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

No, they weren't personally in presence, but the world-famous celebrities were notably included in a slide presentation on social and sweepstakes casinos - the controversial websites using both totally free casino-style video games and rewarding rewards, such as cash, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are just 2 cogs in the multibillion-dollar industry that now discovers itself besieged by claims. In the eyes of many video gaming corporations, not to point out suit plaintiffs and state regulators, sweepstakes casinos act as traditional casinos, only without the oversight, customer protections and tax laws. So not only can they avoid the steep 24-percent federal sports betting levy, however sweepstakes operators aren't based on regulative obstacles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits last year alone. Now the company faces accusations of unlawful sports betting in a New York lawsuit that claims VGW utilizes celeb endorsers to 'produce a veneer of legitimacy' around its item. (See VGW's statement below)

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

Sweepstakes endorsers consist of a series of celebrities from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, along with 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 numerous sweepstakes gambling establishments discovered online

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

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

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

Others tempt clients with pledges of rewards. One such operator, Stake, ran a social networks ad displaying Drake's automobiles, planes and estates before rotating to video of the rapper playing online casino-style games.

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

Another caption discussed: 'Because I never quit.'

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

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA data, many of the gamers on social-sweepstakes casinos are playing for complimentary.

'Most social sweeps consumers never ever make a purchase,' the SPGA representative told DailyMail.com. 'The minority of customers who make purchases do so in amounts far smaller than the common deposit or bet size at real-money online gambling websites.'

Social gambling establishments offer consumers an opportunity to play casino-style video games with good friends. Players have the alternative to purchase valueless currency typically described as 'gold coins,' which can not be exchanged for real money, however can be utilized to unlock different features within the games.

But within the world of social casinos exists sweepstakes 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 capacity for monetary losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York City. One player told 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 a Global Poker occasion

Social sweeps casino Stake ran an ad flaunting Drake's vehicles, airplanes 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 banned in all however seven states, which has assisted to sustain the popularity of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes sites, which don't need typically need identification. However, websites like Chumba will request IDs from players trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, enable customers to send mail-in demands for totally free sweeps coins, provided the players follow painfully specific directions. What's more, players are typically rewarded with sweeps coins merely for signing up, consequently giving them a reason to try their hands at any number of gambling establishment video games for an opportunity to win - or lose - real money.

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

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

'Social sweepstakes video games are merely a type of online home entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is required to dip into social casinos with sweepstakes rewards. Consumers never have to pay for a chance to win prizes. That lack of a purchase requirement - or" consideration" - is a crucial difference in between social sweeps and standard online sports betting websites like casinos.'

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

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

'Sweepstakes are a long-standing method for promoting all kinds of everyday companies in the United States, everything from hamburgers to publication memberships to coffee and home enhancement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are frequently utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'
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But to lots of sports betting industry experts, that argument does not cut it.

For starters, video gaming attorney Daniel Wallach mentions, McDonald's Monopoly game does not run forever. Rather, it has a distinct beginning and end, therefore recommending the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being utilized to promote genuine items like french fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're generally not tied to casino-style games of opportunity,' Wallach told DailyMail.com. 'They're just cash free gifts.

'The sweepstakes [gambling establishments] have none of the qualities typically connected with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes casinos provide" casino-like" payments, generally 80 percent or more of revenues, whereas the common payout percentage for a momentary marketing sweepstakes is an unimportant share of the income made by the business [normally less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the internet coffee shops that emerged in Florida, using consumers the chance to play casino-style video games for genuine prizes. A lot of those brick-and-mortar establishments have actually because been shuttered over allegations of illegal gaming.

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

Now, Wallach argues, social sweeps casinos ought to face comparable scrutiny.

'These distinctions are not approximate,' Wallach stated of social sweeps casinos. 'They have actually repeatedly been pointed out by courts and state attorney generals 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 pressing legislators to investigate sweepstakes operators and, sometimes, enact brand-new legislation on the concern.

'Consumers are being denied of securities and states are passing up substantial tax and profits 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 sued social casinos in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in four different cases in Kentucky without admitting any misbehavior, according to the Washington Post. Meanwhile VGW concurred to 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 a handle the VGW Group, which owns Global Poker

In the latest claim, which is mainly similar to its predecessors, New york city state citizens 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 business. '

Apple and Google have actually also 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 normally don't talk about 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 policies where we run, and remain confident about the future,' the representative continued. 'We continue to provide our free-to-play games throughout the majority of North America, as we have for more than a years, producing not just excellent games, user experiences and entertainment, but also ensuring this is done safely, properly and at the greatest level of standards.

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

The concerns in between traditional online gaming and sweepstakes gambling establishments could show problematic for some celebrity endorsers.

Towns, a star center with the Knicks, and the 76ers' George both back VGW's Global Poker brand 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 exact same time the leagues wish to predict a strong stance versus unlawful gambling - especially when attempting to tamp down the periodic gambling scandal,' Glaser told DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter got a lifetime restriction from the NBA over accusations he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes gambling establishments.

Along with VGW, Apple and Google are being demanded hosting allegedly unlawful gambling websites

Regardless, Glaser sees sweepstakes casinos as a significant concern for leagues such as the NBA.
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'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' representatives reacted to DailyMail.com's requests 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 celeb endorsers have a responsibility to describe to consumers the differences and similarities in between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is absolutely nothing more that requires to be done.

'We have full self-confidence in our influencer and ambassadorial collaborations, and our organization practices more broadly,' the spokesperson said. 'Some of our worths are" our gamers come first" and" we do what's right", and we put our worths at the core of whatever we do.'

Glaser, an outspoken opponent of sweepstakes websites, sees things in a different way.

'Celebrities who lend their names to dubious unlawful gaming sites are, at a minimum, putting their reputations at threat along with and class actions by consumers who allege damage,' Glaser said. 'There is also some threat that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for helping with illegal gaming.'

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