the majority of North America, as we have for more than a decade, developing not only terrific video games, user experiences and entertainment, but likewise guaranteeing this is done securely, properly and at the greatest level of standards.

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

The issues between conventional online gambling and sweepstakes gambling establishments might show troublesome for some star endorsers.

Towns, a star center with the Knicks, and the 76ers' George both back VGW's Global Poker brand while the NBA is partnered with conventional video gaming titans like FanDuel and DraftKings.

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

It was simply 8 months ago that Toronto Raptors forward Jontay Porter got a lifetime ban from the NBA over allegations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes casinos.

Together with VGW, Apple and Google are being demanded hosting apparently unlawful gambling sites

Regardless, Glaser sees sweepstakes casinos as a significant issue for leagues such as the NBA.

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

Neither an NBA representative 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 neglected to react to DailyMail.com emails.

Asked if their celebrity endorsers have a duty to explain to consumers the distinctions and resemblances in between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that requires to be done.

'We have full self-confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the representative stated. 'Some 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 sites, sees things in a different way.

'Celebrities who lend their names to shady unlawful sports betting sites are, at a minimum, putting their reputations at danger along with courting civil and class actions by customers who allege harm,' Glaser said. 'There is likewise some threat that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for facilitating illegal gambling.'

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