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

No, they weren't personally in presence, but the world-famous celebrities were conspicuously included in a slide discussion on social and sweepstakes gambling establishments - the questionable sites providing both free casino-style games and rewarding prizes, such as money, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are simply 2 cogs in the multibillion-dollar market that now finds itself besieged by claims. In the eyes of lots of video gaming corporations, not to mention lawsuit plaintiffs and state regulators, sweepstakes gambling establishments act as conventional casinos, just without the oversight, customer securities and tax laws. So not just can they avoid the high 24-percent federal gaming levy, but sweepstakes operators aren't based on regulatory 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 faces accusations of illegal gaming in a New york city suit that claims VGW uses celebrity endorsers to 'produce 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 illegal 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 include a variety of celebrities from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom provide any distinctions in between standard sports betting 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 lots of - however not all - video 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 center around the social aspect of the gambling establishments, while leaving out the capacity for real gaming losses.

Others tempt clients with promises of prizes. One such operator, Stake, ran a social networks advertisement displaying Drake's cars and trucks, planes and estates before rotating to video footage of the rapper playing online casino-style video games.

'Daddy, why do we have so much money?' read the first caption on the screen.
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Another caption explained: 'Because I never quit.'

The discrepancy between gaming websites and social or sweepstakes casinos is a bit intricate, however operators of the latter insist they're not included with the previous.

A representative for an industry trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA data, most of the players on social-sweepstakes gambling establishments are playing for totally free.

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

Social gambling establishments use consumers an opportunity to play casino-style video games with good friends. Players have the alternative to buy worthless currency frequently described as 'gold coins,' which can not be exchanged for genuine money, but can be utilized to open various functions within the games.

But within the world of social gambling establishments exists sweepstakes gaming, enabling customers to acquire other currency referred to as 'sweeps coins' that can be exchanged for cash or other prizes.

And therein lies the capacity for financial losses, like the ones declared by complainants 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 past year after continuing to buy 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 gambling establishment Stake ran an ad flaunting Drake's automobiles, planes and mansions

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 actually helped to sustain the popularity of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, allow clients to send mail-in ask for complimentary sweeps coins, offered the painfully particular guidelines. What's more, gamers are often rewarded with sweeps coins simply for signing up, thus giving them a factor to try their hands at any number of casino games for an opportunity to win - or lose - real cash.

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

According to the stakeholders, their item is the totally free casino-style video gaming, and the real-stakes competitors is simply a means of promoting their bread and butter.
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'Social sweepstakes video games are merely a kind of online home entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is required to dip into social gambling establishments with sweepstakes rewards. Consumers never need to pay for an opportunity to win rewards. That absence of a purchase requirement - or" consideration" - is an essential difference in between social sweeps and traditional online gaming websites like casinos.'

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

And without a purchase requirement, or 'factor to consider', the game itself does not satisfy the definition of sports betting 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 enhancement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are frequently used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous sports betting market insiders, that argument does not cut it.

For beginners, gaming lawyer Daniel Wallach explains, McDonald's Monopoly video game does not run forever. Rather, it has a distinct beginning and end, thereby recommending the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being used to promote real products like fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're generally not tied to casino-style video games of opportunity,' Wallach informed DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [gambling establishments] have none of the attributes commonly connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments offer" casino-like" payments, generally 80 percent or more of earnings, whereas the normal payment percentage for a temporary promotional sweepstakes is an unimportant share of the revenue earned by the company [usually less than one percent]'

Wallach is quick to compare the online social sweeps casinos to the internet coffee shops that emerged in Florida, offering clients the opportunity to play casino-style games for real rewards. Much of those brick-and-mortar establishments have since been shuttered over claims of illegal gaming.

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

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

'These distinctions are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have consistently been cited by courts and state attorney general of the United States as essential consider identifying that a sweepstakes promo was in truth a guise for prohibited gaming.'

Among the gambling establishment industry's leading trade companies, the American Gaming Association, is now pushing lawmakers to examine sweepstakes operators and, sometimes, enact brand-new legislation on the issue.

'Consumers are being denied of protections and states are forgoing considerable tax and earnings opportunities as this gaming changes that carried out through regulated channels,' checked out a well-circulated AGA memo.

And after that there are the plaintiffs who have taken legal action against social casinos in more than a lots states.

Sweepstakes casino operators paid a combined $14.2 million in 4 separate cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action lawsuit, saying the settlement was made to avoid legal expenses and continued lawsuits.

Michael Phelps has signed a deal with the VGW Group, which owns Global Poker

In the most current suit, which is mainly comparable to its predecessors, New York state locals Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is described in the filing as an 'unlawful sports betting enterprise. '

Apple and Google have also been named as offenders in suits for hosting the sweepstakes sites. But unlike VGW, neither tech business responded to DailyMail.com's demand for remark.

'We typically don't discuss matters before the courts,' a VGW representative told DailyMail.com by means of email. 'However, we note that this claim has only simply been submitted 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 run, and remain confident about the future,' the spokesperson continued. 'We continue to offer our free-to-play games across many of The United States and Canada, as we have for more than a decade, producing not only great video games, user experiences and entertainment, however likewise ensuring this is done securely, responsibly and at the greatest level of requirements.

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

The issues in between conventional online sports betting and sweepstakes gambling establishments could prove troublesome for some star endorsers.
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Towns, a star center with the Knicks, and the 76ers' George both back VGW's Global Poker brand while the NBA is partnered with traditional gaming titans like FanDuel and DraftKings.
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'It's paradoxical that professional athletes are hawking prohibited sports betting wagering 'sweeps' websites while at the same time the leagues want to forecast a strong position against prohibited gambling - specifically when attempting to tamp down the occasional gaming scandal,' Glaser informed DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter got a life time restriction from the NBA over claims he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes casinos.

Together with VGW, Apple and Google are being demanded hosting allegedly prohibited sports betting websites

Regardless, Glaser sees sweepstakes casinos as a significant issue 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 spokesman nor the players' agents reacted to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise ignored to react to DailyMail.com e-mails.

Asked if their star endorsers have a duty to discuss to clients the differences and similarities between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that needs to be done.

'We have full confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the representative said. 'Some of our values are" our players come first" and" we do what's right", and we put our values at the core of everything we do.'

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

'Celebrities who lend their names to dubious prohibited gaming websites are, at a minimum, putting their reputations at risk along with courting civil and class actions by customers who declare damage,' Glaser stated. 'There is also some risk that state regulators and state chief law officers rope star endorsers into enforcement efforts for facilitating illegal gambling.'

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