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, but the world-famous stars were notably consisted of in a slide discussion on social and sweepstakes gambling establishments - the questionable websites using both complimentary casino-style video 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 totally 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 discovers itself besieged by claims. In the eyes of many gaming corporations, not to mention lawsuit plaintiffs and state regulators, sweepstakes casinos function as conventional gambling establishments, only without the oversight, consumer defenses and tax laws. So not only can they avoid the high 24-percent federal gambling levy, but sweepstakes operators aren't subject to regulative obstacles like anti-money laundering and responsible-gaming protections.
One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the business deals with accusations of unlawful sports betting in a New York claim that claims VGW utilizes star endorsers to 'create a veneer of authenticity' around its product. (See VGW's declaration 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 prohibited operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of video gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers include a series of celebrities from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom provide any distinctions in between standard gaming and sweepstakes play.
Paris Hilton is seen plugging Wow Vegas, one of many sweepstakes gambling establishments found online
Ryan Seacrest urges fans to dip into Chumba Casino, where lots of - however not all - games are totally free
Drake has a deal with social sweeps gambling establishment, Stake, that he regularly touts on social media
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Instead, ads usually focus around the social aspect of the gambling establishments, while omitting the capacity for actual gaming losses.
Others tempt customers with pledges of rewards. One such operator, Stake, ran a social networks advertisement showing off Drake's cars, planes and mansions before rotating to footage of the rapper playing online casino-style video games.
'Daddy, why do we have a lot cash?' check out the very first caption on the screen.
Another caption described: 'Because I never ever provided up.'
The disparity in between sports betting sites and social or sweepstakes gambling establishments is a bit complicated, however operators of the latter insist they're not involved with the previous.
A representative for an industry 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 data, the majority of the players on social-sweepstakes casinos are sports betting complimentary.
'Most social sweeps customers never purchase,' the SPGA spokesperson informed DailyMail.com. 'The minority of customers who make purchases do so in amounts far smaller than the typical deposit or wager size at real-money online gambling sites.'
Social casinos offer customers a chance to play casino-style games with friends. Players have the alternative to buy valueless currency typically referred to as 'gold coins,' which can not be exchanged for real cash, however can be used to unlock various functions within the video games.
But within the world of social gambling establishments exists sweepstakes gaming, enabling clients to get other currency understood as 'sweeps coins' that can be exchanged for cash or other prizes.
And therein lies the potential for financial losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York City. One player informed the Washington Post he lost more than $100,000 on sweepstakes casinos in the previous year after continuing to buy 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, planes and estates
Karl-Anthony Towns of the New York Knicks is another NBA star plugging VGW's Global Poker
Traditional online gambling establishments are banned in all however 7 states, which has helped to sustain the appeal of sweepstakes gambling establishments.
Anyone over the age of 18 can access the sweepstakes sites, which do not need usually require recognition. However, websites like Chumba will ask for IDs from gamers trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, permit customers to submit mail-in demands for totally free sweeps coins, provided the gamers follow painfully particular guidelines. What's more, gamers are frequently rewarded with sweeps coins just for signing up, therefore providing them a factor to try their hands at any variety of gambling establishment games for an opportunity to win - or lose - real money.
So why are sweepstakes websites allowed to operate in 48 states, while online casinos are prohibited in all however 7?
According to the stakeholders, their item is the totally free casino-style gaming, and the real-stakes competition is simply a method of promoting their bread and butter.
'Social sweepstakes games are merely a kind of online entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is needed to play at social gambling establishments with sweepstakes rewards. Consumers never ever have to pay for an opportunity to win prizes. That absence of a purchase requirement - or" factor to consider" - is a crucial distinction in between social sweeps and standard online gambling websites like casinos.'
Think of the method that McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and french fries that use them the opportunity to win financially rewarding prizes, such as a $1 million jackpot.
And without a purchase requirement, or 'consideration', the video game itself does not satisfy the definition of gaming in the US.
'Sweepstakes are a long-standing approach for promoting all type of daily services in the United States, whatever from hamburgers to publication memberships to coffee and home improvement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are regularly used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'
But to many sports betting market insiders, that argument does not cut it.
For starters, video gaming lawyer Daniel Wallach explains, McDonald's Monopoly game doesn't run forever. Rather, it has a distinct beginning and end, thereby suggesting the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being utilized to promote genuine products like fries, shakes, and the Filet-O-Fish.
'They do not last permanently and they're generally not connected to casino-style video games of opportunity,' Wallach told DailyMail.com. 'They're just money giveaways.
'The sweepstakes [gambling establishments] have none of the attributes typically associated with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments use" casino-like" payouts, usually 80 percent or more of earnings, whereas the common payout percentage for a momentary advertising sweepstakes is a trivial share of the revenue earned by the business [typically less than one percent]'
Wallach fasts to liken the online social sweeps gambling establishments to the web coffee shops that emerged in Florida, using consumers the possibility to play casino-style games for real prizes. Many of those brick-and-mortar facilities have because been shuttered over allegations of prohibited gambling.

DJ Khaled is among a number of celeb spokespeople for VGW's Global Poker brand
Now, Wallach argues, social sweeps gambling establishments ought to face similar analysis.
'These differences are not arbitrary,' Wallach said of social sweeps casinos. 'They have repeatedly been mentioned by courts and state chief law officer as essential consider identifying that a sweepstakes promo was in fact a guise for unlawful sports betting.'
One of the gambling establishment market's leading trade companies, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, in some cases, enact brand-new legislation on the problem.
'Consumers are being denied of defenses and states are forgoing substantial tax and earnings opportunities as this gambling replaces that conducted through regulated channels,' checked out a well-circulated AGA memo.
And after that there are the complainants who have actually sued social casinos in more than a lots states.
Sweepstakes gambling establishment operators paid a combined $14.2 million in four different cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action lawsuit, saying the settlement was made to prevent legal costs and continued litigation.
Michael Phelps has signed a handle the VGW Group, which owns Global Poker
In the most recent lawsuit, which is mostly similar to its predecessors, New York state locals 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 gaming business. '
Apple and Google have actually also been named as defendants in claims for hosting the sweepstakes websites. But unlike VGW, neither tech business responded to DailyMail.com's ask for comment.
'We typically do not discuss matters before the courts,' a VGW representative told DailyMail.com through e-mail. 'However, we keep in mind that this claim has only simply 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 policies where we run, and stay positive about the future,' the representative continued. 'We continue to use our free-to-play games throughout the majority of North America, as we have for more than a years, creating not just great games, user experiences and entertainment, but likewise ensuring this is done securely, properly and at the highest level of requirements.
'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are relatively common throughout the online social video games market (and the US more broadly), and our basic practice is that we mean to strongly protect any claim which may be brought against us.'
The issues between conventional online sports betting and sweepstakes gambling establishments might show troublesome for some celebrity endorsers.
Towns, a star center with the Knicks, and the 76ers' George both back VGW's Global Poker brand while the NBA is partnered with standard gaming titans like FanDuel and DraftKings.
'It's paradoxical that professional athletes are hawking illegal sports betting wagering 'sweeps' sites while at the same time the leagues wish to project a strong stance against unlawful gaming - especially when trying to tamp down the occasional gambling scandal,' Glaser told DailyMail.com.
It was simply eight months ago that Toronto Raptors forward Jontay Porter received a life time ban from the NBA over accusations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes gambling establishments.
Together with VGW, Apple and Google are being sued for hosting presumably unlawful sports betting websites
Regardless, Glaser sees sweepstakes gambling establishments as a significant problem for leagues such as the NBA.
'I 'd expect that a league crackdown on athletes endorsing sweepstakes websites is a matter of when, not if,' Glaser added.
Neither an NBA representative nor the players' agents reacted to DailyMail.com's requests for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also ignored to respond to DailyMail.com e-mails.
Asked if their celeb endorsers have an obligation to describe to consumers the distinctions and similarities 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 business practices more broadly,' the representative said. 'Some 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 challenger of sweepstakes sites, sees things in a different way.
'Celebrities who provide their names to shady unlawful gaming sites are, at a minimum, putting their reputations at danger along with courting civil and class actions by customers who allege damage,' Glaser said. 'There is also some risk that state regulators and state lawyers general rope celebrity endorsers into enforcement efforts for helping with unlawful gaming.'
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