The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on illegal gaming.
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No, they weren't personally in participation, but the world-famous celebs were conspicuously included in a slide discussion on social and sweepstakes gambling establishments - the controversial websites providing both totally free casino-style video games and profitable rewards, 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 industry that now finds itself besieged by suits. In the eyes of lots of gaming corporations, not to mention claim complainants and state regulators, sweepstakes gambling establishments serve as standard casinos, just without the oversight, customer protections and tax laws. So not only can they prevent the high 24-percent federal sports betting levy, but sweepstakes operators aren't subject to regulatory obstacles 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 prohibited gambling in a New york city lawsuit that claims VGW utilizes celebrity endorsers to 'create a veneer of legitimacy' around its product. (See VGW's declaration listed below)

'I'm not sure" if you do not trust us, you can trust Paris Hilton" is a winning message for business operating multibillion-dollar illegal 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 include 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 distinctions in between standard gaming and sweepstakes play.

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

Ryan Seacrest advises fans to dip into Chumba Casino, where numerous - however not all - games are totally free

Drake has a handle social sweeps gambling establishment, Stake, that he regularly touts on social networks
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Instead, advertisements typically focus around the social aspect of the gambling establishments, while leaving out the potential for actual gaming losses.

Others tempt clients with guarantees of prizes. One such operator, Stake, ran a social media ad flaunting Drake's cars, aircrafts and estates before pivoting to video footage of the rap artist playing online casino-style video games.

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

Another caption discussed: 'Because I never offered up.'

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

A representative for an industry 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 data, many of the players on social-sweepstakes casinos are playing for complimentary.

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

Social casinos provide clients an opportunity to play casino-style video games with good friends. Players have the option to buy worthless currency frequently described as 'gold coins,' which can not be exchanged genuine cash, but can be used to unlock different functions within the video games.

But within the world of social gambling establishments exists sweepstakes gaming, permitting clients to get other currency known as 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the capacity for monetary losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York City. One player informed the Washington Post he lost more than $100,000 on sweepstakes casinos in the past year after continuing to buy more coins in pursuit of money and other things of value.

The Philadelphia 76ers' Paul George is seen promoting a Worldwide Poker occasion

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake's vehicles, aircrafts and mansions

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 assisted to sustain the popularity of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes sites, which do not need typically need recognition. However, sites like Chumba will ask for IDs from players attempting to withdraw any funds.

Many websites, like the crypto-compatible Stake, enable clients to send mail-in requests for totally free sweeps coins, offered the gamers follow painfully specific directions. What's more, gamers are typically rewarded with sweeps coins merely for signing up, thereby providing a factor to try their hands at any variety of gambling establishment video games for a chance to win - or lose - real money.

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

According to the stakeholders, their item is the complimentary casino-style gaming, and the real-stakes competitors is merely a way of promoting their bread and butter.

'Social sweepstakes games are merely a kind of online entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is needed to dip into social casinos with sweepstakes prizes. Consumers never need to pay for an opportunity to win prizes. That absence of a purchase requirement - or" consideration" - is a vital distinction between social sweeps and standard online sports betting websites like casinos.'

Think of the way that McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and fries that provide them the opportunity to win rewarding rewards, such as a $1 million prize.

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

'Sweepstakes are a long-standing technique for promoting all sort of everyday services in the United States, everything from burgers to magazine memberships to coffee and home improvement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are regularly 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 experts, that argument doesn't cut it.

For starters, video gaming lawyer Daniel Wallach explains, McDonald's Monopoly game does not run indefinitely. Rather, it has a distinct start and end, thus suggesting the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being used to promote real products like fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're typically not tied to casino-style video games of possibility,' Wallach told DailyMail.com. 'They're simply cash giveaways.

'The sweepstakes [gambling establishments] possess none of the attributes typically related to McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments use" casino-like" payouts, normally 80 percent or more of profits, whereas the normal payment portion for a sweepstakes is an unimportant share of the profits earned by the company [generally less than one percent]'

Wallach is quick to compare the online social sweeps casinos to the web coffee shops that sprang up in Florida, providing consumers the chance to play casino-style video games for real prizes. A lot of those brick-and-mortar establishments have given that been shuttered over accusations of unlawful sports betting.

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

Now, Wallach argues, social sweeps casinos need to face comparable analysis.

'These distinctions are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have actually consistently been cited by courts and state attorney general of the United States as essential consider figuring out that a sweepstakes promo remained in truth a guise for illegal gambling.'

Among the gambling establishment industry's leading trade organizations, 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 earnings chances as this sports betting replaces that carried out through controlled channels,' read a well-circulated AGA memo.

And after that there are the plaintiffs who have actually sued social casinos in more than a dozen states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in four 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 avoid legal expenses and continued litigation.

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

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

Apple and Google have likewise been called as defendants in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com's request for comment.

'We generally do not comment on matters before the courts,' a VGW spokesperson told DailyMail.com by means of email. 'However, we note that this claim has only just been submitted with the court and VGW has not been officially served.

'We have full confidence in our compliance with all laws and guidelines where we run, and remain positive about the future,' the spokesperson 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, creating not only great games, user experiences and entertainment, but likewise guaranteeing this is done securely, responsibly and at the greatest level of standards.
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'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are reasonably common throughout the online social games industry (and the US more broadly), and our standard practice is that we intend to strongly safeguard any claim which might be brought against us.'

The concerns in between standard online gambling and sweepstakes casinos could prove bothersome for some celebrity endorsers.

Towns, a star center with the Knicks, and the 76ers' George both back 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 wagering 'sweeps' sites while at the exact same time the leagues wish to predict a strong position against prohibited gaming - specifically when trying to tamp down the occasional gaming scandal,' Glaser told DailyMail.com.

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

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

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

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

Neither an NBA spokesperson nor the gamers' representatives reacted to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise disregarded to react to DailyMail.com emails.

Asked if their celeb endorsers have an obligation to discuss to customers the differences and similarities in between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that requires to be done.

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

Glaser, an outspoken opponent of sweepstakes sites, sees things in a different way.
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'Celebrities who provide their names to shady illegal sports betting sites are, at a minimum, putting their track records at danger along with courting civil and class actions by consumers who declare harm,' Glaser said. 'There is also some threat that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for assisting in illegal sports betting.'

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