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

No, they weren't personally in presence, however the world-famous stars were notably consisted of in a slide discussion on social and sweepstakes casinos - the controversial sites using both complimentary casino-style video games and rewarding prizes, such as cash, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for 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 market that now discovers itself besieged by claims. In the eyes of lots of video gaming corporations, not to discuss lawsuit complainants and state regulators, sweepstakes casinos function as traditional casinos, only without the oversight, consumer securities and tax laws. So not just can they avoid the steep 24-percent federal gambling levy, but sweepstakes operators aren't subject to regulative difficulties like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the company deals with allegations of unlawful sports betting in a New York claim that claims VGW uses star endorsers to 'produce a veneer of authenticity' around its product. (See VGW's statement listed below)

'I'm unsure" if you do not trust us, you can trust Paris Hilton" is a winning message for business running multibillion-dollar unlawful operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a range of celebs from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions in between standard sports betting and sweepstakes play.

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

Ryan Seacrest advises fans to dip into Chumba Casino, where many - but not all - games are complimentary

Drake has a deal with social sweeps casino, Stake, that he routinely promotes on social media

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Instead, advertisements generally focus around the social element of the casinos, while omitting the capacity for real sports betting losses.

Others lure customers with guarantees of rewards. One such operator, Stake, ran a social media advertisement displaying Drake's cars, planes and mansions before pivoting to footage of the rap artist playing online casino-style games.

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

Another caption discussed: 'Because I never ever provided up.'

The inconsistency between gambling sites and social or sweepstakes gambling establishments is a bit complex, 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), explained its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, many of the gamers on social-sweepstakes gambling establishments are sports betting complimentary.

'Most social sweeps customers never ever purchase,' the SPGA spokesperson informed 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 sports betting sites.'

Social casinos provide clients an opportunity to play casino-style video games with good friends. Players have the alternative to buy valueless currency frequently described as 'gold coins,' which can not be exchanged for real money, however can be utilized to unlock various features within the games.

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

And therein lies the potential for monetary losses, like the ones claimed 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 previous year after continuing to purchase more coins in pursuit of money and other things of worth.

The Philadelphia 76ers' Paul George is seen promoting an International Poker event

Social sweeps casino Stake ran an advertisement displaying Drake's vehicles, aircrafts and estates

Karl-Anthony Towns of the New York Knicks is another NBA star plugging VGW's Global Poker

Traditional online gambling establishments are prohibited in all but 7 states, which has assisted to sustain the appeal of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, enable clients to submit mail-in demands for free sweeps coins, provided the gamers follow painfully specific instructions. What's more, players are typically rewarded with sweeps coins simply for signing up, consequently providing a reason to try their hands at any number of casino games for an opportunity to win - or lose - real money.
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So why are sweepstakes sites enabled to run in 48 states, while online casinos are banned in all but 7?

According to the stakeholders, their product is the complimentary casino-style video gaming, and the real-stakes competitors is just a means of promoting their support.

'Social sweepstakes games are simply a form of online home entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is needed to dip into social gambling establishments with sweepstakes prizes. Consumers never have to spend for an opportunity to win prizes. That absence of a purchase requirement - or" factor to consider" - is a vital distinction between social sweeps and conventional online gambling websites like casinos.'

Consider the manner in which McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're buying hamburgers and french fries that offer them the chance to win financially rewarding rewards, such as a $1 million jackpot.

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

'Sweepstakes are a long-standing technique for promoting all type of daily organizations in the United States, everything from hamburgers to magazine subscriptions to coffee and home improvement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions 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 gambling industry experts, that argument doesn't cut it.
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For starters, video gaming lawyer Daniel Wallach mentions, McDonald's Monopoly video game doesn't run forever. Rather, it has a well-defined beginning and end, thus recommending the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being utilized to promote genuine products like french fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're usually not tied to casino-style games of possibility,' Wallach informed DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [casinos] have none of the characteristics typically related to McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments offer" casino-like" payments, generally 80 percent or more of profits, whereas the common payout portion for a temporary advertising sweepstakes is an unimportant share of the income earned by the business [typically less than one percent]'

Wallach is fast to liken the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, using clients the opportunity to play casino-style games for genuine rewards. A lot of those brick-and-mortar establishments have given that been shuttered over allegations of prohibited gambling.

DJ Khaled is among a number of celeb spokespeople for VGW's Global Poker brand

Now, Wallach argues, social sweeps casinos ought to deal with comparable examination.

'These differences are not approximate,' 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 reality a guise for unlawful sports betting.'

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

'Consumers are being denied of protections and states are passing up considerable tax and earnings opportunities as this sports betting replaces that performed through managed channels,' checked out a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action claim, saying the settlement was made to prevent legal costs and continued litigation.
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Michael Phelps has signed a handle the VGW Group, which owns Global Poker

In the most current suit, which is mainly similar to its predecessors, New york city state citizens Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'illegal sports betting business. '

Apple and Google have likewise been named as accuseds in suits for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's request for comment.

'We generally don't discuss matters before the courts,' a VGW representative told DailyMail.com through e-mail. 'However, we note that this claim has actually only just been submitted with the court and VGW has not been formally served.

'We have complete self-confidence in our compliance with all laws and policies where we operate, and stay confident about the future,' the representative continued. 'We continue to provide our free-to-play video games throughout many of The United States and Canada, as we have for more than a decade, developing not only terrific games, user experiences and home entertainment, but likewise ensuring this is done safely, responsibly and at the greatest level of standards.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are fairly common throughout the online social video games industry (and the US more broadly), and our basic practice is that we plan to vigorously protect any claim which may be brought versus us.'

The problems in between conventional online gambling and sweepstakes gambling establishments might show troublesome 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 gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking unlawful sports betting wagering 'sweeps' websites while at the exact same time the leagues want to project a strong position against prohibited gambling - particularly when attempting to tamp down the periodic gaming scandal,' Glaser told DailyMail.com.

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

Together with VGW, Apple and Google are being sued for hosting presumably illegal gambling websites
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Regardless, Glaser sees sweepstakes casinos as a significant issue for leagues such as the NBA.
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'I 'd anticipate that a league crackdown on professional athletes backing sweepstakes sites is a matter of when, not if,' Glaser added.

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

Asked if their celeb endorsers have a responsibility to explain to consumers the distinctions and similarities in between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that requires to be done.

'We have complete confidence in our influencer and ambassadorial collaborations, and our organization practices more broadly,' the representative stated. 'Some of our worths are" our gamers precede" and" we do what's right", and we put our worths at the core of everything we do.'

Glaser, an outspoken challenger 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 threat as well as courting civil and class actions by customers who declare damage,' Glaser said. 'There is also some danger that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for assisting in unlawful gaming.'

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