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

No, they weren't personally in presence, however the world-famous celebs were conspicuously consisted of in a slide presentation on social and sweepstakes casinos - the questionable websites using both complimentary casino-style games and lucrative rewards, such as money, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are just two cogs in the multibillion-dollar industry that now finds itself besieged by claims. In the eyes of many gaming corporations, not to point out suit plaintiffs and state regulators, sweepstakes casinos act as conventional casinos, only without the oversight, customer protections and tax laws. So not just can they avoid the high 24-percent federal sports betting levy, however sweepstakes operators aren't subject to regulative hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the business deals with allegations of unlawful gambling in a New york city lawsuit that declares VGW utilizes celebrity endorsers to 'create a veneer of authenticity' around its product. (See VGW's declaration listed below)

'I'm not exactly sure" if you do not trust us, you can trust Paris Hilton" is a winning message for business 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.
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Sweepstakes endorsers include a series 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 differences in between traditional sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of numerous sweepstakes gambling establishments found online

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

Drake has a deal with social sweeps gambling establishment, Stake, that he regularly promotes on social networks

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

Others lure consumers with promises of rewards. One such operator, Stake, ran a social media ad flaunting Drake's cars, planes and mansions before pivoting to video of the rap artist playing online casino-style video games.

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

Another caption described: 'Because I never ever gave up.'

The discrepancy between gambling websites and social or sweepstakes casinos is a bit intricate, however operators of the latter insist they're not included with the previous.

A spokesperson 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 information, most of the gamers on social-sweepstakes gambling establishments are playing for complimentary.

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

Social gambling establishments offer consumers a possibility to play casino-style video games with pals. Players have the option to purchase valueless currency typically referred to as 'gold coins,' which can not be exchanged genuine cash, however can be utilized to open various features within the games.
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But within the world of social gambling establishments exists sweepstakes video gaming, enabling consumers to obtain 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 complainants in Florida, Georgia, New Jersey and New York. One player told the Washington Post he lost more than $100,000 on sweepstakes casinos in the previous year after continuing to buy more coins in pursuit of cash and other things of value.

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

Social sweeps gambling establishment Stake ran an advertisement revealing off 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 gambling establishments are prohibited in all but seven states, which has actually assisted to fuel the popularity of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, enable customers to send mail-in requests for totally free sweeps coins, supplied the gamers follow painfully particular guidelines. What's more, gamers are typically rewarded with sweeps coins simply for signing up, thereby providing them a factor to try their hands at any number of casino games for a possibility to win - or lose - real money.

So why are sweepstakes sites allowed to operate in 48 states, while online casinos are prohibited in all but 7?
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According to the stakeholders, their item is the totally free casino-style video gaming, and the real-stakes competition is simply a way of promoting their bread and butter.

'Social sweepstakes video games are merely a form of online entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is needed to play at social gambling establishments with sweepstakes prizes. Consumers never have to pay for a chance to win prizes. That lack of a purchase requirement - or" factor to consider" - is an essential difference in between social sweeps and conventional online gaming websites like casinos.'
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Think of the method 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 french fries that provide them the opportunity to win rewarding prizes, such as a $1 million jackpot.

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

'Sweepstakes are a long-standing method for promoting all type of everyday companies in the United States, everything from burgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are routinely utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling industry insiders, that argument doesn't cut it.

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

'They do not last permanently and they're generally not tied to casino-style video games of possibility,' Wallach told DailyMail.com. 'They're simply money free gifts.

'The sweepstakes [casinos] have none of the qualities commonly associated with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes casinos provide" casino-like" payouts, normally 80 percent or more of incomes, whereas the normal payout percentage for a short-lived advertising sweepstakes is a trivial share of the earnings earned by the company [typically less than one percent]'

Wallach is fast to compare the online social sweeps casinos to the that sprang up in Florida, using customers the chance to play casino-style games for genuine prizes. A number of those brick-and-mortar facilities have given that been shuttered over accusations of unlawful gambling.

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

Now, Wallach argues, social sweeps gambling establishments ought to face similar analysis.

'These distinctions are not approximate,' Wallach said of social sweeps casinos. 'They have actually repeatedly been cited by courts and state attorney general of the United States as key factors in determining that a sweepstakes promo was in fact a guise for prohibited gambling.'

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

'Consumers are being deprived of securities and states are giving up considerable tax and profits chances as this gambling changes that carried out through controlled channels,' checked out a well-circulated AGA memo.

And after that there are the plaintiffs who have sued social casinos in more than a dozen states.
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Sweepstakes gambling establishment operators paid a combined $14.2 million in four different cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action claim, saying the settlement was made to prevent legal costs and continued lawsuits.

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

In the current lawsuit, which is mainly similar to its predecessors, New York state citizens Lamar Prater and Rebecca Pratt both claim 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 actually also been named as offenders in claims for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's ask for remark.

'We normally do not discuss matters before the courts,' a VGW spokesperson told DailyMail.com through email. 'However, we keep in mind that this claim has only simply been submitted with the court and VGW has actually not been formally served.

'We have complete self-confidence in our compliance with all laws and guidelines where we run, and remain positive about the future,' the spokesperson continued. 'We continue to use our free-to-play video games across most of The United States and Canada, as we have for more than a years, developing not just great video games, user experiences and entertainment, however also ensuring this is done securely, properly and at the greatest level of standards.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are fairly common across the online social games industry (and the US more broadly), and our standard 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 might show problematic for some celebrity endorsers.

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

'It's paradoxical that professional athletes are hawking prohibited sports betting wagering 'sweeps' websites while at the same time the leagues desire to project a strong stance versus prohibited gambling - specifically when trying to tamp down the periodic gaming scandal,' Glaser told DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter got a life time restriction from the NBA over accusations he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes casinos.

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

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

'I 'd anticipate that a league crackdown on athletes endorsing sweepstakes sites is a matter of when, not if,' Glaser included.

Neither an NBA spokesperson nor the players' agents 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 e-mails.
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Asked if their celebrity endorsers have a responsibility to discuss to customers the differences and similarities in between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that requires to be done.

'We have full self-confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the spokesperson stated. 'Some of our worths are" our players 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 websites, sees things differently.

'Celebrities who lend their names to shady unlawful gaming sites are, at a minimum, putting their credibilities at danger along with courting civil and class actions by customers who allege harm,' Glaser stated. 'There is likewise some threat that state regulators and state attorneys general rope star endorsers into enforcement efforts for facilitating illegal gaming.'

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