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 attendance, however the world-famous celebs were notably included in a slide discussion on social and sweepstakes casinos - the controversial sites using both free casino-style video games and financially rewarding rewards, such as cash, present cards or cryptocurrency. In one advertisement, 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.
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The sites are just two cogs in the multibillion-dollar market that now finds itself besieged by claims. In the eyes of lots of gaming corporations, not to discuss claim plaintiffs and state regulators, sweepstakes casinos act as standard casinos, only without the oversight, consumer protections and tax laws. So not just can they prevent the steep 24-percent federal gambling levy, however sweepstakes operators aren't based on regulatory hurdles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the business faces allegations of illegal gaming in a New york city suit that declares VGW utilizes celebrity endorsers to 'create a veneer of legitimacy' around its product. (See VGW's statement listed below)

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

Sweepstakes endorsers include a variety of stars from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions between traditional gaming and sweepstakes play.

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

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

Drake has a deal with social sweeps gambling establishment, Stake, that he routinely touts on social media

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Instead, ads generally center around the social aspect of the gambling establishments, while omitting the potential for real sports betting losses.

Others lure clients with pledges of prizes. One such operator, Stake, ran a social media ad revealing off Drake's cars and trucks, planes and estates before rotating to footage of the rapper playing online casino-style games.

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

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

The discrepancy in between sports betting sites and social or sweepstakes casinos is a bit intricate, but operators of the latter insist they're not involved with the previous.

A representative for a market 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 data, most of the players on social-sweepstakes gambling establishments are sports betting complimentary.

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

Social casinos offer consumers a possibility to play casino-style games with 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 used to open various features within the games.
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But within the world of social casinos exists sweepstakes gaming, enabling customers to obtain other currency referred to as 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the capacity 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 past year after continuing to purchase more coins in pursuit of money and other things of value.
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The Philadelphia 76ers' Paul George is seen promoting a Global Poker event

Social sweeps casino Stake ran an advertisement flaunting Drake's cars and trucks, planes 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 helped to fuel the popularity of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, allow clients to submit mail-in demands for complimentary sweeps coins, supplied the players follow painfully particular guidelines. What's more, players are frequently rewarded with sweeps coins just for registering, therefore providing 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 enabled to run 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 competitors is merely a method of promoting their support.

'Social sweepstakes video games are merely a kind of online entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is needed to play at social casinos with sweepstakes rewards. Consumers never have to pay for a chance to win prizes. That lack of a purchase requirement - or" consideration" - is an essential distinction in between social sweeps and conventional online gaming sites like casinos.'
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Think about the method that McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and fries that offer them the opportunity to win profitable rewards, such as a $1 million prize.

And without a purchase requirement, or 'factor to consider', the video game itself does not satisfy the definition of sports betting in the US.
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'Sweepstakes are a long-standing method for promoting all kinds of everyday businesses in the United States, everything from burgers to publication memberships to coffee and home improvement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are frequently 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 industry insiders, that argument does not cut it.

For beginners, video gaming lawyer Daniel Wallach mentions, McDonald's Monopoly game does not run indefinitely. Rather, it has a distinct beginning and end, therefore suggesting the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being used to promote genuine products like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [gambling establishments] have none of the qualities commonly connected with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos use" casino-like" payouts, generally 80 percent or more of incomes, whereas the typical payout portion for a momentary marketing sweepstakes is a minor share of the earnings earned by the company [typically less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the web cafes that emerged in Florida, providing customers the opportunity to play casino-style video games for real rewards. A number of those brick-and-mortar facilities have given that been shuttered over claims of illegal gambling.

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

Now, Wallach argues, social sweeps casinos ought to face comparable scrutiny.

'These distinctions are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been pointed out by courts and state attorney generals as crucial consider identifying that a sweepstakes promo remained in truth a guise for prohibited gambling.'

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

'Consumers are being deprived of protections and states are passing up considerable tax and profits chances as this gaming changes that performed through regulated channels,' read a well-circulated AGA memo.

And then there are the complainants who have taken legal action against social casinos in more than a dozen states.

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

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

In the most current lawsuit, which is mostly comparable to its predecessors, New york city state citizens Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'unlawful sports betting enterprise. '

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

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

'We have complete confidence in our compliance with all laws and regulations where we operate, and remain positive about the future,' the spokesperson continued. 'We continue to offer our free-to-play video games across the majority of The United States and Canada, as we have for more than a decade, creating not just excellent games, user experiences and home entertainment, however also ensuring this is done securely, properly and at the highest level of requirements.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are relatively common across the online social games market (and the US more broadly), and our basic practice is that we intend to strongly protect any claim which may be brought against us.'

The problems between traditional online gambling and sweepstakes casinos could prove bothersome for some celebrity 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 standard video gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking unlawful sports betting wagering 'sweeps' sites while at the very same time the leagues wish to project a strong stance versus prohibited gambling - especially when attempting to tamp down the periodic gambling scandal,' Glaser told DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter got a lifetime ban from the NBA over claims he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes gambling establishments.

In addition to VGW, Apple and Google are being taken legal action against for hosting apparently unlawful sports betting websites

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

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

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

Asked if their celebrity endorsers have a responsibility to explain to clients the distinctions and similarities between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial collaborations, and our business practices more broadly,' the representative stated. 'Some of our worths are" our players precede" and" we do what's right", and we put our worths 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 dubious illegal sports betting sites are, at a minimum, putting their reputations at risk as well as courting civil and class actions by customers who declare harm,' Glaser said. 'There is likewise some danger that state regulators and state chief law officers rope celeb endorsers into enforcement efforts for assisting in illegal sports betting.'

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