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

No, they weren't personally in participation, but the world-famous stars were conspicuously included in a slide presentation on social and sweepstakes gambling establishments - the controversial sites using both free casino-style video games and financially rewarding rewards, such as cash, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for free,' 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 claims. In the eyes of lots of gaming corporations, not to discuss lawsuit plaintiffs and state regulators, sweepstakes casinos act as standard casinos, only without the oversight, consumer securities and tax laws. So not just can they prevent the steep 24-percent federal sports betting levy, but sweepstakes operators aren't subject to regulatory difficulties like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the company deals with accusations of prohibited gaming in a New york city claim that declares VGW utilizes celeb endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's declaration below)

'I'm uncertain" if you do not trust us, you can rely on Paris Hilton" is a winning message for companies 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 variety of celebs from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions in between traditional gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among many sweepstakes gambling establishments found online

Ryan Seacrest advises fans to dip into Chumba Casino, where lots of - however not all - video games are free

Drake has a handle social sweeps gambling establishment, Stake, that he regularly touts on social media

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Instead, ads normally focus around the social aspect of the casinos, while omitting the capacity for real gambling losses.

Others tempt clients with guarantees of prizes. One such operator, Stake, ran a social networks ad displaying Drake's automobiles, aircrafts and mansions before rotating to video of the rapper playing online casino-style video games.

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

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

The disparity between gaming websites and social or sweepstakes casinos is a bit complex, but operators of the latter insist they're not involved with the previous.

A representative for an industry trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA information, the majority of the gamers on social-sweepstakes casinos are sports betting complimentary.

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

Social gambling establishments provide consumers an opportunity to play casino-style video games with buddies. Players have the choice to purchase valueless currency often described as 'gold coins,' which can not be exchanged genuine money, however can be used to unlock different features within the video games.

But within the world of social casinos exists sweepstakes video gaming, permitting consumers to obtain other currency called 'sweeps coins' that can be exchanged for money 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 informed the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the past year after continuing to purchase more coins in pursuit of cash and other things of worth.

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

Social sweeps casino Stake ran an ad revealing off Drake's automobiles, planes and mansions

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 seven states, which has actually helped to fuel the appeal of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, permit customers to submit mail-in demands for free sweeps coins, provided the gamers follow painfully particular guidelines. What's more, players are frequently rewarded with sweeps coins just for signing up, consequently providing them a reason to try their hands at any number of gambling establishment games for a possibility to win - or lose - real cash.

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

According to the stakeholders, their product is the complimentary casino-style gaming, and the real-stakes competitors is simply a means of promoting their bread and butter.

'Social sweepstakes games are merely a kind of online home entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is required to dip into social casinos with sweepstakes prizes. Consumers never need to spend for an opportunity to win prizes. That absence of a purchase requirement - or" consideration" - is a vital difference in between social sweeps and standard online gambling websites like gambling establishments.'

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 purchasing hamburgers and french fries that provide them the possibility to win financially rewarding rewards, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the game itself doesn't fulfill the definition of gaming in the US.

'Sweepstakes are an enduring method for promoting all sort of daily organizations in the United States, everything from burgers to magazine memberships to coffee and home enhancement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are routinely used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting market experts, that argument does not cut it.

For starters, gaming attorney Daniel Wallach explains, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a distinct start and end, therefore recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote real products like french fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [casinos] possess none of the characteristics commonly related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos provide" casino-like" payments, generally 80 percent or more of profits, whereas the normal payment portion for a short-term promotional sweepstakes is an insignificant share of the profits earned by the business [usually less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the web coffee shops that sprang up in Florida, using customers the chance to play casino-style video games for real rewards. A lot of those brick-and-mortar establishments have actually because been shuttered over allegations of illegal sports betting.

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

Now, Wallach argues, social sweeps casinos should face similar analysis.

'These distinctions are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been mentioned by courts and state lawyer generals as essential elements in determining that a sweepstakes promotion was in truth a guise for illegal gambling.'

One of the casino industry's leading trade organizations, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, sometimes, enact brand-new legislation on the problem.

'Consumers are being deprived of securities and states are forgoing significant tax and revenue opportunities as this gambling replaces that carried out through managed channels,' checked out a well-circulated AGA memo.

And after that there are the complainants who have actually sued social gambling establishments in more than a lots states.

Sweepstakes casino operators paid a combined $14.2 million in 4 separate cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action lawsuit, saying the settlement was made to avoid legal expenses and continued litigation.

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

In the most current suit, which is largely similar 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 'illegal sports betting enterprise. '

Apple and Google have actually likewise been called as defendants in claims for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for comment.

'We normally don't talk about matters before the courts,' a VGW spokesperson told DailyMail.com via e-mail. 'However, we note that this claim has actually only simply been filed with the court and VGW has actually not been officially served.

'We have complete self-confidence in our compliance with all laws and guidelines where we run, and stay confident about the future,' the spokesperson continued. 'We continue to provide our free-to-play games throughout most of North America, as we have for more than a decade, creating not just great games, user experiences and home entertainment, however likewise ensuring this is done securely, properly and at the greatest level of requirements.

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

The problems in between traditional online sports betting and sweepstakes casinos might show troublesome for some celeb endorsers.

Towns, a star center with the Knicks, and the 76ers' George both endorse VGW's Global Poker brand name while the NBA is partnered with traditional gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking prohibited sports betting 'sweeps' sites while at the exact same time the leagues want to forecast a strong stance versus unlawful gambling - especially when trying to tamp down the occasional gambling scandal,' Glaser told DailyMail.com.

It was simply eight 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 unrelated to anything involving social or sweepstakes gambling establishments.

Along with VGW, Apple and Google are being demanded hosting presumably prohibited gambling sites

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

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

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

Asked if their star endorsers have an obligation to discuss to consumers the differences and similarities in between iGaming and sweepstakes casinos, VGW insisted there is nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial collaborations, and our service practices more broadly,' the representative said. 'Some of our worths are" our players come first" and" we do what's right", and we put our values at the core of whatever we do.'

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

'Celebrities who provide their names to shady illegal gambling sites are, at a minimum, putting their reputations at danger in addition to courting civil and class actions by consumers who allege harm,' Glaser stated. 'There is also some risk that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for helping with prohibited gaming.'

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