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

No, they weren't personally in presence, but the world-famous celebrities were notably included in a slide discussion on social and sweepstakes casinos - the controversial sites using both free casino-style games and profitable rewards, such as money, gift 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 just 2 cogs in the multibillion-dollar industry that now discovers itself besieged by claims. In the eyes of lots of gaming corporations, not to discuss claim complainants and state regulators, sweepstakes casinos serve as traditional gambling establishments, only without the oversight, consumer securities and tax laws. So not only can they avoid the high 24-percent federal gaming levy, however 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 faces allegations of illegal gambling in a New York suit that claims VGW utilizes celeb endorsers to 'produce a veneer of legitimacy' around its item. (See VGW's statement listed below)

'I'm not exactly sure" if you don't trust us, you can rely on Paris Hilton" is a winning message for business running 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, informed DailyMail.com.

Sweepstakes endorsers include a variety of celebrities from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom provide any differences between standard gaming and sweepstakes play.

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

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

Drake has an offer with social sweeps gambling establishment, Stake, that he regularly touts on social networks

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Instead, ads usually center around the social aspect of the casinos, while omitting the potential for actual gaming losses.

Others lure clients with pledges of prizes. One such operator, Stake, ran a social networks ad flaunting Drake's cars and trucks, planes and estates before rotating to video of the rap artist playing online casino-style video games.

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

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

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

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, most of the players on social-sweepstakes gambling establishments are playing for complimentary.

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

Social casinos provide customers a chance to play casino-style video games with friends. Players have the alternative to purchase valueless currency frequently described as 'gold coins,' which can not be exchanged for genuine money, however can be utilized to open various functions within the video games.

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

And therein lies the capacity for monetary 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 casinos in the previous year after continuing to purchase more coins in pursuit of money and other things of value.

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

Social sweeps casino Stake ran an advertisement flaunting Drake's cars and trucks, planes and mansions

Karl-Anthony Towns of the New York Knicks is another NBA star plugging VGW's Global Poker

Traditional online casinos are banned in all but seven states, which has helped to fuel the popularity of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes sites, which don't require generally need recognition. However, websites like Chumba will request for IDs from gamers attempting to withdraw any funds.

Many websites, like the crypto-compatible Stake, allow clients to send mail-in ask for totally free sweeps coins, supplied the gamers follow painfully particular instructions. What's more, players are typically rewarded with sweeps coins simply for registering, consequently providing a reason to attempt their hands at any number of gambling establishment games for an opportunity to win - or lose - genuine cash.

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

According to the stakeholders, their item is the complimentary casino-style gaming, and the real-stakes competition is just a way of promoting their support.

'Social sweepstakes games are merely a form of online home entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is needed to dip into social gambling establishments with sweepstakes rewards. Consumers never need to pay for a chance to win rewards. That absence of a purchase requirement - or" factor to consider" - is an essential difference in between social sweeps and conventional online sports betting sites like casinos.'

Consider the manner in which McDonald's uses its yearly Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're buying hamburgers and french fries that use them the opportunity to win profitable rewards, such as a $1 million prize.

And without a purchase requirement, or 'factor to consider', the game itself doesn't satisfy the meaning of gambling in the US.

'Sweepstakes are an enduring method for promoting all type of daily businesses in the United States, whatever from burgers to publication subscriptions to coffee and home enhancement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are routinely utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting market experts, that argument doesn't cut it.

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

'They do not last forever and they're usually not connected to casino-style video games of chance,' Wallach told DailyMail.com. 'They're just money giveaways.

'The sweepstakes [gambling establishments] have none of the attributes commonly connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments provide" casino-like" payouts, typically 80 percent or more of incomes, whereas the common payment portion for a short-lived promotional sweepstakes is a minor share of the profits earned by the company [usually less than one percent]'

Wallach is fast to liken the online social sweeps casinos to the internet coffee shops that emerged in Florida, providing consumers the chance to play casino-style video games for real rewards. Many of those brick-and-mortar facilities have actually since been shuttered over allegations of unlawful gaming.

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

Now, Wallach argues, social sweeps gambling establishments must deal with comparable scrutiny.

'These distinctions are not arbitrary,' Wallach said 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 promo remained in fact a guise for prohibited gaming.'

One of the gambling establishment market's leading trade organizations, the American Gaming Association, is now pushing lawmakers to examine sweepstakes operators and, in some cases, enact new legislation on the problem.

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

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

Sweepstakes casino operators paid a combined $14.2 million in four different cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action suit, saying the settlement was made to avoid legal costs and continued lawsuits.

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

In the most current claim, which is mostly comparable 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 described in the filing as an 'prohibited sports betting business. '

Apple and Google have actually likewise been named as defendants in suits for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's request for comment.

'We usually don't discuss matters before the courts,' a VGW spokesperson informed DailyMail.com through e-mail. 'However, we keep in mind that this claim has only simply been submitted with the court and VGW has not been officially served.

'We have full confidence in our compliance with all laws and guidelines where we run, and remain confident about the future,' the spokesperson continued. 'We continue to offer our free-to-play games throughout most of North America, as we have for more than a decade, developing not only great games, user experiences and entertainment, however likewise ensuring this is done securely, responsibly and at the greatest level of standards.

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

The issues in between standard online gaming and sweepstakes casinos could prove troublesome for some star 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 traditional gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking prohibited sports betting 'sweeps' websites while at the exact same time the leagues desire to forecast a strong stance versus illegal gaming - specifically 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 received a lifetime restriction from the NBA over allegations he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes casinos.

In addition to VGW, Apple and Google are being sued for hosting supposedly prohibited gambling websites

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

'I 'd anticipate that a league crackdown on professional athletes backing sweepstakes sites refers when, not if,' Glaser included.

Neither an NBA spokesman nor the players' agents reacted to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also overlooked to react to DailyMail.com e-mails.

Asked if their celeb endorsers have a responsibility to describe to consumers the differences and similarities in between iGaming and sweepstakes casinos, VGW insisted there is nothing more that requires to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the spokesperson said. 'Some of our worths are" our players precede" 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 differently.

'Celebrities who lend their names to dubious unlawful sports betting sites are, at a minimum, putting their reputations at threat along with courting civil and class actions by customers who allege harm,' Glaser said. 'There is also some threat that state regulators and state chief law officers rope celebrity endorsers into enforcement efforts for assisting in prohibited gambling.'

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