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

No, they weren't personally in participation, but the world-famous stars were conspicuously included in a slide discussion on social and sweepstakes gambling establishments - the questionable sites providing both totally free casino-style games and financially rewarding rewards, such as money, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are just 2 cogs in the multibillion-dollar market that now discovers itself besieged by lawsuits. In the eyes of lots of video gaming corporations, not to point out lawsuit plaintiffs and state regulators, sweepstakes gambling establishments act as traditional casinos, only without the oversight, customer protections and tax laws. So not only can they prevent the steep 24-percent federal gambling levy, but sweepstakes operators aren't subject to regulatory obstacles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the business deals with allegations of unlawful sports betting in a New York suit that claims VGW utilizes star endorsers to 'create a veneer of legitimacy' around its product. (See VGW's declaration below)

'I'm not sure" if you don't trust us, you can trust Paris Hilton" is a winning message for companies operating multibillion-dollar illegal operations out of places 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, along with NBA stars Karl-Anthony Towns and Paul George - none of whom use any differences between standard gaming and sweepstakes play.

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

Ryan Seacrest advises fans to dip into Chumba Casino, where lots of - but not all - video games are complimentary

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

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Instead, ads generally focus around the social element of the casinos, while leaving out the capacity for real sports betting losses.

Others lure clients with promises of prizes. One such operator, Stake, ran a social media ad displaying Drake's vehicles, aircrafts and mansions before rotating to video footage of the rap artist playing online casino-style video games.

'Daddy, why do we have so much cash?' read the very first caption on the screen.

Another caption described: 'Because I never ever quit.'

The disparity in between gaming websites and social or sweepstakes casinos is a bit intricate, but operators of the latter insist they're not involved with the former.

A spokesperson for a market trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, most of the gamers on social-sweepstakes gambling establishments are playing for free.

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

Social gambling establishments offer customers a chance to play casino-style games with good friends. Players have the option to purchase valueless currency typically referred to as 'gold coins,' which can not be exchanged genuine cash, but can be used to open various functions within the video games.

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

And therein lies the potential for financial losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York City. One player informed 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 Global Poker occasion

Social sweeps gambling establishment Stake ran an ad flaunting Drake's cars and trucks, planes 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 actually assisted to sustain the popularity of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes websites, which do not require usually need recognition. However, websites like Chumba will ask for IDs from gamers trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, allow consumers to submit mail-in ask for totally free sweeps coins, offered the players follow painfully specific guidelines. What's more, gamers are frequently rewarded with sweeps coins simply for signing up, therefore offering them a factor to attempt their hands at any number of gambling establishment video games for a chance to win - or lose - genuine money.

So why are sweepstakes websites permitted to run in 48 states, while online gambling establishments are banned in all however 7?

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

'Social sweepstakes games are just a kind of online home entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is needed to dip into social casinos with sweepstakes prizes. Consumers never have to pay for an opportunity to win prizes. That lack of a purchase requirement - or" consideration" - is a vital distinction between social sweeps and standard online sports betting websites like casinos.'

Think about the manner in which McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and french fries that use them the possibility to win rewarding prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'factor to consider', the game itself does not meet the definition of gambling in the US.

'Sweepstakes are an enduring technique for promoting all kinds of everyday companies in the United States, whatever from hamburgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are routinely utilized by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For beginners, video gaming attorney Daniel Wallach points out, McDonald's Monopoly 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 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 opportunity,' Wallach informed DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [gambling establishments] possess none of the attributes typically connected with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments provide" casino-like" payments, usually 80 percent or more of profits, whereas the common payment portion for a short-term marketing sweepstakes is a trivial share of the revenue made by the business [normally less than one percent]'

Wallach is fast to compare the online social sweeps gambling establishments to the web coffee shops that emerged in Florida, providing clients the opportunity to play casino-style games for real prizes. Many of those brick-and-mortar facilities have actually since been shuttered over allegations of prohibited sports betting.

DJ Khaled is among numerous celeb spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps gambling establishments ought to deal with similar examination.

'These distinctions are not arbitrary,' Wallach said of social sweeps casinos. 'They have actually consistently been pointed out by courts and state chief law officer as crucial consider identifying that a sweepstakes promotion was in truth a guise for illegal gambling.'

One of the gambling establishment industry's leading trade organizations, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, in many cases, enact new legislation on the concern.

'Consumers are being deprived of securities and states are forgoing significant tax and profits opportunities as this gaming changes that conducted through controlled channels,' read a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in four different cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action suit, 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 recent lawsuit, which is largely similar to its predecessors, New york city state residents 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 'unlawful gambling enterprise. '

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

'We normally do not talk about matters before the courts,' a VGW representative told DailyMail.com via e-mail. 'However, we note that this claim has only simply been filed with the court and VGW has not been officially served.

'We have full self-confidence in our compliance with all laws and guidelines where we run, and stay positive about the future,' the spokesperson continued. 'We continue to offer our free-to-play games across the majority of The United States and Canada, as we have for more than a years, creating not just excellent games, user experiences and home entertainment, but likewise guaranteeing this is done securely, properly and at the greatest level of standards.

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

The problems between standard online gambling and sweepstakes casinos might prove bothersome for some celebrity 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 conventional video gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking unlawful sports betting wagering 'sweeps' websites while at the same time the leagues wish to predict a strong stance versus prohibited sports betting - particularly when attempting to tamp down the occasional sports betting scandal,' Glaser informed DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter received a lifetime restriction 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.

Together with VGW, Apple and Google are being demanded hosting presumably prohibited gambling websites

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

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

Neither an NBA representative nor the players' representatives responded to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also disregarded to react to DailyMail.com emails.

Asked if their star endorsers have a responsibility to explain to customers the distinctions and similarities between iGaming and sweepstakes casinos, VGW firmly insisted there is absolutely nothing more that requires to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the spokesperson stated. 'A few of our values are" our gamers come first" 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 provide their names to dubious prohibited gaming websites are, at a minimum, putting their reputations at danger along with courting civil and class actions by consumers who allege harm,' Glaser stated. 'There is likewise some danger that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for facilitating prohibited gaming.'

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