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

No, they weren't personally in participation, but the world-famous celebs were notably consisted of in a slide presentation on social and sweepstakes casinos - the questionable websites offering both totally free casino-style video games and lucrative rewards, such as money, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are just 2 cogs in the multibillion-dollar market that now discovers itself besieged by suits. In the eyes of numerous gaming corporations, not to discuss suit plaintiffs and state regulators, sweepstakes gambling establishments act as traditional gambling establishments, just without the oversight, consumer protections and tax laws. So not only can they avoid the high 24-percent federal gambling levy, however sweepstakes operators aren't based on regulative hurdles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the business deals with allegations of unlawful gaming in a New york city suit that claims VGW utilizes star endorsers to 'develop a veneer of authenticity' around its product. (See VGW's declaration below)

'I'm not sure" if you don't trust us, you can trust 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 speaker, Howard Glaser of video gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers include a variety of stars from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom offer any differences between standard gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among numerous sweepstakes casinos discovered online

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

Drake has a handle social sweeps casino, Stake, that he routinely touts on social networks

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

Others tempt customers with pledges of prizes. One such operator, Stake, ran a social networks advertisement displaying Drake's cars, planes and estates before rotating to video of the rap artist playing online casino-style games.

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

Another caption described: 'Because I never quit.'

The inconsistency in between gaming websites and social or sweepstakes gambling establishments is a bit intricate, however operators of the latter insist they're not included with the former.

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

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

Social gambling establishments use clients an opportunity to play casino-style games with friends. Players have the option to purchase valueless currency frequently described as 'gold coins,' which can not be exchanged genuine money, but can be used to unlock various features within the video games.

But within the world of social casinos exists sweepstakes video gaming, enabling consumers to obtain other currency referred to as 'sweeps coins' that can be exchanged for money 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. 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 occasion

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake's cars, airplanes and estates

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

Traditional online casinos are prohibited in all however seven states, which has actually assisted to fuel the popularity of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, permit consumers to submit mail-in ask for complimentary sweeps coins, supplied the players follow painfully particular guidelines. What's more, players are often rewarded with sweeps coins merely for registering, therefore giving them a factor to try their hands at any variety of casino games for an opportunity to win - or lose - genuine money.

So why are sweepstakes sites permitted to operate in 48 states, while online gambling establishments are banned in all however 7?

According to the stakeholders, their product is the totally free casino-style video gaming, and the real-stakes competition is just a method of promoting their bread and butter.

'Social sweepstakes video games are just a type of online home entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is needed to play at social casinos with sweepstakes rewards. Consumers never have to pay for an opportunity to win rewards. That absence of a purchase requirement - or" consideration" - is an essential difference in between social sweeps and standard online gaming sites like casinos.'

Think of the manner in which McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're buying hamburgers and french fries that offer them the chance to win profitable rewards, such as a $1 million prize.

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

'Sweepstakes are a long-standing technique for promoting all sort of everyday organizations in the United States, whatever from hamburgers to publication memberships to coffee and home enhancement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are regularly used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For beginners, video gaming lawyer Daniel Wallach points out, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a distinct start and end, consequently suggesting the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being used to promote genuine products like french fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're typically not tied to casino-style games of chance,' Wallach informed DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [casinos] possess none of the attributes commonly connected with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes casinos use" casino-like" payouts, typically 80 percent or more of earnings, whereas the normal payout percentage for a temporary advertising sweepstakes is an insignificant share of the profits earned by the business [usually less than one percent]'

Wallach is quick to compare the online social sweeps gambling establishments to the web cafes that emerged in Florida, using clients the possibility to play casino-style video games for real rewards. Many of those brick-and-mortar facilities have actually because been shuttered over claims of illegal gambling.

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

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

'These distinctions are not approximate,' Wallach stated of social sweeps casinos. 'They have consistently been mentioned by courts and state attorney generals as crucial consider figuring out that a sweepstakes promotion was in fact a guise for illegal gaming.'

One of the gambling establishment industry's leading trade organizations, the American Gaming Association, is now pushing legislators to examine sweepstakes operators and, in many cases, enact brand-new legislation on the issue.

'Consumers are being deprived of protections and states are passing up significant tax and earnings chances as this gambling changes that carried out through managed channels,' checked out a well-circulated AGA memo.

And after that there are the complainants 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 separate cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action suit, saying 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 current lawsuit, which is mainly similar to its predecessors, New york city state citizens 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 'prohibited sports betting enterprise. '

Apple and Google have also been called as accuseds in suits for hosting the sweepstakes sites. But unlike VGW, neither tech business responded to DailyMail.com's ask for comment.

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

'We have complete confidence in our compliance with all laws and guidelines where we run, and remain positive about the future,' the representative continued. 'We continue to offer our free-to-play games throughout the majority of North America, as we have for more than a decade, developing not only terrific video games, user experiences and entertainment, but likewise ensuring this is done securely, properly and at the greatest level of standards.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are fairly common throughout the online social games industry (and the US more broadly), and our basic practice is that we mean to strongly protect any claim which might be brought against us.'

The issues in between traditional online sports betting and sweepstakes casinos could prove bothersome for some star 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 video gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking unlawful sports betting 'sweeps' websites while at the exact same time the leagues desire to project a strong stance against prohibited gaming - particularly when attempting to tamp down the occasional sports betting scandal,' Glaser informed DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter received a lifetime restriction from the NBA over claims he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes casinos.

Together with VGW, Apple and Google are being sued for hosting allegedly illegal gambling websites

Regardless, Glaser sees sweepstakes gambling establishments as a major problem for leagues such as the NBA.

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

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

Asked if their celebrity endorsers have a duty to discuss to consumers the differences and resemblances between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that needs to be done.

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

Glaser, an outspoken challenger of sweepstakes websites, sees things differently.

'Celebrities who provide their names to shady prohibited gaming websites are, at a minimum, putting their reputations at threat along with courting civil and class actions by consumers who declare damage,' Glaser stated. 'There is also some danger that state regulators and state attorneys basic rope celeb endorsers into enforcement efforts for helping with illegal gambling.'

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