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

No, they weren't personally in attendance, but the world-famous celebrities were conspicuously included in a slide presentation on social and sweepstakes gambling establishments - the controversial websites using both totally free casino-style games and profitable prizes, such as money, present 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 claims. In the eyes of lots of video gaming corporations, not to discuss claim complainants and state regulators, sweepstakes gambling establishments serve as traditional gambling establishments, only without the oversight, customer defenses and tax laws. So not only can they avoid the steep 24-percent federal gaming levy, but 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 profits last year alone. Now the company faces allegations of illegal sports betting in a New York claim that claims VGW uses celeb endorsers to 'create a veneer of authenticity' around its item. (See VGW's statement listed below)

'I'm not exactly sure" if you don't trust us, you can rely on Paris Hilton" is a winning message for companies prohibited 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 consist of a series of celebrities from gambling enthusiasts 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 between conventional gambling and sweepstakes play.

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

Ryan Seacrest prompts fans to dip into Chumba Casino, where many - however not all - video games are free

Drake has a handle social sweeps gambling establishment, Stake, that he frequently promotes on social media

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Instead, advertisements usually focus around the social aspect of the gambling establishments, while leaving out the potential for actual gambling losses.

Others tempt customers with promises of prizes. One such operator, Stake, ran a social media advertisement displaying Drake's automobiles, aircrafts and estates before rotating to footage of the rapper playing online casino-style video games.
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'Daddy, why do we have a lot money?' check out the very first caption on the screen.

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

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

A spokesperson 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, many of the players on social-sweepstakes casinos are playing for totally free.

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

Social gambling establishments provide clients an opportunity to play casino-style video games with friends. Players have the choice to purchase valueless currency frequently described as 'gold coins,' which can not be exchanged for real money, however can be used to unlock various functions within the video games.

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

And therein lies the capacity for monetary losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York. One player 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 cash and other things of worth.

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

Social sweeps casino Stake ran an ad displaying Drake's vehicles, airplanes and mansions
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Karl-Anthony Towns of the New York Knicks is another NBA star plugging VGW's Global Poker

Traditional online gambling establishments are banned 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 don't require generally require identification. However, websites like Chumba will request IDs from players attempting to withdraw any funds.
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Many websites, like the crypto-compatible Stake, allow customers to send mail-in requests for free sweeps coins, offered the gamers follow painfully particular instructions. What's more, gamers are often rewarded with sweeps coins just for signing up, thus providing them a factor to try their hands at any number of gambling establishment video games for an opportunity to win - or lose - genuine money.

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

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

'Social sweepstakes games are merely a form of online entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is required to play at social casinos with sweepstakes prizes. Consumers never ever need to spend for a chance to win prizes. That absence of a purchase requirement - or" factor to consider" - is an important difference between social sweeps and standard online gambling sites like gambling establishments.'

Think about the method that McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and french fries that offer them the opportunity to win lucrative rewards, such as a $1 million jackpot.

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

'Sweepstakes are an enduring technique for promoting all sort of everyday businesses in the United States, whatever from hamburgers to magazine subscriptions to coffee and home improvement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are frequently 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 insiders, that argument does not cut it.

For starters, video gaming attorney Daniel Wallach points out, McDonald's Monopoly video game doesn't run forever. Rather, it has a well-defined start and end, thus recommending the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being used to promote real items like french fries, shakes, and the Filet-O-Fish.
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'They don't last permanently and they're typically not tied to casino-style video games of chance,' Wallach informed DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [casinos] have none of the attributes commonly connected with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos use" casino-like" payments, usually 80 percent or more of profits, whereas the normal payment portion for a short-lived promotional sweepstakes is a minor share of the earnings made by the company [typically less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the internet cafes that sprang up in Florida, offering clients the possibility to play casino-style video games for genuine rewards. A lot of those brick-and-mortar establishments have because been shuttered over claims of prohibited gaming.

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

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

'These differences are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been mentioned by courts and state attorney general of the United States as key factors in identifying that a sweepstakes promotion remained in fact a guise for unlawful gaming.'

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

'Consumers are being denied of protections and states are passing up significant tax and earnings chances as this gambling replaces that performed through controlled channels,' checked out a well-circulated AGA memo.

And then there are the complainants who have actually taken legal action against social casinos in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action lawsuit, stating the settlement was made to prevent legal expenses and continued lawsuits.

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

In the current lawsuit, which is largely similar to its predecessors, New York state homeowners Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is described in the filing as an 'prohibited sports betting enterprise. '
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Apple and Google have actually also been called as defendants in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's ask for comment.

'We normally do not discuss matters before the courts,' a VGW spokesperson told DailyMail.com via e-mail. 'However, we note that this claim has only just been filed with the court and VGW has actually not been formally served.

'We have full self-confidence in our compliance with all laws and policies where we operate, and remain confident about the future,' the representative continued. 'We continue to provide our free-to-play video games across the majority of The United States and Canada, as we have for more than a decade, developing not only excellent games, user experiences and home entertainment, however likewise guaranteeing this is done safely, responsibly and at the greatest level of requirements.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are relatively common across the online social games industry (and the US more broadly), and our basic practice is that we plan to strongly safeguard any claim which may be brought versus us.'

The issues between conventional online sports betting and sweepstakes gambling establishments could prove problematic 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 conventional video gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking illegal sports betting 'sweeps' websites while at the very same time the leagues wish to forecast a strong stance against unlawful gaming - particularly when attempting to tamp down the occasional gaming scandal,' Glaser informed DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter received a lifetime restriction from the NBA over claims he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes casinos.

Together with VGW, Apple and Google are being demanded hosting allegedly illegal gambling websites

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

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

Neither an NBA spokesperson nor the gamers' representatives reacted to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise overlooked to respond to DailyMail.com emails.

Asked if their celeb endorsers have an obligation to explain to customers the distinctions and similarities between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that requires to be done.

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the spokesperson stated. 'Some of our values are" our gamers come initially" 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 challenger of sweepstakes websites, sees things in a different way.
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'Celebrities who lend their names to shady prohibited sports betting sites are, at a minimum, putting their reputations at danger in addition to courting civil and class actions by consumers who allege damage,' Glaser said. 'There is also some danger that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for assisting in prohibited gaming.'

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