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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 prohibited gaming.

No, they weren't personally in presence, however the world-famous celebs were conspicuously included in a slide presentation on social and sweepstakes casinos - the controversial sites offering both complimentary casino-style video games and rewarding prizes, such as money, present cards or cryptocurrency. In one advertisement, 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 simply two cogs in the multibillion-dollar industry that now discovers itself besieged by suits. In the eyes of numerous gaming corporations, not to mention claim plaintiffs and state regulators, sweepstakes casinos act as conventional gambling establishments, only without the oversight, consumer securities and tax laws. So not only can they avoid the steep 24-percent federal sports betting 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 profits last year alone. Now the business faces allegations of illegal gambling in a New york city claim that claims VGW uses celeb endorsers to 'produce a veneer of authenticity' around its product. (See VGW's declaration listed below)

'I'm unsure" if you don't trust us, you can rely on Paris Hilton" is a winning message for business running multibillion-dollar illegal operations out of locations 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 variety of stars 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 gambling and sweepstakes play.

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

Ryan Seacrest urges fans to play at Chumba Casino, where numerous - but not all - video games are complimentary

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

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Instead, advertisements usually focus around the social aspect of the gambling establishments, while omitting the potential for actual sports betting losses.

Others tempt consumers with guarantees of rewards. One such operator, Stake, ran a social media advertisement flaunting Drake's cars, planes and mansions before rotating to footage of the rapper playing online casino-style video games.

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

Another caption explained: 'Because I never ever quit.'

The inconsistency between sports betting websites and social or sweepstakes gambling establishments is a bit intricate, but operators of the latter insist they're not involved with the previous.

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

'Most social sweeps clients never make a purchase,' the SPGA representative informed DailyMail.com. 'The minority of consumers who make purchases do so in quantities far smaller sized than the typical deposit or wager size at real-money online sports betting websites.'

Social casinos use customers an opportunity to play casino-style games with friends. Players have the choice to purchase valueless currency typically described as 'gold coins,' which can not be exchanged for real money, but can be used to unlock numerous features within the games.

But within the world of social casinos exists sweepstakes video gaming, allowing clients to obtain other currency called 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the potential 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 previous year after continuing to buy more coins in pursuit of money and other things of worth.

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

Social sweeps gambling establishment Stake ran an ad displaying 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 7 states, which has actually assisted to sustain the appeal of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes sites, which don't require normally need recognition. However, sites like Chumba will request for IDs from gamers attempting to withdraw any funds.

Many sites, like the crypto-compatible Stake, permit clients to submit mail-in requests for free sweeps coins, provided the players follow painfully specific guidelines. What's more, gamers are typically rewarded with sweeps coins merely for registering, thus providing a reason to attempt their hands at any number of gambling establishment games for an opportunity to win - or lose - real money.

So why are sweepstakes sites allowed to run in 48 states, while online casinos 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 simply a way of promoting their bread and butter.

'Social sweepstakes games are merely a form of online home entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is needed to dip into social casinos with sweepstakes rewards. Consumers never ever have to pay for an opportunity to win prizes. That lack of a purchase requirement - or" factor to consider" - is a crucial distinction between social sweeps and standard online gambling sites like casinos.'

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

And without a purchase requirement, or 'consideration', the video game itself doesn't meet the meaning of sports betting in the US.

'Sweepstakes are an enduring approach for promoting all type of daily services in the United States, everything from hamburgers to publication memberships to coffee and home improvement shops,' the SPGA representative 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 numerous sports betting industry experts, that argument does not cut it.

For beginners, video gaming attorney Daniel Wallach points out, McDonald's Monopoly video game doesn't run forever. Rather, it has a well-defined beginning and end, consequently suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote genuine products like french fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're usually not tied to casino-style games of possibility,' Wallach informed DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [gambling establishments] have none of the characteristics typically connected with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos offer" casino-like" payments, usually 80 percent or more of profits, whereas the normal payment portion for a short-lived marketing sweepstakes is an unimportant share of the revenue earned by the business [normally less than one percent]'

Wallach is fast to liken the online social sweeps casinos to the internet cafes that sprang up in Florida, providing clients the chance to play casino-style games for real prizes. A lot of those brick-and-mortar establishments have actually considering that been shuttered over accusations of unlawful sports betting.

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

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

'These distinctions are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have consistently been pointed out by courts and state lawyer generals as key consider identifying that a sweepstakes promotion was in fact 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 problem.

'Consumers are being deprived of securities and states are forgoing substantial tax and profits chances as this sports betting changes that carried out through controlled channels,' checked out a well-circulated AGA memo.

And then there are the complainants who have actually taken legal action against 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 concurred to pay $11.75 million in one class-action claim, stating the settlement was made to avoid legal expenses and continued lawsuits.

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

In the most current lawsuit, which is largely similar to its predecessors, New York state locals 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 'unlawful sports betting business. '

Apple and Google have actually likewise been called as offenders in suits for hosting the sweepstakes sites. But unlike VGW, neither tech company responded to DailyMail.com's request for remark.

'We normally do not talk about matters before the courts,' a VGW spokesperson informed DailyMail.com via e-mail. 'However, we note that this claim has only just been submitted 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 remain confident about the future,' the spokesperson continued. 'We continue to offer our free-to-play video games across the majority of North America, as we have for more than a years, creating not just terrific video games, user experiences and home entertainment, however likewise ensuring this is done securely, responsibly and at the greatest level of standards.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are reasonably common across the online social video games industry (and the US more broadly), and our basic practice is that we intend to vigorously safeguard any claim which might be brought against us.'

The between traditional online sports betting and sweepstakes gambling establishments might prove problematic 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 standard gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking unlawful sports betting wagering 'sweeps' sites while at the same time the leagues wish to forecast a strong stance versus illegal gambling - particularly when attempting to tamp down the periodic gambling scandal,' Glaser informed DailyMail.com.

It was simply eight months ago that Toronto Raptors forward Jontay Porter received a life time restriction from the NBA over allegations he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes casinos.

Together with VGW, Apple and Google are being demanded hosting supposedly unlawful sports betting sites

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

'I 'd anticipate that a league crackdown on athletes endorsing sweepstakes sites refers when, not if,' Glaser added.

Neither an NBA spokesman nor the players' representatives reacted to DailyMail.com's requests for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to respond to DailyMail.com e-mails.

Asked if their star endorsers have a duty to describe to customers the distinctions and resemblances between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the representative said. 'A few of our values are" our gamers come first" and" we do what's right", and we put our worths at the core of everything we do.'

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

'Celebrities who lend their names to shady prohibited gaming sites are, at a minimum, putting their credibilities at risk along with courting civil and class actions by consumers who declare harm,' Glaser said. 'There is likewise some danger that state regulators and state chief law officers rope celebrity endorsers into enforcement efforts for facilitating unlawful sports betting.'

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