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

No, they weren't personally in participation, but the world-famous celebrities were notably consisted of in a slide discussion on social and sweepstakes gambling establishments - the controversial sites providing both totally free casino-style video games and lucrative rewards, such as money, present 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 websites are just 2 cogs in the multibillion-dollar industry that now finds itself besieged by lawsuits. In the eyes of numerous video gaming corporations, not to point out claim plaintiffs and state regulators, sweepstakes gambling establishments act as conventional gambling establishments, only without the oversight, consumer securities and tax laws. So not only can they avoid the high 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulatory difficulties 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 business faces accusations of illegal gaming in a New york city lawsuit that claims VGW utilizes celebrity endorsers to 'develop a veneer of legitimacy' around its item. (See VGW's declaration listed below)

'I'm uncertain" if you do not trust us, you can trust Paris Hilton" is a winning message for business 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 consist of a series of celebs 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 gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of gambling establishments found online

Ryan Seacrest prompts fans to dip into Chumba Casino, where lots of - however not all - video games are free
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Drake has an offer with social sweeps casino, Stake, that he regularly promotes on social media

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

Others lure customers with pledges of prizes. One such operator, Stake, ran a social media ad flaunting Drake's cars and trucks, airplanes and estates before pivoting to video of the rapper playing online casino-style games.

'Daddy, why do we have so much money?' read the very first caption on the screen.

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

The disparity in between gambling websites and social or sweepstakes gambling establishments is a bit complicated, however operators of the latter insist they're not included with the previous.

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, the majority of the gamers on social-sweepstakes casinos are sports betting complimentary.
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'Most social sweeps customers never purchase,' the SPGA spokesperson told DailyMail.com. 'The minority of clients who make purchases do so in amounts far smaller sized than the normal deposit or bet size at real-money online gaming sites.'

Social casinos provide clients a chance to play casino-style games with good friends. Players have the option to purchase worthless currency typically described as 'gold coins,' which can not be exchanged for genuine money, however can be used to open different features within the games.

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

And therein lies the potential for financial losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York. One gamer informed 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 cash and other things of value.

The Philadelphia 76ers' Paul George is seen promoting a Global Poker event

Social sweeps casino Stake ran an advertisement displaying 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 prohibited in all but 7 states, which has actually helped to sustain the appeal of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, allow customers to send mail-in demands for free sweeps coins, supplied the gamers follow painfully specific instructions. What's more, gamers are often rewarded with sweeps coins just for registering, therefore providing a factor to attempt their hands at any number of casino games for a possibility to win - or lose - genuine money.

So why are sweepstakes sites allowed to operate in 48 states, while online casinos are banned in all however 7?
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According to the stakeholders, their item is the free casino-style gaming, and the real-stakes competitors is just a way of promoting their support.

'Social sweepstakes video games are simply a kind of online home entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is required to dip into social casinos with sweepstakes rewards. Consumers never need to spend for an opportunity to win rewards. That absence of a purchase requirement - or" consideration" - is a vital distinction in between social sweeps and conventional online gaming websites like casinos.'

Think about the way that McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and french fries that offer them the opportunity to win rewarding rewards, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the video game itself does not fulfill the definition of gambling in the US.

'Sweepstakes are a long-standing approach for promoting all sort of everyday companies in the United States, whatever from burgers to magazine subscriptions to coffee and home improvement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are routinely used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many gambling market insiders, that argument doesn't cut it.

For starters, gaming lawyer Daniel Wallach explains, McDonald's Monopoly video game doesn't 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 products like french fries, shakes, and the Filet-O-Fish.
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'They do not last permanently and they're typically not connected to casino-style video games of chance,' Wallach informed DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [casinos] possess none of the attributes commonly associated with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments offer" casino-like" payments, typically 80 percent or more of incomes, whereas the typical payout percentage for a short-lived marketing sweepstakes is a minor share of the earnings made by the business [normally less than one percent]'

Wallach is fast to compare the online social sweeps casinos to the web cafes that emerged in Florida, providing customers the possibility to play casino-style video games for genuine prizes. Many of those brick-and-mortar establishments have because been shuttered over allegations of unlawful gambling.

DJ Khaled is among several celeb spokespeople for VGW's Global Poker brand
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Now, Wallach argues, social sweeps gambling establishments should face comparable analysis.

'These distinctions are not arbitrary,' Wallach stated of social sweeps casinos. 'They have actually repeatedly been cited by courts and state lawyer generals as key aspects in determining that a sweepstakes promo was in reality a guise for unlawful gaming.'
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Among the casino market's leading trade organizations, the American Gaming Association, is now pressing lawmakers to investigate sweepstakes operators and, sometimes, enact brand-new legislation on the issue.

'Consumers are being deprived of securities and states are passing up substantial tax and earnings opportunities as this sports betting replaces that performed through controlled channels,' read a well-circulated AGA memo.

And then there are the plaintiffs who have sued social gambling establishments in more than a dozen states.

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

Michael Phelps has actually signed an offer with the VGW Group, which owns Global Poker

In the most recent claim, which is mostly similar to its predecessors, New York state citizens Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is explained in the filing as an 'illegal sports betting enterprise. '

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

'We usually don't discuss matters before the courts,' a VGW representative told DailyMail.com through email. 'However, we keep in mind that this claim has only simply been filed with the court and VGW has actually not been officially served.

'We have full self-confidence in our compliance with all laws and policies where we operate, and remain positive 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 years, creating not just excellent video games, user experiences and entertainment, however also guaranteeing this is done securely, properly and at the highest level of requirements.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are fairly typical across 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 against us.'

The issues in between conventional online gaming and sweepstakes casinos might prove problematic for some star 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 traditional video gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking unlawful sports betting wagering 'sweeps' websites while at the very same time the leagues wish to forecast a strong stance versus prohibited gambling - particularly when attempting to tamp down the periodic gaming scandal,' Glaser told DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter received a life time restriction from the NBA over claims he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes gambling establishments.

Along with VGW, Apple and Google are being sued for hosting supposedly illegal sports betting sites

Regardless, Glaser sees sweepstakes gambling establishments as a major concern for leagues such as the NBA.
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'I 'd expect that a league crackdown on professional athletes backing sweepstakes sites refers when, not if,' Glaser added.

Neither an NBA spokesman nor the players' agents reacted to DailyMail.com's requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also disregarded to react to DailyMail.com emails.

Asked if their star endorsers have a responsibility to explain to customers the differences and resemblances in between iGaming and sweepstakes casinos, VGW insisted there is nothing more that requires to be done.

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our organization practices more broadly,' the representative said. 'A few of our worths are" our players come first" and" we do what's right", and we put our worths at the core of whatever we do.'

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

'Celebrities who provide their names to shady prohibited sports betting websites are, at a minimum, putting their track records at risk as well as courting civil and class actions by consumers who allege damage,' Glaser said. 'There is also some threat that state regulators and state chief law officers rope star endorsers into enforcement efforts for helping with unlawful gaming.'

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