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 participation, but the world-famous celebs were notably included in a slide discussion on social and sweepstakes gambling establishments - the questionable websites providing both complimentary casino-style video games and lucrative prizes, such as money, 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 sites are simply two cogs in the multibillion-dollar market that now finds itself besieged by claims. In the eyes of many gaming corporations, not to point out claim complainants and state regulators, sweepstakes casinos act as conventional gambling establishments, only without the oversight, customer protections and tax laws. So not only can they avoid the steep 24-percent federal gaming levy, but sweepstakes operators aren't based on regulatory difficulties like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits last year alone. Now the business faces allegations of prohibited gaming in a New york city claim that claims VGW uses star endorsers to 'create a veneer of authenticity' around its product. (See VGW's statement listed below)

'I'm uncertain" if you don't trust us, you can trust Paris Hilton" is a winning message for companies running multibillion-dollar unlawful operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of video gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers include a variety of celebs from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom offer any differences between conventional sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among lots of sweepstakes gambling establishments found online

Ryan Seacrest prompts fans to dip into Chumba Casino, where many - however not all - games are complimentary

Drake has a handle social sweeps gambling establishment, Stake, that he routinely promotes on social networks

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Instead, advertisements typically center around the social aspect of the gambling establishments, while leaving out the capacity for real gaming losses.

Others lure clients with guarantees of rewards. One such operator, Stake, ran a social networks ad flaunting Drake's vehicles, airplanes and estates before rotating to video footage of the rapper playing online casino-style games.

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

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

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

A representative for an industry trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA data, many of the gamers on social-sweepstakes gambling establishments are playing for complimentary.

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

Social gambling establishments offer clients a chance to play casino-style games with pals. Players have the choice to buy worthless currency frequently described as 'gold coins,' which can not be exchanged for genuine money, but can be utilized to unlock various features within the video games.

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

And therein lies the capacity for monetary losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York. One player 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 money and other things of worth.

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

Social sweeps gambling establishment Stake ran an advertisement revealing off Drake's cars, 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 however seven states, which has actually helped to fuel the popularity of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, enable clients to submit mail-in ask for free sweeps coins, supplied the gamers follow painfully particular instructions. What's more, players are often rewarded with sweeps coins simply for signing up, therefore providing them a reason to try their hands at any number of casino games for an opportunity to win - or lose - real money.

So why are sweepstakes sites allowed to run in 48 states, while online casinos are banned in all but 7?

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

'Social sweepstakes video games are just a kind of online home entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is required to play at social gambling establishments with sweepstakes prizes. Consumers never ever need to spend for an opportunity to win rewards. That lack of a purchase requirement - or" factor to consider" - is a vital distinction between social sweeps and standard online sports betting websites like casinos.'

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

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

'Sweepstakes are an enduring method for promoting all sort of everyday services in the United States, whatever from burgers to publication memberships to coffee and home improvement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are frequently used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For beginners, video gaming attorney Daniel Wallach explains, McDonald's Monopoly game doesn't run forever. Rather, it has a distinct start and end, consequently 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 don't last forever and they're normally not tied to casino-style video games of possibility,' Wallach told DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [gambling establishments] have none of the attributes frequently connected with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos offer" casino-like" payouts, usually 80 percent or more of earnings, whereas the common payment portion for a temporary marketing sweepstakes is an insignificant share of the revenue earned by the business [usually less than one percent]'

Wallach is fast to liken the online social sweeps casinos to the web cafes that emerged in Florida, providing clients the chance to play casino-style games for real prizes. Much of those brick-and-mortar establishments have because been shuttered over claims of prohibited gaming.

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

Now, Wallach argues, social sweeps casinos must deal with comparable examination.

'These differences are not arbitrary,' Wallach stated of social sweeps casinos. 'They have repeatedly been pointed out by courts and state attorney generals as key consider figuring out that a sweepstakes promo was in fact a guise for unlawful gaming.'

One of the casino market's leading trade organizations, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, in some cases, enact brand-new legislation on the concern.

'Consumers are being deprived of protections and states are giving up significant tax and earnings opportunities as this sports betting replaces that conducted through managed channels,' checked out 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 dozen 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 consented to pay $11.75 million in one class-action claim, stating 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 most recent suit, which is mostly similar to its predecessors, New York state citizens Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is described in the filing as an 'prohibited gaming enterprise. '

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

'We normally don't discuss matters before the courts,' a VGW spokesperson informed DailyMail.com by means of email. 'However, we keep in mind 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 policies where we operate, and stay confident about the future,' the representative continued. 'We continue to offer our free-to-play games across the majority of North America, as we have for more than a decade, producing not just great video games, user experiences and entertainment, however also guaranteeing this is done securely, responsibly and at the highest level of requirements.

'More broadly, we 'd restate that class actions and other litigations and arbitrations are relatively common across the online social video games industry (and the US more broadly), and our standard practice is that we plan to strongly defend any claim which may be brought versus us.'

The issues in between standard online gaming and sweepstakes casinos might prove problematic for some star 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 standard video gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking illegal sports betting 'sweeps' websites while at the exact same time the leagues wish to project a strong stance against prohibited sports betting - particularly when trying to tamp down the periodic gaming scandal,' Glaser informed DailyMail.com.

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

Along with VGW, Apple and Google are being demanded hosting supposedly prohibited gambling sites

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

'I 'd anticipate that a league crackdown on professional athletes endorsing sweepstakes websites is a matter of 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 ignored to react to DailyMail.com e-mails.

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

'We have complete confidence in our influencer and ambassadorial collaborations, and our service practices more broadly,' the spokesperson stated. 'A few of our values are" our gamers precede" and" we do what's right", and we put our worths at the core of whatever we do.'

Glaser, an outspoken opponent of sweepstakes sites, sees things differently.

'Celebrities who lend their names to shady illegal sports betting websites are, at a minimum, putting their track records at risk as well as courting civil and class actions by customers who declare damage,' Glaser said. 'There is also some danger that state regulators and state chief law officers rope star endorsers into enforcement efforts for helping with unlawful gaming.'

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