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The smiling faces of Paris Hilton and Ryan Seacrest made surprise looks 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 consisted of in a slide discussion on social and sweepstakes gambling establishments - the questionable websites using both totally free casino-style video games and rewarding prizes, such as cash, gift 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 sites are just 2 cogs in the multibillion-dollar market that now discovers itself besieged by suits. In the eyes of many video gaming corporations, not to point out suit complainants and state regulators, sweepstakes gambling establishments serve as standard gambling establishments, only without the oversight, consumer protections and tax laws. So not only can they avoid the high 24-percent federal sports betting levy, but sweepstakes operators aren't based on regulatory difficulties 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 accusations of illegal gaming in a New York suit that declares VGW uses celeb endorsers to 'create a veneer of authenticity' around its item. (See VGW's statement listed 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 locations like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of video gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers include a series of stars from sports betting lovers 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 gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of many sweepstakes gambling establishments discovered online

Ryan Seacrest urges fans to dip into Chumba Casino, where lots of - but not all - video games are complimentary

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

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Instead, advertisements generally center around the social aspect of the gambling establishments, while leaving out the potential for real gaming losses.

Others tempt clients with promises of prizes. One such operator, Stake, ran a social media ad showing off Drake's cars, airplanes and mansions before rotating to footage of the rapper playing online casino-style games.

'Daddy, why do we have a lot cash?' read the very first caption on the screen.

Another caption explained: 'Because I never ever provided up.'

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

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, most of the players on social-sweepstakes casinos are playing for 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 typical deposit or bet size at real-money online sports betting sites.'

Social casinos offer customers a chance to play casino-style video games with friends. Players have the option to purchase valueless currency frequently referred to as 'gold coins,' which can not be exchanged for real money, however can be utilized to unlock numerous functions within the games.

But within the world of social gambling establishments exists sweepstakes gaming, allowing customers to obtain other currency understood as 'sweeps coins' that can be exchanged for cash 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. One gamer informed the Washington Post he lost more than $100,000 on sweepstakes casinos 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 casino Stake ran an ad revealing off Drake's cars and trucks, airplanes and mansions

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

Traditional online casinos are prohibited in all however 7 states, which has assisted to fuel the popularity of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes sites, which don't need usually need recognition. However, sites like Chumba will ask for IDs from players attempting to withdraw any funds.

Many sites, like the crypto-compatible Stake, enable clients to submit mail-in ask for totally free sweeps coins, provided the players follow painfully specific directions. What's more, gamers are often rewarded with sweeps coins simply for signing up, consequently offering them a reason to try their hands at any variety of gambling establishment video games for a chance to win - or lose - genuine cash.

So why are sweepstakes websites permitted to run in 48 states, while online gambling establishments are prohibited in all but 7?

According to the stakeholders, their item is the complimentary casino-style gaming, and the real-stakes competition is just a way of promoting their bread and butter.

'Social sweepstakes video games are merely a kind of online entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is needed to play at social casinos with sweepstakes prizes. Consumers never need to spend for an opportunity to win rewards. That lack of a purchase requirement - or" consideration" - is an essential difference between social sweeps and traditional online gaming websites like casinos.'

Think about the way that McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're buying hamburgers and fries that provide them the opportunity to win rewarding prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'factor to consider', the video game itself doesn't satisfy the meaning of sports betting in the US.

'Sweepstakes are an enduring approach for promoting all kinds of everyday services in the United States, whatever from burgers to magazine memberships to coffee and home enhancement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are frequently utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

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

'They don't last permanently and they're generally not tied to casino-style video games of chance,' Wallach told DailyMail.com. 'They're just cash free gifts.

'The sweepstakes [gambling establishments] possess none of the attributes frequently related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos provide" casino-like" payouts, normally 80 percent or more of earnings, whereas the common payment percentage for a short-term promotional sweepstakes is an insignificant share of the revenue earned by the business [generally less than one percent]'

Wallach is fast to liken the online social sweeps casinos to the internet coffee shops that emerged in Florida, providing customers the possibility to play casino-style video games for real prizes. Many of those brick-and-mortar facilities have given that been shuttered over claims of prohibited sports betting.

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

Now, Wallach argues, social sweeps casinos need to face comparable analysis.

'These differences are not approximate,' Wallach said of social sweeps gambling establishments. 'They have actually repeatedly been cited by courts and state chief law officer as essential consider identifying that a sweepstakes promotion was in fact a guise for unlawful sports betting.'

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

'Consumers are being denied of securities and states are forgoing significant tax and earnings opportunities as this gaming replaces that carried out through controlled channels,' checked out a well-circulated AGA memo.

And then there are the plaintiffs who have actually sued social casinos in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 different cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action claim, stating the settlement was made to avoid legal costs and continued lawsuits.

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

In the most recent suit, which is mostly comparable to its predecessors, New york city state locals Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is described in the filing as an 'illegal gambling enterprise. '

Apple and Google have actually also been named as accuseds in suits for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com's request for comment.

'We generally do not discuss matters before the courts,' a VGW representative 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 full self-confidence in our compliance with all laws and guidelines where we run, and remain confident about the future,' the representative continued. 'We continue to use our games throughout most of North America, as we have for more than a years, creating not just fantastic video games, user experiences and home entertainment, but likewise guaranteeing this is done safely, responsibly and at the greatest level of standards.

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

The problems between standard online sports betting and sweepstakes casinos could show troublesome for some celebrity 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 conventional gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking unlawful sports betting 'sweeps' websites while at the same time the leagues desire to project a strong position against illegal gaming - especially when attempting to tamp down the occasional sports betting scandal,' Glaser told DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter received a life time 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 casinos.

Together with VGW, Apple and Google are being demanded hosting supposedly prohibited gambling websites

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

'I 'd expect that a league crackdown on athletes backing sweepstakes sites is a matter of when, not if,' Glaser added.

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

Asked if their star endorsers have a responsibility to discuss to clients the distinctions and resemblances in between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that needs to be done.

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the representative stated. 'A few of our values 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 differently.

'Celebrities who lend their names to dubious illegal sports betting 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 also some risk that state regulators and state chief law officers rope celeb endorsers into enforcement efforts for assisting in unlawful gaming.'

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