The smiling faces of Paris Hilton and Ryan Seacrest made surprise looks before the Louisiana Senate for Friday's hearing on unlawful gambling.
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No, they weren't personally in attendance, however the world-famous stars were conspicuously included in a slide presentation on social and sweepstakes casinos - the controversial websites using both complimentary casino-style video games and rewarding prizes, such as cash, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are just two cogs in the multibillion-dollar industry that now finds itself besieged by lawsuits. In the eyes of many gaming corporations, not to discuss claim plaintiffs and state regulators, sweepstakes gambling establishments function as traditional casinos, just without the oversight, customer defenses and tax laws. So not just can they prevent the steep 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulative obstacles like anti-money laundering and .

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the business faces accusations of prohibited gaming in a New york city lawsuit that declares VGW utilizes celeb endorsers to 'develop a veneer of authenticity' around its product. (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 operating multibillion-dollar unlawful operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a variety of celebrities from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions in between conventional sports betting and sweepstakes play.

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

Ryan Seacrest prompts fans to play at Chumba Casino, where numerous - however not all - games are free
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Drake has a handle social sweeps casino, Stake, that he frequently touts on social media

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

Others tempt customers with promises of rewards. One such operator, Stake, ran a social media ad revealing off Drake's automobiles, planes and estates before pivoting to video footage of the rap artist playing online casino-style video games.

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

Another caption described: 'Because I never quit.'

The discrepancy between sports betting websites and social or sweepstakes casinos is a bit complex, but operators of the latter insist they're not included with the previous.

A spokesperson for a market trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA information, most of the players on social-sweepstakes gambling establishments are sports betting free.

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

Social casinos provide consumers an opportunity to play casino-style video games with friends. Players have the option to buy valueless currency often described as 'gold coins,' which can not be exchanged for genuine money, but can be used to open various functions within the video games.

But within the world of social casinos exists sweepstakes video gaming, enabling consumers to acquire other currency understood as 'sweeps coins' that can be exchanged for cash or other rewards.

And therein lies the capacity for monetary 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 casinos in the previous year after continuing to buy more coins in pursuit of cash and other things of worth.

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

Social sweeps casino Stake ran an advertisement revealing off Drake's automobiles, 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 but seven states, which has assisted to fuel the appeal of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, enable consumers to submit mail-in requests for totally free sweeps coins, offered the players follow painfully specific guidelines. What's more, gamers are frequently rewarded with sweeps coins simply for signing up, consequently providing a reason to try their hands at any number of gambling establishment games for a possibility to win - or lose - real money.

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

According to the stakeholders, their item is the free casino-style video gaming, and the real-stakes competition is merely a means of promoting their bread and butter.

'Social sweepstakes games are just a kind of online home entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is needed to play at social casinos with sweepstakes prizes. Consumers never have to pay for an opportunity to win prizes. That lack of a purchase requirement - or" consideration" - is a crucial distinction between social sweeps and standard online sports betting sites like casinos.'

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

And without a purchase requirement, or 'consideration', the video game itself does not satisfy the meaning of gaming in the US.

'Sweepstakes are a long-standing approach for promoting all kinds of everyday organizations in the United States, whatever from burgers to publication subscriptions to coffee and home enhancement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are regularly used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling market experts, that argument does not cut it.

For beginners, video gaming lawyer Daniel Wallach mentions, McDonald's Monopoly video game does not run indefinitely. Rather, it has a distinct start and end, consequently recommending the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being utilized to promote real items like fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're usually not connected to casino-style video games of chance,' Wallach told DailyMail.com. 'They're just money free gifts.

'The sweepstakes [casinos] have none of the attributes typically associated with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes casinos offer" casino-like" payments, normally 80 percent or more of profits, whereas the typical payment percentage for a momentary advertising sweepstakes is a minor share of the earnings made by the business [normally less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the web cafes that sprang up in Florida, providing clients the possibility to play casino-style games for genuine rewards. A number of those brick-and-mortar establishments have actually considering that been shuttered over allegations of unlawful sports betting.

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

'These differences are not arbitrary,' Wallach stated of social sweeps casinos. 'They have consistently been pointed out by courts and state lawyer generals as crucial consider determining that a sweepstakes promo remained in fact a guise for prohibited gambling.'

Among the casino industry's leading trade companies, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, in some cases, enact brand-new legislation on the concern.

'Consumers are being denied of securities and states are giving up substantial tax and earnings chances as this gaming replaces that conducted through regulated channels,' checked out 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 different cases in Kentucky without confessing any misdeed, 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 litigation.

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

In the most recent lawsuit, which is largely comparable to its predecessors, New york city state residents 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 business. '

Apple and Google have actually also been called as offenders in claims for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's request for comment.

'We generally don't talk about matters before the courts,' a VGW spokesperson told DailyMail.com by means of email. 'However, we note that this claim has only simply been filed with the court and VGW has not been formally served.

'We have full confidence in our compliance with all laws and regulations where we run, and stay confident about the future,' the representative continued. 'We continue to use our free-to-play video games throughout the majority of The United States and Canada, as we have for more than a decade, developing not just excellent games, user experiences and home entertainment, however likewise guaranteeing this is done securely, responsibly and at the greatest level of requirements.

'More broadly, we 'd restate 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 standard practice is that we plan to intensely safeguard any claim which might be brought against us.'

The issues in between traditional online gaming and sweepstakes gambling establishments could show problematic for some celebrity 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 standard video gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking prohibited sports betting wagering 'sweeps' sites while at the same time the leagues want to forecast a strong position versus illegal gambling - especially when trying to tamp down the occasional gambling scandal,' Glaser informed DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter received a lifetime ban from the NBA over allegations he conspired with bettors. 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 sites

Regardless, Glaser sees sweepstakes casinos as a significant concern for leagues such as the NBA.

'I 'd anticipate that a league crackdown on athletes backing sweepstakes websites is a matter of when, not if,' Glaser included.

Neither an NBA representative nor the gamers' representatives reacted to DailyMail.com's requests for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to react to DailyMail.com emails.

Asked if their star endorsers have an obligation to explain to clients the differences and resemblances between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is absolutely nothing more that requires to be done.

'We have full confidence in our influencer and ambassadorial collaborations, and our organization practices more broadly,' the spokesperson stated. 'Some of our worths are" our players precede" 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.
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'Celebrities who lend their names to dubious illegal gaming sites are, at a minimum, putting their track records at risk in addition to courting civil and class actions by customers who declare harm,' Glaser said. 'There is likewise some danger that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for assisting in unlawful sports betting.'

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