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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 prohibited gaming.

No, they weren't personally in presence, but the world-famous celebrities were notably included in a slide presentation on social and sweepstakes casinos - the controversial websites offering both free casino-style video games and rewarding prizes, such as money, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen 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 industry that now finds itself besieged by suits. In the eyes of many video gaming corporations, not to mention claim complainants and state regulators, sweepstakes casinos function as conventional casinos, just without the oversight, consumer securities and tax laws. So not only can they prevent the steep 24-percent federal gambling levy, but sweepstakes operators aren't subject to regulatory hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income last year alone. Now the business deals with allegations of prohibited sports betting in a New York suit that claims VGW utilizes celebrity endorsers to 'produce a veneer of authenticity' around its product. (See VGW's declaration listed below)

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

Sweepstakes endorsers include a range of celebs from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom provide any differences in between standard sports betting and sweepstakes play.

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

Ryan Seacrest urges fans to play at Chumba Casino, where numerous - but not all - video games are complimentary

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

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

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

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

Another caption discussed: 'Because I never gave up.'

The discrepancy in between gambling websites and social or sweepstakes casinos is a bit complex, but operators of the latter insist they're not included with the former.

A spokesperson for an industry 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 gambling establishments are playing for free.

'Most social sweeps consumers never ever 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 bet size at real-money online gaming websites.'

Social gambling establishments provide clients a possibility to play casino-style video games with good friends. Players have the option to purchase worthless currency often described as 'gold coins,' which can not be exchanged genuine money, however can be utilized to unlock numerous functions within the games.

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

And therein lies the capacity for financial losses, like the ones declared by plaintiffs 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 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 a Global Poker occasion

Social sweeps gambling establishment Stake ran an advertisement displaying Drake's vehicles, 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 7 states, which has actually assisted to fuel the appeal of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes sites, which do not require normally need identification. However, websites like Chumba will ask for IDs from gamers trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, permit customers to submit mail-in requests for totally free sweeps coins, offered the gamers follow painfully particular guidelines. What's more, gamers are typically rewarded with sweeps coins merely for signing up, thus providing a factor to attempt their hands at any variety of gambling establishment video games for a possibility to win - or lose - real money.

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

According to the stakeholders, their item is the free casino-style gaming, and the real-stakes competition is simply a means of promoting their bread and butter.

'Social sweepstakes games are just a type of online entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is needed to dip into social gambling establishments with sweepstakes prizes. Consumers never need to pay for an opportunity to win prizes. That absence of a purchase requirement - or" consideration" - is an essential distinction between social sweeps and standard online gaming websites like casinos.'

Consider the manner in which McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and fries that use them the opportunity to win profitable prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the video game itself does not fulfill the meaning of sports betting in the US.

'Sweepstakes are a long-standing technique for promoting all kinds of everyday companies in the United States, everything from hamburgers to publication memberships to coffee and home enhancement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are regularly used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous sports betting market experts, that argument does not cut it.

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

'They do not last forever and they're normally not tied to casino-style video games of opportunity,' Wallach told DailyMail.com. 'They're just money giveaways.

'The sweepstakes [gambling establishments] possess none of the qualities commonly associated with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes casinos provide" casino-like" payouts, generally 80 percent or more of revenues, whereas the common payout portion for a momentary advertising sweepstakes is an insignificant share of the income made by the business [normally less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, using clients the possibility to play casino-style games for real prizes. A lot of those brick-and-mortar establishments have given that been shuttered over allegations of prohibited sports betting.

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

Now, Wallach argues, social sweeps casinos should face similar examination.

'These distinctions are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have actually repeatedly been pointed out by courts and state chief law officer as crucial factors in determining that a sweepstakes promotion remained in truth a guise for illegal gambling.'

One of the gambling establishment market's leading trade companies, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, sometimes, enact brand-new legislation on the problem.

'Consumers are being deprived of securities and states are passing up substantial tax and profits chances as this sports betting changes that performed through controlled channels,' checked out a well-circulated AGA memo.

And after that there are the plaintiffs who have actually taken legal action against social casinos in more than a lots states.

Sweepstakes gambling establishment 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, saying the settlement was made to avoid legal costs and continued lawsuits.

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

In the newest lawsuit, which is mostly similar to its predecessors, New York state residents Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'illegal sports betting enterprise. '

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

'We generally do not discuss matters before the courts,' a VGW representative informed DailyMail.com by means of email. 'However, we keep in mind that this claim has actually only just been filed 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 stay positive about the future,' the spokesperson continued. 'We continue to provide our free-to-play video games across the majority of North America, as we have for more than a years, developing not just terrific games, user experiences and home entertainment, but also guaranteeing this is done safely, responsibly and at the highest level of standards.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are fairly common throughout the online social games market (and the US more broadly), and our standard practice is that we plan to intensely defend any claim which might be brought versus us.'

The concerns between standard online sports betting and sweepstakes casinos could show problematic 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 standard gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking prohibited sports betting 'sweeps' sites while at the very same time the leagues desire to predict a strong position versus unlawful gaming - specifically when trying to tamp down the periodic gaming scandal,' Glaser told DailyMail.com.

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

In addition to VGW, Apple and Google are being taken legal action against for hosting supposedly prohibited sports betting sites

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

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

Neither an NBA representative nor the gamers' agents reacted to DailyMail.com's demands for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise disregarded to react to DailyMail.com emails.

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

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the spokesperson stated. 'Some of our worths are" our gamers come initially" and" we do what's right", and we put our values at the core of whatever we do.'

Glaser, an outspoken opponent of sweepstakes websites, sees things in a different way.

'Celebrities who lend their names to shady unlawful gambling sites are, at a minimum, putting their credibilities at threat in addition to courting civil and class actions by customers who declare damage,' Glaser said. 'There is also some threat that state regulators and state lawyers general rope celeb endorsers into enforcement efforts for assisting in unlawful gaming.'

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