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

No, they weren't personally in presence, however the world-famous stars were conspicuously included in a slide discussion on social and sweepstakes gambling establishments - the questionable websites providing both totally free casino-style games and financially rewarding 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 just two cogs in the multibillion-dollar market that now discovers itself besieged by lawsuits. In the eyes of many video gaming corporations, not to discuss lawsuit complainants and state regulators, sweepstakes gambling establishments function as standard gambling establishments, just without the oversight, customer securities and tax laws. So not only can they prevent the high 24-percent federal sports betting levy, but sweepstakes operators aren't based on regulatory obstacles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the company faces accusations of prohibited gambling in a New york city claim that claims VGW uses celeb endorsers to 'create a veneer of authenticity' around its product. (See VGW's statement below)

'I'm uncertain" if you don't trust us, you can rely on Paris Hilton" is a winning message for business operating 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 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 use any distinctions in between conventional sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among many sweepstakes gambling establishments discovered online

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

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

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Instead, ads typically center around the social aspect of the casinos, while leaving out the potential for real sports betting losses.

Others tempt customers with promises of prizes. One such operator, Stake, ran a social media ad displaying Drake's cars, aircrafts and mansions before rotating to video of the rapper playing online casino-style games.

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

Another caption described: 'Because I never provided up.'

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

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), described 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 casinos are playing for free.

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

Social casinos provide customers a chance to play casino-style games with good friends. Players have the option to buy worthless currency often referred to 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, enabling consumers to acquire other currency referred to as 'sweeps coins' that can be exchanged for cash or other rewards.

And therein lies the potential for monetary losses, like the ones declared by plaintiffs 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 buy more coins in pursuit of cash and other things of worth.

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

Social sweeps gambling establishment Stake ran an ad displaying Drake's automobiles, planes and mansions

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

Traditional online casinos are banned in all however seven states, which has actually assisted to sustain the appeal of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, permit consumers to send mail-in demands for totally free sweeps coins, offered the gamers follow painfully specific directions. What's more, gamers are frequently rewarded with sweeps coins merely for signing up, thereby providing a factor to attempt their hands at any number of casino video games for a possibility to win - or lose - real money.

So why are sweepstakes websites allowed to operate in 48 states, while online gambling establishments are prohibited in all however 7?

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

'Social sweepstakes games are simply a form of online home entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is needed to play at social gambling establishments with sweepstakes prizes. Consumers never need to pay for a chance to win rewards. That lack of a purchase requirement - or" factor to consider" - is an essential distinction between social sweeps and standard online gambling websites like gambling establishments.'

Think of the manner in which McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and french fries that use them the possibility to win profitable prizes, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the video game itself does not satisfy the definition of gambling in the US.

'Sweepstakes are a long-standing approach for promoting all type of daily businesses in the United States, whatever from burgers to publication subscriptions to coffee and home enhancement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are routinely 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 mentions, McDonald's Monopoly game does not run indefinitely. Rather, it has a well-defined beginning and end, therefore recommending the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being utilized to promote genuine items like french fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're normally not connected to casino-style games of opportunity,' Wallach informed DailyMail.com. 'They're just money free gifts.

'The sweepstakes [casinos] have none of the qualities frequently related to McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments use" casino-like" payouts, generally 80 percent or more of incomes, whereas the normal payout portion for a short-lived marketing sweepstakes is an unimportant share of the income made by the business [typically less than one percent]'

Wallach is fast to liken the online social sweeps casinos to the internet coffee shops that emerged in Florida, offering consumers the chance to play casino-style games for genuine prizes. A lot of those brick-and-mortar establishments have actually since been shuttered over accusations of unlawful gaming.

DJ Khaled is amongst numerous star spokespeople for VGW's Global Poker brand

Now, Wallach argues, social sweeps gambling establishments need to deal with similar analysis.

'These distinctions are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have repeatedly been mentioned by courts and state chief law officer as key consider identifying that a sweepstakes promo was in truth a guise for unlawful sports betting.'

Among the casino market's leading trade companies, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, sometimes, enact new legislation on the problem.

'Consumers are being denied of defenses and states are forgoing considerable tax and income chances as this sports betting changes that carried out through controlled channels,' checked out a well-circulated AGA memo.

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

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

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

In the most recent claim, which is mostly similar to its predecessors, New York state locals Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'illegal sports betting business. '

Apple and Google have actually likewise been named as accuseds in claims for hosting the sweepstakes websites. But unlike VGW, neither tech company responded to DailyMail.com's demand for remark.

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

'We have complete confidence in our compliance with all laws and guidelines where we operate, and stay positive about the future,' the spokesperson continued. 'We continue to use our free-to-play games throughout many of The United States and Canada, as we have for more than a years, creating not only great video games, user experiences and entertainment, however also guaranteeing this is done safely, responsibly and at the highest level of standards.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are relatively common across the online social games market (and the US more broadly), and our standard practice is that we mean to vigorously safeguard any claim which may be brought against us.'

The issues between conventional online sports betting and sweepstakes gambling establishments might prove bothersome 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 standard 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 prohibited gambling - especially when trying 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 life time ban from the NBA over accusations 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 taken legal action against for hosting allegedly illegal sports betting sites

Regardless, Glaser sees sweepstakes gambling establishments as a significant concern 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 players' agents responded to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise overlooked to react to DailyMail.com e-mails.

Asked if their celebrity endorsers have an obligation to discuss to customers the distinctions and similarities in between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that requires to be done.

'We have full confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the spokesperson said. 'Some of our worths are" our players come initially" and" we do what's right", and we put our values at the core of everything we do.'

Glaser, an outspoken opponent of sweepstakes websites, sees things in a different way.

'Celebrities who lend their names to dubious illegal gambling sites are, at a minimum, putting their reputations at threat as well as courting civil and class actions by customers who allege damage,' Glaser said. 'There is likewise some risk that state regulators and state lawyers basic rope celeb endorsers into enforcement efforts for assisting in prohibited gaming.'

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