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

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 websites offering both free casino-style games and lucrative prizes, such as cash, gift cards or cryptocurrency. In one advertisement, 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.
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The sites are just 2 cogs in the multibillion-dollar market that now discovers itself besieged by lawsuits. In the eyes of numerous gaming corporations, not to discuss lawsuit complainants and state regulators, sweepstakes casinos act as traditional casinos, only without the oversight, customer protections and tax laws. So not just can they prevent the high 24-percent federal gaming levy, however sweepstakes operators aren't subject to regulatory obstacles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income last year alone. Now the business deals with allegations of prohibited sports betting in a New york city suit that declares VGW uses celeb endorsers to 'create a veneer of legitimacy' around its product. (See VGW's statement listed below)

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

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

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

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

Drake has a deal with social sweeps casino, Stake, that he regularly touts on social media

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Instead, advertisements generally focus around the social element of the gambling establishments, while leaving out the capacity for real gaming losses.

Others lure customers with pledges of prizes. One such operator, Stake, ran a social media ad displaying Drake's cars and trucks, planes and estates before pivoting to video footage of the rapper playing online casino-style video games.

'Daddy, why do we have a lot cash?' check out the first caption on the screen.

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

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

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

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

Social gambling establishments offer customers a chance 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 cash, however can be used to unlock numerous features within the games.

But within the world of social gambling establishments exists sweepstakes video gaming, permitting clients to acquire other currency known as 'sweeps coins' that can be exchanged for cash or other rewards.

And therein lies the potential 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 past year after continuing to buy 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 gambling establishment Stake ran an ad flaunting Drake's vehicles, planes and estates

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

Traditional online gambling establishments are prohibited in all but 7 states, which has actually assisted to fuel the appeal of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, permit customers to submit mail-in ask for complimentary sweeps coins, supplied the gamers follow painfully particular . What's more, gamers are typically rewarded with sweeps coins simply for registering, therefore providing a reason to try their hands at any number of gambling establishment games for a chance to win - or lose - genuine money.

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

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

'Social sweepstakes games are just a form of online home entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is needed to dip into social gambling establishments with sweepstakes rewards. Consumers never ever have to pay for a chance to win prizes. That absence of a purchase requirement - or" factor to consider" - is a vital difference between social sweeps and standard online sports betting websites like gambling establishments.'

Think about the manner in which McDonald's uses its yearly Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and french fries that provide them the possibility to win profitable rewards, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the video game itself doesn't satisfy the meaning of sports betting in the US.

'Sweepstakes are an enduring method for promoting all type of daily companies in the United States, whatever from hamburgers to magazine subscriptions to coffee and home improvement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are routinely used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling market insiders, that argument doesn't cut it.

For starters, gaming attorney Daniel Wallach points out, McDonald's Monopoly video game doesn't run forever. Rather, it has a well-defined beginning and end, consequently suggesting the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being used to promote genuine items like fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're generally not connected to casino-style video games of possibility,' Wallach informed DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [casinos] possess none of the qualities frequently related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos provide" casino-like" payouts, generally 80 percent or more of profits, whereas the common payment portion for a momentary promotional sweepstakes is a trivial share of the profits earned by the company [usually less than one percent]'

Wallach is quick to liken the online social sweeps gambling establishments to the web coffee shops that emerged in Florida, using clients the possibility to play casino-style video games for genuine prizes. A number of those brick-and-mortar facilities have given that been shuttered over allegations of illegal gaming.

DJ Khaled is amongst a number of celeb spokespeople for VGW's Global Poker brand name
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Now, Wallach argues, social sweeps casinos ought to deal with comparable scrutiny.

'These distinctions are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been cited by courts and state attorney general of the United States as crucial consider determining that a sweepstakes promotion remained in fact a guise for illegal sports betting.'

Among the casino market's leading trade companies, the American Gaming Association, is now pressing legislators to investigate sweepstakes operators and, in some cases, enact brand-new legislation on the issue.

'Consumers are being deprived of securities and states are giving up considerable tax and revenue chances as this sports betting replaces that conducted through managed channels,' read a well-circulated AGA memo.

And then there are the complainants who have taken legal action against social casinos 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 agreed to pay $11.75 million in one class-action lawsuit, saying the settlement was made to prevent legal expenses and continued lawsuits.

Michael Phelps has signed an offer with the VGW Group, which owns Global Poker

In the current claim, which is mostly 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 described in the filing as an 'illegal gambling enterprise. '

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

'We generally do not discuss matters before the courts,' a VGW spokesperson informed DailyMail.com by means of email. 'However, we note that this claim has only simply been submitted with the court and VGW has not been officially served.

'We have complete self-confidence in our compliance with all laws and policies where we operate, and stay confident about the future,' the spokesperson continued. 'We continue to use our free-to-play games throughout the majority of North America, as we have for more than a years, developing not only great games, user experiences and home entertainment, however likewise guaranteeing this is done securely, properly and at the greatest level of requirements.

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

The problems in between standard online gambling and sweepstakes casinos might show problematic for some celebrity endorsers.

Towns, a star center with the Knicks, and the 76ers' George both back VGW's Global Poker brand name while the NBA is partnered with standard video gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking illegal sports betting wagering 'sweeps' sites while at the exact same time the leagues wish to forecast a strong stance versus prohibited gaming - specifically when attempting to tamp down the occasional gaming scandal,' Glaser told DailyMail.com.
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It was simply 8 months ago that Toronto Raptors forward Jontay Porter received a life time restriction from the NBA over accusations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes casinos.

In addition to VGW, Apple and Google are being sued for hosting allegedly illegal sports betting sites

Regardless, Glaser sees sweepstakes gambling establishments as a significant issue for leagues such as the NBA.
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'I 'd anticipate that a league crackdown on professional athletes endorsing sweepstakes sites refers when, not if,' Glaser added.
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Neither an NBA spokesperson nor the gamers' 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 emails.

Asked if their celeb endorsers have a responsibility to discuss to customers the differences and resemblances between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is absolutely nothing more that needs to be done.

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our service practices more broadly,' the representative said. 'Some of our worths are" our players precede" and" we do what's right", and we put our worths at the core of whatever we do.'
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Glaser, an outspoken opponent of sweepstakes sites, sees things differently.

'Celebrities who lend their names to dubious unlawful sports betting sites are, at a minimum, putting their credibilities at threat along with courting civil and class actions by consumers who declare damage,' Glaser stated. 'There is likewise some risk that state regulators and state attorneys basic rope celebrity endorsers into enforcement efforts for facilitating unlawful sports betting.'

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