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

No, they weren't personally in participation, however the world-famous stars were conspicuously included in a slide discussion on social and sweepstakes casinos - the questionable sites using both totally free casino-style video games and lucrative prizes, such as cash, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are simply 2 cogs in the multibillion-dollar industry that now discovers itself besieged by claims. In the eyes of many gaming corporations, not to point out claim plaintiffs and state regulators, sweepstakes casinos serve as traditional casinos, only without the oversight, customer securities and tax laws. So not only can they avoid the steep 24-percent federal gaming levy, however sweepstakes operators aren't subject to regulative difficulties like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the business deals with allegations of unlawful sports betting in a New York claim that claims VGW uses celeb endorsers to 'produce 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 rely on 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 DailyMail.com.

Sweepstakes endorsers include a series of celebrities from gambling enthusiasts 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 traditional gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among lots of sweepstakes casinos found online

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

Drake has a handle social sweeps gambling establishment, Stake, that he frequently touts on social networks

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Instead, ads generally center around the social element of the casinos, while omitting the capacity for real sports betting losses.

Others lure customers with guarantees of rewards. One such operator, Stake, ran a social media ad revealing off Drake's cars and trucks, airplanes and estates before rotating to video of the rapper playing online casino-style video games.

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

Another caption explained: 'Because I never quit.'

The discrepancy in between gaming sites and social or sweepstakes gambling establishments is a bit complex, but operators of the latter insist they're not included with the previous.

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, the majority of the players on social-sweepstakes casinos are playing for complimentary.

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

Social gambling establishments provide consumers an opportunity to play casino-style games with good friends. Players have the option to buy valueless currency often described as 'gold coins,' which can not be exchanged for real money, however can be used to open different features within the games.

But within the world of social casinos exists sweepstakes gaming, enabling consumers to obtain other currency referred to 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 plaintiffs in Florida, Georgia, New Jersey and New York City. One gamer told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the past year after continuing to buy more coins in pursuit of cash and other things of worth.

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

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake's automobiles, planes 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 gambling establishments.

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

Many websites, like the crypto-compatible Stake, allow customers to submit mail-in requests for totally free sweeps coins, provided the gamers follow painfully particular directions. What's more, players are often rewarded with sweeps coins simply for signing up, thereby providing a factor to attempt their hands at any number of gambling establishment games for a chance to win - or lose - real cash.

So why are sweepstakes sites enabled to operate in 48 states, while online casinos are prohibited in all however 7?

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

'Social sweepstakes games are just a type of online entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is required to play at social gambling establishments with sweepstakes rewards. Consumers never have to spend for a chance to win rewards. That lack of a purchase requirement - or" factor to consider" - is an essential distinction in between social sweeps and traditional 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 bet, but rather they're purchasing hamburgers and french fries that use them the possibility to win rewarding rewards, such as a $1 million prize.

And without a purchase requirement, or 'factor to consider', the game itself doesn't fulfill the meaning of gaming in the US.

'Sweepstakes are an enduring method for promoting all sort of everyday services in the United States, everything from burgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos 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 insiders, that argument doesn't cut it.

For starters, gaming lawyer Daniel Wallach mentions, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a well-defined beginning and end, therefore suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote genuine products like french fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're typically not connected to casino-style games of possibility,' Wallach told DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [casinos] have none of the characteristics typically related to McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos provide" casino-like" payouts, usually 80 percent or more of profits, whereas the normal payment portion for a short-term marketing sweepstakes is a minor share of the profits earned by the business [normally less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the internet coffee shops that sprang up in Florida, offering consumers the opportunity to play casino-style games for real prizes. Many of those brick-and-mortar facilities have because been shuttered over allegations of unlawful gambling.

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

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

'These differences are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have actually consistently been cited by courts and state chief law officer as key 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 pressing lawmakers to examine sweepstakes operators and, sometimes, enact brand-new legislation on the problem.

'Consumers are being deprived of defenses and states are forgoing considerable tax and earnings chances as this gaming changes that conducted through managed channels,' read a well-circulated AGA memo.

And then there are the complainants who have actually sued social gambling establishments in more than a dozen states.

Sweepstakes casino operators paid a combined $14.2 million in 4 separate cases in Kentucky without admitting any misbehavior, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action suit, stating the settlement was made to prevent legal costs and continued lawsuits.

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

In the most recent lawsuit, which is mainly similar to its predecessors, New york city state locals 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 'prohibited gambling business. '

Apple and Google have actually also been called as accuseds in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's demand for comment.

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

'We have complete self-confidence in our compliance with all laws and regulations where we operate, and stay confident about the future,' the representative continued. 'We continue to offer our free-to-play games throughout the majority of The United States and Canada, as we have for more than a years, developing not just fantastic video games, user experiences and home entertainment, however also guaranteeing this is done safely, responsibly and at the highest level of standards.

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

The problems in between conventional online gambling and sweepstakes casinos could show troublesome for some celeb 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 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 wish to predict a strong stance versus unlawful gambling - especially when attempting 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 allegations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes .

In addition to VGW, Apple and Google are being sued for hosting allegedly prohibited gambling websites

Regardless, Glaser sees sweepstakes gambling establishments as a significant issue for leagues such as the NBA.

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

Neither an NBA representative nor the players' agents responded to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise neglected to react to DailyMail.com emails.

Asked if their star endorsers have a duty to discuss to clients the distinctions and similarities in between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that requires to be done.
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'We have full confidence in our influencer and ambassadorial collaborations, and our service practices more broadly,' the representative said. 'A few 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 challenger of sweepstakes sites, sees things differently.
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'Celebrities who lend their names to shady illegal gambling sites are, at a minimum, putting their track records at risk as well as courting civil and class actions by customers who allege damage,' 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 illegal gambling.'

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