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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 gambling.
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No, they weren't personally in attendance, however the world-famous celebrities were conspicuously included in a slide presentation on social and sweepstakes casinos - the controversial sites using both complimentary casino-style games and financially rewarding rewards, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are just two cogs in the multibillion-dollar market that now finds itself besieged by lawsuits. In the eyes of many video gaming corporations, not to mention lawsuit plaintiffs and state regulators, sweepstakes casinos serve as traditional casinos, only without the oversight, consumer defenses and tax laws. So not only can they prevent the steep 24-percent federal gambling 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 earnings last year alone. Now the business deals with allegations of prohibited gaming in a New york city claim that claims VGW uses star endorsers to 'develop a veneer of authenticity' around its product. (See VGW's declaration listed below)

'I'm uncertain" if you don't trust us, you can rely on 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, told DailyMail.com.

Sweepstakes endorsers consist of a variety of celebrities from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom offer any differences between conventional sports betting and sweepstakes play.

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

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

Drake has a deal with social sweeps casino, Stake, that he routinely promotes on social media

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Instead, ads usually center around the social element of the casinos, while leaving out the potential for real gaming losses.

Others tempt consumers with pledges of prizes. One such operator, Stake, ran a social media ad flaunting Drake's cars and trucks, planes and mansions before rotating to video footage of the rapper playing online casino-style video games.

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

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

The disparity 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 a market trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, many of the gamers on social-sweepstakes casinos are playing for free.

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

Social casinos use clients a possibility to play casino-style games with pals. Players have the choice to purchase valueless currency often referred to as 'gold coins,' which can not be exchanged for genuine money, but can be used to open different features within the video games.

But within the world of social gambling establishments exists sweepstakes video gaming, enabling consumers to acquire other currency understood as 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the potential 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 purchase more coins in pursuit of money and other things of worth.

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

Social sweeps gambling establishment Stake ran an advertisement flaunting 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

Traditional online casinos are prohibited in all but 7 states, which has helped to fuel the appeal of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes websites, which do not require usually need recognition. 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 complimentary sweeps coins, provided the gamers follow painfully particular guidelines. What's more, players are typically rewarded with sweeps coins simply for signing up, thus providing them a factor to try their hands at any number of gambling establishment games for a possibility to win - or lose - genuine cash.

So why are sweepstakes websites allowed to operate in 48 states, while online casinos are banned in all however 7?

According to the stakeholders, their product is the free casino-style gaming, and the real-stakes competition is merely a means of promoting their support.

'Social sweepstakes video games are simply a kind of online home entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is needed to dip into social gambling establishments with sweepstakes prizes. Consumers never ever have to pay for an opportunity to win prizes. That absence of a purchase requirement - or" factor to consider" - is a vital difference between social sweeps and traditional online sports betting sites 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, however 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 'consideration', the video game itself does not meet the meaning of gambling in the US.

'Sweepstakes are an enduring method for promoting all type of daily organizations in the United States, whatever from burgers to publication subscriptions to coffee and home improvement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are regularly used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of gambling industry experts, that argument doesn't cut it.

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

'They do not last forever and they're typically not connected to casino-style video games of possibility,' Wallach told DailyMail.com. 'They're simply cash giveaways.

[gambling establishments] possess none of the qualities commonly connected with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments use" casino-like" payouts, normally 80 percent or more of revenues, whereas the normal payout portion for a short-term advertising sweepstakes is an unimportant share of the income made by the business [normally less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the internet coffee shops that sprang up in Florida, providing clients the chance to play casino-style video games for real rewards. Many of those brick-and-mortar establishments have actually considering that been shuttered over claims of illegal sports betting.

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

Now, Wallach argues, social sweeps casinos ought to face similar examination.

'These distinctions are not approximate,' Wallach said of social sweeps gambling establishments. 'They have consistently been mentioned by courts and state attorney general of the United States as key consider figuring out that a sweepstakes promo remained in truth a guise for prohibited sports betting.'

Among the casino industry's leading trade companies, the American Gaming Association, is now pressing lawmakers to investigate sweepstakes operators and, in some cases, enact new legislation on the concern.

'Consumers are being deprived of protections and states are giving up substantial tax and income chances as this gambling replaces that conducted through controlled channels,' read a well-circulated AGA memo.

And after that there are the plaintiffs who have taken legal action against social gambling establishments in more than a dozen states.

Sweepstakes casino operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action claim, saying the settlement was made to prevent legal expenses and continued lawsuits.

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

In the most current suit, which is mostly similar to its predecessors, New York state locals Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is described in the filing as an 'unlawful sports betting enterprise. '

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

'We typically do not talk about matters before the courts,' a VGW spokesperson informed DailyMail.com through email. 'However, we note that this claim has 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 guidelines where we run, and stay positive about the future,' the representative continued. 'We continue to offer our free-to-play video games throughout most of North America, as we have for more than a years, developing not only terrific games, user experiences and home entertainment, however also ensuring this is done safely, properly and at the greatest 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 plan to strongly defend any claim which may be brought versus us.'

The concerns between conventional online gaming and sweepstakes casinos could show bothersome for some celebrity 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 standard gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking illegal sports betting 'sweeps' websites while at the very same time the leagues wish to predict a strong stance against prohibited sports betting - especially when attempting to tamp down the periodic sports betting scandal,' Glaser told DailyMail.com.

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

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

Regardless, Glaser sees sweepstakes gambling establishments as a significant concern 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 spokesperson nor the players' representatives reacted 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 emails.

Asked if their celeb endorsers have a duty to describe to consumers the differences and similarities between iGaming and sweepstakes casinos, VGW firmly insisted there is absolutely nothing more that needs to be done.

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the representative stated. 'Some of our values are" our players come first" and" we do what's right", and we put our worths at the core of everything we do.'

Glaser, an outspoken challenger of sweepstakes websites, sees things in a different way.
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'Celebrities who provide their names to shady prohibited sports betting websites are, at a minimum, putting their credibilities at danger as well as courting civil and class actions by customers who declare harm,' Glaser stated. 'There is likewise some danger that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for facilitating unlawful gaming.'

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