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

No, they weren't personally in attendance, but the world-famous stars were conspicuously consisted of in a slide presentation on social and sweepstakes gambling establishments - the questionable sites using both totally free casino-style games and lucrative prizes, such as cash, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are simply 2 cogs in the multibillion-dollar industry that now discovers itself besieged by lawsuits. In the eyes of numerous gaming corporations, not to discuss lawsuit plaintiffs and state regulators, sweepstakes casinos function as standard casinos, just without the oversight, customer protections and tax laws. So not only can they prevent the high 24-percent federal gambling levy, however sweepstakes operators aren't subject to regulative hurdles 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 deals with allegations of unlawful gaming in a New york city claim that declares VGW uses celeb endorsers to 'develop a veneer of authenticity' around its product. (See VGW's statement below)

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

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

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

Ryan Seacrest prompts fans to play at Chumba Casino, where lots of - but not all - video games are totally free

Drake has a handle social sweeps gambling establishment, Stake, that he regularly touts on social networks

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Instead, advertisements generally center around the social aspect of the gambling establishments, while omitting the potential for real sports betting losses.
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Others tempt customers with pledges of rewards. One such operator, Stake, ran a social networks advertisement showing off Drake's cars and trucks, aircrafts and estates before rotating to video footage of the rap artist playing online casino-style video games.

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

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

The inconsistency between gaming sites and social or sweepstakes gambling establishments is a bit intricate, but 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 information, the majority of the gamers on social-sweepstakes casinos are sports betting complimentary.

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

Social casinos use consumers a chance to play casino-style video games with friends. Players have the option to purchase worthless currency typically described as 'gold coins,' which can not be exchanged genuine money, but can be utilized to unlock numerous functions within the games.

But within the world of social gambling establishments exists sweepstakes gaming, allowing consumers to get other currency called 'sweeps coins' that can be exchanged for cash or other prizes.

And therein lies the potential for financial losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York City. One gamer informed the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the past 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 Worldwide Poker occasion

Social sweeps gambling establishment Stake ran an ad flaunting Drake's cars, aircrafts 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 however 7 states, which has actually helped to fuel the appeal of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, permit customers to send mail-in demands for complimentary sweeps coins, supplied the gamers follow painfully particular directions. What's more, gamers are typically rewarded with sweeps coins merely for signing up, therefore offering them a factor to try their hands at any variety of gambling establishment games for a possibility to win - or lose - real money.

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

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

'Social sweepstakes video games are merely a form of online entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is required to play at social casinos with sweepstakes rewards. Consumers never have to pay for an opportunity to win rewards. That absence of a purchase requirement - or" consideration" - is an important difference in between social sweeps and conventional online sports betting websites like gambling establishments.'

Consider the way that McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to bet, but rather they're buying hamburgers and fries that offer them the possibility to win rewarding prizes, such as a $1 million jackpot.
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And without a purchase requirement, or 'consideration', the game itself doesn't satisfy the definition of gaming in the US.

'Sweepstakes are an enduring technique for promoting all kinds of daily companies in the United States, everything from burgers to magazine memberships to coffee and home improvement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are frequently used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For starters, video gaming attorney Daniel Wallach mentions, McDonald's Monopoly game doesn't run forever. Rather, it has a distinct start and end, consequently suggesting the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being used to promote real items like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [casinos] have none of the characteristics commonly associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments offer" casino-like" payouts, normally 80 percent or more of revenues, whereas the typical payout percentage for a short-term promotional sweepstakes is a trivial share of the income earned by the business [typically less than one percent]'

Wallach is quick to compare the online social sweeps gambling establishments to the web coffee shops that sprang up in Florida, offering customers the possibility to play casino-style video games for genuine rewards. A number of those brick-and-mortar establishments have actually since been shuttered over allegations of unlawful sports betting.

DJ Khaled is among numerous celebrity spokespeople for VGW's Global Poker brand
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Now, Wallach argues, social sweeps casinos need to deal with comparable scrutiny.

'These distinctions are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have actually consistently been mentioned by courts and state attorney generals as crucial elements in determining that a sweepstakes promo was in truth a guise for prohibited gambling.'

One of the casino market's leading trade companies, the American Gaming Association, is now to examine sweepstakes operators and, sometimes, enact new legislation on the issue.

'Consumers are being denied of securities and states are passing up substantial tax and income chances as this gambling changes that performed through controlled channels,' checked out a well-circulated AGA memo.

And then there are the complainants who have actually sued social gambling establishments in more than a dozen states.
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Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action claim, 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 most current claim, which is largely comparable to its predecessors, New York 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 'unlawful gaming enterprise. '

Apple and Google have likewise been called as defendants in claims for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for remark.

'We generally don't comment on matters before the courts,' a VGW spokesperson told DailyMail.com through 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 confidence in our compliance with all laws and guidelines where we run, and remain 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 decade, creating not just terrific video games, user experiences and entertainment, but also ensuring this is done securely, responsibly and at the highest level of standards.

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

The issues between traditional online sports betting and sweepstakes gambling establishments could show 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 standard gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking unlawful sports betting 'sweeps' sites while at the same time the leagues wish to forecast a strong position versus illegal gaming - especially when attempting to tamp down the occasional gambling scandal,' Glaser told 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 gamblers. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes gambling establishments.

Along with VGW, Apple and Google are being demanded hosting allegedly prohibited gambling sites

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

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

Neither an NBA spokesperson nor the gamers' agents reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also disregarded to respond to DailyMail.com emails.

Asked if their celebrity endorsers have a responsibility to discuss to customers the distinctions and similarities 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 business practices more broadly,' the spokesperson said. 'Some of our values are" our gamers 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.

'Celebrities who provide their names to shady illegal gambling sites are, at a minimum, putting their credibilities at danger as well as courting civil and class actions by consumers who allege damage,' Glaser stated. 'There is also some threat that state regulators and state chief law officers rope star endorsers into enforcement efforts for facilitating illegal gaming.'

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