The smiling faces of Paris Hilton and Ryan Seacrest made surprise looks before the Louisiana Senate for Friday's hearing on illegal gambling.
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No, they weren't personally in attendance, however the world-famous stars were conspicuously included in a slide discussion on social and sweepstakes casinos - the controversial sites offering both totally free casino-style video games and lucrative prizes, such as money, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are simply two cogs in the multibillion-dollar industry that now finds itself besieged by suits. In the eyes of many gaming corporations, not to discuss claim complainants and state regulators, sweepstakes gambling establishments act as standard gambling establishments, only without the oversight, customer protections and tax laws. So not just can they prevent the high 24-percent federal sports betting levy, however sweepstakes operators aren't based on regulative difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the business deals with allegations of illegal sports betting in a New york city suit that declares VGW utilizes celebrity endorsers to 'develop a veneer of legitimacy' around its item. (See VGW's declaration listed below)

'I'm uncertain" if you don't trust us, you can rely on Paris Hilton" is a winning message for business running multibillion-dollar unlawful operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of video gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a series of stars 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 use any differences between standard gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among lots of sweepstakes gambling establishments found online

Ryan Seacrest advises fans to dip into Chumba Casino, where numerous - however not all - video games are totally free

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

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

Others tempt customers with guarantees of rewards. One such operator, Stake, ran a social networks ad revealing off Drake's cars and trucks, planes and mansions before pivoting to video footage of the rap artist 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 quit.'

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

A representative 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 information, the majority of the players on social-sweepstakes casinos are playing for free.

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

Social gambling establishments provide clients a chance to play casino-style games with good friends. Players have the alternative to buy valueless currency frequently described as 'gold coins,' which can not be exchanged for genuine money, however can be used to open different features within the video games.

But within the world of social casinos exists sweepstakes gaming, permitting consumers to get 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 player informed the Washington Post he lost more than $100,000 on sweepstakes gambling establishments 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 an International Poker event

Social sweeps casino Stake ran an advertisement flaunting Drake's automobiles, 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 however 7 states, which has actually assisted to fuel the popularity of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, allow consumers to send mail-in ask for complimentary sweeps coins, provided the players follow painfully particular instructions. What's more, gamers are often rewarded with sweeps coins simply for signing up, thereby providing a factor to attempt their hands at any number of gambling establishment games for an opportunity to win - or lose - genuine money.

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

According to the stakeholders, their item is the free casino-style gaming, and the real-stakes competitors is simply a way of promoting their bread and butter.

'Social sweepstakes games are just a form of online home entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is needed to dip into social gambling establishments with sweepstakes rewards. Consumers never need to pay for an opportunity to win prizes. That absence of a purchase requirement - or" factor to consider" - is an important distinction between social sweeps and standard online gaming sites like casinos.'

Think about the manner in which McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and fries that provide them the opportunity to win financially rewarding prizes, 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 a long-standing method for promoting all sort of everyday businesses in the United States, everything from hamburgers to magazine memberships to coffee and home enhancement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are regularly used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous 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 forever. Rather, it has a distinct start and end, therefore recommending the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being utilized to promote genuine products like french fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're usually not connected to casino-style games of chance,' Wallach informed DailyMail.com. 'They're simply money free gifts.

'The sweepstakes [gambling establishments] have none of the attributes typically connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments provide" casino-like" payments, typically 80 percent or more of earnings, whereas the typical payment percentage for a short-lived promotional sweepstakes is a minor share of the earnings made by the business [generally less than one percent]'

Wallach is fast to compare the online social sweeps gambling establishments to the web coffee shops that sprang up in Florida, providing consumers the possibility to play casino-style video games for real prizes. Much of those brick-and-mortar establishments have given that been shuttered over accusations of unlawful sports betting.

DJ Khaled is among a number of celeb spokespeople for VGW's Global Poker brand

Now, Wallach argues, social sweeps casinos must face similar examination.

'These distinctions are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have actually repeatedly been cited by courts and state chief law officer as essential elements in determining that a sweepstakes promo remained in truth a guise for unlawful gaming.'

One of the gambling establishment industry's leading trade companies, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, in some cases, enact brand-new legislation on the concern.

'Consumers are being deprived of protections and states are giving up significant tax and revenue chances as this gambling replaces that carried out through regulated channels,' read a well-circulated AGA memo.

And then there are the plaintiffs who have actually taken legal action against 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 misbehavior, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action suit, stating the settlement was made to prevent legal expenses and continued litigation.

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

In the most recent suit, which is mostly comparable to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is explained in the filing as an 'illegal sports betting business. '

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

'We normally don't talk about matters before the courts,' a VGW representative told DailyMail.com via email. 'However, we keep in mind that this claim has actually only just been filed with the court and VGW has actually not been officially served.

'We have full confidence in our compliance with all laws and policies where we run, and stay positive about the future,' the spokesperson continued. 'We continue to use our free-to-play games throughout most of The United States and Canada, as we have for more than a years, creating not just fantastic games, user experiences and entertainment, however likewise ensuring this is done securely, responsibly and at the highest level of requirements.

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

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

'It's paradoxical that professional athletes are hawking illegal sports betting 'sweeps' websites while at the same time the leagues want to project a strong position versus illegal gaming - particularly when attempting to tamp down the occasional gambling scandal,' Glaser informed DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter got a lifetime ban 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.
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Along with VGW, Apple and Google are being demanded hosting presumably prohibited gambling websites

Regardless, Glaser sees sweepstakes gambling establishments as a significant issue for leagues such as the NBA.

'I 'd anticipate that a league crackdown on professional athletes endorsing sweepstakes is a matter of when, not if,' Glaser included.

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

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

'We have full self-confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the spokesperson said. 'A few 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 opponent of sweepstakes sites, sees things differently.

'Celebrities who lend their names to shady unlawful sports betting websites are, at a minimum, putting their credibilities at danger as well as courting civil and class actions by consumers who declare damage,' Glaser stated. 'There is also some threat that state regulators and state chief law officers rope celeb endorsers into enforcement efforts for facilitating prohibited gaming.'

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