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 participation, but the world-famous celebs were conspicuously consisted of in a slide presentation on social and sweepstakes gambling establishments - the questionable websites offering both free casino-style video games and financially rewarding prizes, such as cash, gift cards or cryptocurrency. In one advertisement, 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.
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The sites are just two cogs in the multibillion-dollar market that now finds itself besieged by claims. In the eyes of numerous gaming corporations, not to mention lawsuit plaintiffs and state regulators, sweepstakes casinos function as traditional gambling establishments, only without the oversight, consumer protections and tax laws. So not just can they prevent the high 24-percent federal gaming levy, however sweepstakes operators aren't based on regulative obstacles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings last year alone. Now the company faces accusations of unlawful gaming in a New York suit that claims VGW uses star endorsers to 'create a veneer of legitimacy' around its item. (See VGW's statement below)

'I'm uncertain" if you don't trust us, you can trust Paris Hilton" is a winning message for companies operating 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, informed DailyMail.com.

Sweepstakes endorsers include a variety of celebs from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions in between traditional gaming and sweepstakes play.

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

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

Drake has a handle social sweeps casino, Stake, that he routinely promotes on social media

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Instead, ads generally center around the social element of the gambling establishments, while omitting the potential for actual gaming losses.

Others lure clients with promises of prizes. One such operator, Stake, ran a social networks ad displaying Drake's vehicles, airplanes and mansions before pivoting to video footage of the rapper playing online casino-style video games.

'Daddy, why do we have a lot cash?' read 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.
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A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, the majority of the players on social-sweepstakes gambling establishments are sports betting complimentary.

'Most social sweeps customers 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 bet size at real-money online gambling sites.'

Social casinos use customers an opportunity to play casino-style video games with buddies. Players have the option to buy worthless currency typically described as 'gold coins,' which can not be exchanged for real cash, however can be used to open different functions within the games.

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

And therein lies the potential for monetary losses, like the ones claimed 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 gambling establishments in the previous year after continuing to buy more coins in pursuit of money and other things of worth.

The Philadelphia 76ers' Paul George is seen promoting an International 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 City Knicks is another NBA star plugging VGW's Global Poker

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

Anyone over the age of 18 can access the sweepstakes websites, which don't require normally require identification. However, websites like Chumba will request for IDs from players attempting to withdraw any funds.
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Many websites, like the crypto-compatible Stake, permit consumers to submit mail-in ask for totally free sweeps coins, offered the players follow painfully particular guidelines. What's more, players are frequently rewarded with sweeps coins merely for registering, thus providing a reason to try their hands at any variety of gambling establishment video games for a chance to win - or lose - real cash.

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

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

'Social sweepstakes games are just a kind of online entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is needed to dip into social gambling establishments with sweepstakes prizes. Consumers never ever need to pay for an opportunity to win rewards. That lack of a purchase requirement - or" factor to consider" - is an essential distinction in between social sweeps and standard online gaming sites like gambling establishments.'

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

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

'Sweepstakes are an enduring method for promoting all type of everyday organizations in the United States, everything from burgers to magazine memberships to coffee and home improvement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are regularly used 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 experts, that argument does not cut it.

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

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

'The sweepstakes [casinos] have none of the attributes frequently connected with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos offer" casino-like" payouts, generally 80 percent or more of incomes, whereas the common payment percentage for a temporary promotional sweepstakes is a trivial share of the profits made by the company [usually less than one percent]'

Wallach is quick to liken the online social sweeps casinos to the web coffee shops that emerged in Florida, providing consumers the possibility to play casino-style games for genuine prizes. Much of those brick-and-mortar establishments have given that been shuttered over claims of illegal gambling.

DJ Khaled is among several star spokespeople for VGW's Global Poker brand

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

'These distinctions are not arbitrary,' Wallach stated of gambling establishments. 'They have actually repeatedly been pointed out by courts and state chief law officer as key consider identifying that a sweepstakes promotion remained in reality a guise for illegal gaming.'

One of the gambling establishment market's leading trade companies, the American Gaming Association, is now pressing legislators to investigate sweepstakes operators and, sometimes, enact new legislation on the issue.

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

And then there are the plaintiffs who have actually sued 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 admitting any misdeed, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action suit, saying the settlement was made to avoid 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 largely similar to its predecessors, New York state citizens Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited gambling enterprise. '

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

'We usually don't 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 formally served.

'We have complete self-confidence in our compliance with all laws and guidelines where we operate, and remain confident about the future,' the spokesperson continued. 'We continue to use our free-to-play games across most of The United States and Canada, as we have for more than a years, developing not only terrific games, user experiences and entertainment, however likewise guaranteeing this is done securely, responsibly and at the highest level of requirements.

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

The problems in between conventional online gaming and sweepstakes casinos might show 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 expert athletes are hawking unlawful sports betting wagering 'sweeps' websites while at the exact same time the leagues want to predict a strong position versus unlawful gaming - specifically when trying to tamp down the occasional sports betting scandal,' Glaser informed DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter got a lifetime ban from the NBA over claims he conspired with bettors. 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 sports betting sites

Regardless, Glaser sees sweepstakes casinos as a major concern for leagues such as the NBA.

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

Neither an NBA representative nor the players' agents responded to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also ignored to react to DailyMail.com e-mails.

Asked if their celebrity endorsers have a duty to describe to customers the distinctions and similarities between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial collaborations, and our company 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 websites, sees things in a different way.
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'Celebrities who lend their names to shady unlawful gaming websites are, at a minimum, putting their reputations at risk as well as courting civil and class actions by customers who declare damage,' Glaser stated. 'There is likewise some risk that state regulators and state chief law officers rope celebrity endorsers into enforcement efforts for facilitating unlawful gambling.'

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