The smiling faces of Paris Hilton and Ryan Seacrest made surprise looks 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 presentation on social and sweepstakes casinos - the questionable sites using both totally free 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 'play for totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are simply 2 cogs in the multibillion-dollar industry that now finds itself besieged by suits. In the eyes of many video gaming corporations, not to discuss claim complainants and state regulators, sweepstakes casinos serve as traditional gambling establishments, just without the oversight, consumer securities and tax laws. So not just can they avoid the steep 24-percent federal gambling levy, however sweepstakes operators aren't subject to regulatory hurdles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the business faces allegations of illegal sports betting in a New York lawsuit that declares VGW uses celeb endorsers to 'produce a veneer of legitimacy' around its item. (See VGW's statement listed below)

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

Sweepstakes endorsers consist of a variety of stars from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions between standard sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of many sweepstakes gambling establishments discovered online
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Ryan Seacrest advises fans to dip into Chumba Casino, where numerous - but not all - video games are complimentary

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

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Instead, ads normally center around the social aspect of the gambling establishments, while omitting the capacity for real sports betting losses.

Others tempt consumers with promises of prizes. One such operator, Stake, ran a social media advertisement showing off Drake's automobiles, aircrafts and estates before rotating to footage of the rap artist playing online casino-style games.
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'Daddy, why do we have so much money?' read the first caption on the screen.

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

The disparity between gambling websites and social or sweepstakes casinos is a bit complicated, however operators of the latter insist they're not involved with the former.

A spokesperson for an industry 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 data, the majority of the players on social-sweepstakes casinos are playing for .

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

Social casinos provide customers an opportunity to play casino-style video games with friends. Players have the choice to buy worthless currency frequently referred to as 'gold coins,' which can not be exchanged for real money, but can be used to open various features within the games.

But within the world of social gambling establishments exists sweepstakes gaming, allowing consumers to get 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 complainants in Florida, Georgia, New Jersey and New York City. One gamer told the Washington Post he lost more than $100,000 on sweepstakes casinos in the previous year after continuing to purchase more coins in pursuit of cash and other things of worth.

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

Social sweeps gambling establishment Stake ran an advertisement displaying Drake's vehicles, aircrafts and estates

Karl-Anthony Towns of the New York 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 sustain the popularity of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes websites, which do not 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, permit customers to send mail-in ask for complimentary sweeps coins, supplied the players follow painfully particular directions. What's more, gamers are typically rewarded with sweeps coins merely for registering, consequently providing a reason to try their hands at any variety of gambling establishment games for a chance to win - or lose - real cash.

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

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

'Social sweepstakes games are simply a type of online home entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is required to dip into social casinos with sweepstakes rewards. Consumers never have to pay for a chance to win rewards. That absence of a purchase requirement - or" consideration" - is an essential distinction in between social sweeps and conventional online gaming websites like casinos.'

Think of 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 provide them the possibility to win financially rewarding rewards, such as a $1 million prize.

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

'Sweepstakes are an enduring approach for promoting all sort of daily businesses in the United States, everything from hamburgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are routinely used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling market insiders, that argument does not cut it.

For beginners, video gaming lawyer Daniel Wallach explains, McDonald's Monopoly video game does not run indefinitely. Rather, it has a well-defined start and end, thus suggesting the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being utilized to promote genuine items like fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're typically not connected to casino-style video games of possibility,' Wallach told DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [gambling establishments] have none of the characteristics typically related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments offer" casino-like" payments, normally 80 percent or more of incomes, whereas the normal payout percentage for a momentary promotional sweepstakes is a trivial share of the earnings made by the company [generally less than one percent]'

Wallach is quick to compare the online social sweeps gambling establishments to the web coffee shops that emerged in Florida, providing clients the possibility to play casino-style video games for real rewards. Much of those brick-and-mortar establishments have actually considering that been shuttered over claims of illegal gaming.

DJ Khaled is amongst a number of star spokespeople for VGW's Global Poker brand name
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Now, Wallach argues, social sweeps gambling establishments should deal with comparable examination.

'These differences are not approximate,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been pointed out by courts and state attorney general of the United States as crucial consider identifying that a sweepstakes promotion remained in fact a guise for illegal gaming.'

Among the gambling establishment industry's leading trade companies, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, sometimes, enact brand-new legislation on the issue.

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

And after that there are the complainants who have actually sued social casinos in more than a dozen states.

Sweepstakes casino operators paid a combined $14.2 million in four 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 claim, saying the settlement was made to prevent legal costs and continued lawsuits.

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

In the most current lawsuit, which is mainly comparable to its predecessors, New York state locals Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited gaming business. '
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Apple and Google have actually likewise been named as offenders in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech business responded to DailyMail.com's request for remark.

'We normally don't talk about matters before the courts,' a VGW representative told DailyMail.com through email. 'However, we note 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 policies where we run, and stay confident about the future,' the spokesperson continued. 'We continue to use our free-to-play video games across many of North America, as we have for more than a years, producing not just great video games, user experiences and home entertainment, but likewise ensuring this is done securely, properly and at the highest level of requirements.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are reasonably common across the online social video games industry (and the US more broadly), and our basic practice is that we plan to vigorously protect any claim which may be brought against us.'

The concerns in between traditional online gaming and sweepstakes gambling establishments might prove 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 traditional video gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking illegal sports betting 'sweeps' websites while at the same time the leagues desire to predict a strong stance against prohibited gaming - especially when trying to tamp down the occasional gaming scandal,' Glaser informed DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter received a lifetime ban from the NBA over accusations he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes casinos.

Along with VGW, Apple and Google are being demanded hosting supposedly illegal sports betting sites
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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 backing sweepstakes sites is a matter of when, not if,' Glaser added.

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

Asked if their celebrity endorsers have a responsibility to explain to consumers the differences and similarities between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that needs to be done.

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the spokesperson said. 'Some of our values are" our players precede" and" we do what's right", and we put our values at the core of whatever we do.'

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

'Celebrities who lend their names to dubious prohibited gambling websites are, at a minimum, putting their credibilities at threat in addition to courting civil and class actions by consumers who declare damage,' Glaser stated. 'There is likewise some threat that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for facilitating illegal gaming.'

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