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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 unlawful gaming.

No, they weren't personally in attendance, however the world-famous celebs were conspicuously consisted of in a slide presentation on social and sweepstakes gambling establishments - the questionable sites providing both free casino-style video games and profitable 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 market that now finds itself besieged by lawsuits. In the eyes of many video gaming corporations, not to discuss claim complainants and state regulators, sweepstakes casinos function as standard casinos, only without the oversight, consumer defenses 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 obstacles like anti-money and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the business deals with accusations of illegal sports betting in a New York lawsuit that claims VGW utilizes celeb endorsers to 'develop a veneer of legitimacy' around its product. (See VGW's declaration below)

'I'm uncertain" if you don't trust us, you can rely on Paris Hilton" is a winning message for business running multibillion-dollar prohibited operations out of locations 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 celebs 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 provide any distinctions in between standard gambling and sweepstakes play.

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

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

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

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Instead, advertisements typically center around the social aspect of the gambling establishments, while omitting the potential for actual gambling losses.

Others lure clients with guarantees of rewards. One such operator, Stake, ran a social networks ad flaunting Drake's cars and trucks, airplanes and estates before pivoting to video of the rapper playing online casino-style video games.
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'Daddy, why do we have so much cash?' read the very first caption on the screen.

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

The discrepancy between gaming sites and social or sweepstakes gambling establishments is a bit complicated, however operators of the latter insist they're not involved with the former.

A spokesperson for a market 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 information, most of the players on social-sweepstakes casinos are sports betting free.

'Most social sweeps consumers never ever purchase,' the SPGA spokesperson informed DailyMail.com. 'The minority of customers who make purchases do so in amounts far smaller than the normal deposit or bet size at real-money online gaming sites.'

Social gambling establishments offer consumers an opportunity to play casino-style video games with pals. Players have the option to buy worthless currency often described as 'gold coins,' which can not be exchanged for real money, but can be utilized to unlock various features within the games.

But within the world of social gambling establishments exists sweepstakes gaming, enabling clients to acquire other currency referred to as 'sweeps coins' that can be exchanged for money or other prizes.
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And therein lies the potential for monetary 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 gambling establishments in the previous year after continuing to purchase more coins in pursuit of money and other things of worth.

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

Social sweeps casino Stake ran an ad displaying Drake's cars and trucks, airplanes and mansions

Karl-Anthony Towns of the New York City Knicks is another NBA star plugging VGW's Global Poker
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Traditional online casinos are prohibited in all however 7 states, which has actually helped to sustain the appeal of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, enable clients to send mail-in ask for free sweeps coins, offered the gamers follow painfully particular guidelines. What's more, players are typically rewarded with sweeps coins just for signing up, thereby providing them a factor to attempt their hands at any number of gambling establishment video games for an opportunity to win - or lose - real cash.

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

According to the stakeholders, their product is the complimentary casino-style gaming, and the real-stakes competitors is just a means of promoting their support.

'Social sweepstakes games are just a kind of online entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is needed to dip into social casinos with sweepstakes prizes. Consumers never ever have to spend for a chance to win prizes. That absence of a purchase requirement - or" factor to consider" - is a vital difference between social sweeps and standard online gambling sites like casinos.'

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

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

'Sweepstakes are an enduring method for promoting all kinds of daily organizations in the United States, everything from hamburgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are regularly utilized by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling market insiders, that argument does not cut it.

For starters, video gaming attorney Daniel Wallach mentions, McDonald's Monopoly video game doesn't run forever. Rather, it has a well-defined start and end, thereby recommending the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being used to promote genuine products like french fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're normally not connected to casino-style video games of chance,' Wallach informed DailyMail.com. 'They're simply money free gifts.

'The sweepstakes [casinos] possess none of the attributes frequently related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes casinos offer" casino-like" payments, generally 80 percent or more of profits, whereas the common payout percentage for a temporary promotional sweepstakes is a trivial share of the revenue made by the business [normally less than one percent]'

Wallach is quick to liken the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, providing clients the opportunity to play casino-style video games for real prizes. Many of those brick-and-mortar facilities have considering that been shuttered over claims of prohibited sports betting.

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

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

'These distinctions are not arbitrary,' Wallach stated of social sweeps casinos. 'They have repeatedly been cited by courts and state chief law officer as key aspects in determining that a sweepstakes promo was in truth a guise for unlawful gambling.'

One of the gambling establishment industry's leading trade companies, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, in some cases, enact new legislation on the problem.

'Consumers are being deprived of securities and states are forgoing considerable tax and revenue opportunities as this gambling changes that performed through controlled channels,' checked out a well-circulated AGA memo.

And after that there are the complainants who have taken legal action against 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 admitting any wrongdoing, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action suit, stating the settlement was made to prevent legal expenses and continued lawsuits.

Michael Phelps has actually signed an offer with the VGW Group, which owns Global Poker

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

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

'We typically do not discuss matters before the courts,' a VGW representative told DailyMail.com through e-mail. 'However, we note that this claim has only just been filed with the court and VGW has actually not been officially served.

'We have complete confidence in our compliance with all laws and regulations where we run, and remain positive about the future,' the representative continued. 'We continue to use our free-to-play video games across the majority of North America, as we have for more than a years, developing not just excellent games, user experiences and home entertainment, however also guaranteeing this is done safely, properly 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 video games market (and the US more broadly), and our standard practice is that we intend to intensely safeguard any claim which might be brought versus us.'

The problems between standard online sports betting and sweepstakes casinos might prove bothersome for some star 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 video gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking unlawful sports betting wagering 'sweeps' sites while at the exact same time the leagues wish to predict a strong stance versus illegal sports betting - specifically when attempting to tamp down the occasional gaming scandal,' Glaser told DailyMail.com.

It was simply 8 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 unrelated to anything including social or sweepstakes gambling establishments.

Together with VGW, Apple and Google are being demanded hosting allegedly illegal sports betting sites

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

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

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

Asked if their celeb endorsers have a responsibility to explain to customers 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 confidence in our influencer and ambassadorial collaborations, and our organization practices more broadly,' the spokesperson said. 'A few of our values are" our players come initially" and" we do what's right", and we put our values at the core of whatever we do.'

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

'Celebrities who provide their names to shady unlawful gambling websites are, at a minimum, putting their track records at threat along with courting civil and class actions by consumers who allege harm,' Glaser said. 'There is also some risk that state regulators and state chief law officers rope star endorsers into enforcement efforts for assisting in prohibited gaming.'

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