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

No, they weren't personally in presence, however the world-famous celebs were conspicuously consisted of in a slide presentation on social and sweepstakes gambling establishments - the questionable websites using both totally free casino-style games and profitable prizes, 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.
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The sites are just two cogs in the multibillion-dollar market that now discovers itself besieged by suits. In the eyes of lots of video gaming corporations, not to point out suit plaintiffs and state regulators, sweepstakes gambling establishments serve as traditional casinos, just without the oversight, consumer securities and tax laws. So not only can they prevent the high 24-percent federal sports betting levy, but 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 company faces allegations of prohibited gambling in a New york city claim that declares VGW uses celebrity endorsers to 'develop a veneer of authenticity' around its item. (See VGW's declaration below)

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

Sweepstakes endorsers consist of a variety of celebrities from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom provide any distinctions in between standard sports betting and sweepstakes play.

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

Ryan Seacrest prompts fans to dip into Chumba Casino, where numerous - however not all - games are complimentary

Drake has an offer with social sweeps casino, Stake, that he regularly promotes on social networks

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Instead, advertisements generally focus around the social aspect of the casinos, while omitting the capacity for actual gaming losses.

Others tempt consumers with promises of prizes. One such operator, Stake, ran a social media advertisement showing off Drake's cars and trucks, airplanes and estates before pivoting to video footage of the rapper playing online casino-style games.

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

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

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

A representative for an industry trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, many of the gamers on social-sweepstakes gambling establishments are sports betting free.

'Most social sweeps clients never make a purchase,' the SPGA spokesperson told DailyMail.com. 'The minority of consumers who make purchases do so in amounts far smaller than the common deposit or bet size at real-money online gambling websites.'

Social casinos provide consumers a possibility to play casino-style video games with good friends. have the choice to buy worthless currency typically described as 'gold coins,' which can not be exchanged genuine money, however can be used to unlock various features within the video games.

But within the world of social gambling establishments exists sweepstakes video gaming, enabling consumers to obtain other currency called 'sweeps coins' that can be exchanged for cash or other rewards.

And therein lies the potential for financial 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 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 an International Poker event

Social sweeps casino Stake ran an ad flaunting Drake's automobiles, airplanes and estates

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

Traditional online casinos 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 require generally need identification. However, websites like Chumba will request for IDs from players attempting to withdraw any funds.

Many sites, like the crypto-compatible Stake, enable consumers to send mail-in demands for complimentary sweeps coins, offered the players follow painfully specific instructions. What's more, players are frequently rewarded with sweeps coins simply for registering, consequently providing a reason to try their hands at any variety of gambling establishment video games for an opportunity to win - or lose - genuine money.

So why are sweepstakes websites enabled to operate in 48 states, while online gambling establishments are banned in all but 7?

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

'Social sweepstakes video games are just a type of online entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is required to dip into social gambling establishments with sweepstakes prizes. Consumers never need to spend for an opportunity to win rewards. That absence of a purchase requirement - or" factor to consider" - is a crucial difference in between social sweeps and standard online sports betting websites like casinos.'

Think about the manner in which McDonald's utilizes its annual Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and french fries that offer them the possibility to win lucrative rewards, such as a $1 million jackpot.
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And without a purchase requirement, or 'consideration', the video game itself does not satisfy the meaning of gambling in the US.

'Sweepstakes are a long-standing approach for promoting all sort of everyday businesses in the United States, whatever from hamburgers to magazine memberships to coffee and home enhancement stores,' the SPGA representative told 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 many sports betting market insiders, that argument doesn't cut it.

For starters, video gaming attorney Daniel Wallach points out, McDonald's Monopoly game does not run forever. Rather, it has a well-defined start and end, thereby recommending the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being used to promote real products like fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're generally not connected to casino-style video games of opportunity,' Wallach told DailyMail.com. 'They're simply cash giveaways.

'The sweepstakes [gambling establishments] possess none of the attributes frequently associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments use" casino-like" payments, typically 80 percent or more of revenues, whereas the normal payment percentage for a temporary promotional sweepstakes is an unimportant share of the profits earned by the business [generally less than one percent]'

Wallach is fast to liken the online social sweeps gambling establishments to the internet coffee shops that emerged in Florida, offering clients the chance to play casino-style video games for real prizes. A lot of those brick-and-mortar facilities have given that been shuttered over accusations of illegal sports betting.

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

Now, Wallach argues, social sweeps gambling establishments should deal with comparable scrutiny.

'These distinctions are not approximate,' Wallach said of social sweeps gambling establishments. 'They have repeatedly been cited by courts and state attorney generals as essential factors in figuring out that a sweepstakes promotion was in fact a guise for prohibited sports betting.'

Among the casino market's leading trade companies, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, sometimes, enact new legislation on the issue.

'Consumers are being deprived of defenses and states are forgoing substantial tax and profits chances as this gambling replaces that performed through controlled channels,' checked out a well-circulated AGA memo.

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

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

In the most recent claim, which is mainly comparable to its predecessors, New York state residents 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 'unlawful sports betting business. '

Apple and Google have also been called as offenders in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech business responded to DailyMail.com's request for remark.

'We normally do not comment on matters before the courts,' a VGW spokesperson told DailyMail.com via email. 'However, we note that this claim has actually only simply been submitted with the court and VGW has actually not been officially served.

'We have complete self-confidence in our compliance with all laws and regulations where we run, and remain confident about the future,' the representative continued. 'We continue to offer our free-to-play games across most of North America, as we have for more than a decade, creating not only great games, user experiences and home entertainment, however likewise ensuring this is done safely, responsibly and at the greatest level of requirements.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are reasonably typical throughout the online social games industry (and the US more broadly), and our standard practice is that we intend to strongly protect any claim which may be brought versus us.'

The concerns in between traditional online gambling and sweepstakes gambling establishments could prove problematic for some star endorsers.

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

'It's ironic that professional athletes are hawking unlawful sports betting wagering 'sweeps' sites while at the exact same time the leagues desire to predict a strong position versus unlawful sports betting - particularly when trying to tamp down the periodic gaming scandal,' Glaser informed 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 bettors. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes gambling establishments.

Along with VGW, Apple and Google are being demanded hosting presumably unlawful gambling websites
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Regardless, Glaser sees sweepstakes gambling establishments as a significant concern for leagues such as the NBA.

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

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

Asked if their celeb endorsers have an obligation to discuss to consumers the distinctions and similarities 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 partnerships, and our service practices more broadly,' the spokesperson said. 'A few of our worths are" our players come first" and" we do what's right", and we put our worths at the core of everything we do.'

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

'Celebrities who lend their names to shady illegal sports betting sites are, at a minimum, putting their track records at risk in addition to courting civil and class actions by consumers who declare harm,' Glaser stated. 'There is also some risk that state regulators and state chief law officers rope celeb endorsers into enforcement efforts for facilitating prohibited sports betting.'

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