The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on unlawful gaming.


No, they weren't personally in participation, but the world-famous celebs were notably consisted of in a slide presentation on social and sweepstakes casinos - the questionable sites providing both complimentary casino-style video games and financially rewarding prizes, such as money, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.


The sites are simply two cogs in the multibillion-dollar industry that now discovers itself besieged by suits. In the eyes of many video gaming corporations, not to mention suit plaintiffs and state regulators, sweepstakes gambling establishments function as traditional gambling establishments, only without the oversight, consumer protections and tax laws. So not only can they avoid the steep 24-percent federal gaming levy, however sweepstakes operators aren't based on regulative difficulties like anti-money laundering and responsible-gaming securities.


One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the company deals with allegations of prohibited gambling in a New York claim that claims VGW utilizes celeb endorsers to 'produce a veneer of authenticity' around its item. (See VGW's declaration below)


'I'm unsure" if you don't trust us, you can trust Paris Hilton" is a winning message for companies operating multibillion-dollar unlawful operations out of places 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 variety of celebrities from gambling 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 distinctions in between traditional sports betting and sweepstakes play.


Paris Hilton is seen plugging Wow Vegas, one of numerous sweepstakes casinos discovered online


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


Drake has a deal with social sweeps gambling establishment, Stake, that he routinely promotes on social networks


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Instead, ads typically center around the social element of the casinos, while omitting the potential for actual gambling losses.


Others tempt customers with guarantees of prizes. One such operator, Stake, ran a social media advertisement revealing off Drake's vehicles, airplanes and mansions before pivoting to video of the rap artist playing online casino-style video games.


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


Another caption described: 'Because I never ever gave up.'


The disparity between gaming websites and social or sweepstakes casinos is a bit intricate, 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, the majority of the players on social-sweepstakes gambling establishments are playing for totally free.


'Most social sweeps customers never purchase,' the SPGA representative informed DailyMail.com. 'The minority of consumers who make purchases do so in amounts far smaller sized than the common deposit or wager size at real-money online gambling websites.'


Social gambling establishments provide customers a chance to play casino-style games with pals. Players have the option to purchase valueless currency typically described as 'gold coins,' which can not be exchanged genuine cash, but can be utilized to open various functions within the games.


But within the world of social casinos exists sweepstakes video gaming, allowing customers to acquire 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 claimed by plaintiffs in Florida, Georgia, New Jersey and New York City. 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 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 showing off Drake's automobiles, airplanes 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 assisted to sustain the popularity of sweepstakes gambling establishments.


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


Many sites, like the crypto-compatible Stake, permit clients to send mail-in demands for totally free sweeps coins, offered the players follow painfully specific instructions. What's more, gamers are typically rewarded with sweeps coins merely for signing up, consequently providing a reason to attempt their hands at any number of gambling establishment games for an opportunity to win - or lose - real money.


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


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


'Social sweepstakes games are merely a type of online entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is needed to dip into social gambling establishments with sweepstakes rewards. Consumers never ever have to spend for a chance to win prizes. That lack of a purchase requirement - or" consideration" - is an essential difference between social sweeps and conventional online sports betting sites like gambling establishments.'


Think of the manner in which McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and fries that use them the possibility to win financially rewarding rewards, such as a $1 million prize.


And without a purchase requirement, or 'factor to consider', the video game itself does not fulfill the definition of sports betting in the US.


'Sweepstakes are a long-standing approach for promoting all sort of everyday organizations in the United States, everything from hamburgers to magazine subscriptions to coffee and home improvement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are regularly used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'


But to many gambling industry insiders, that argument doesn't cut it.


For beginners, gaming lawyer Daniel Wallach mentions, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a distinct beginning and end, therefore suggesting the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being utilized to promote genuine items like fries, shakes, and the Filet-O-Fish.


'They don't last forever and they're normally not tied to casino-style games of chance,' Wallach informed DailyMail.com. 'They're simply money giveaways.


'The sweepstakes [gambling establishments] possess none of the characteristics frequently related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments use" casino-like" payments, usually 80 percent or more of profits, whereas the common payout portion for a momentary marketing sweepstakes is a trivial share of the income earned by the business [typically less than one percent]'


Wallach is fast to compare the online social sweeps casinos to the internet coffee shops that emerged in Florida, providing clients the possibility to play casino-style video games for real rewards. A number of those brick-and-mortar facilities have actually because been shuttered over allegations of illegal sports betting.


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


Now, Wallach argues, social sweeps casinos should deal with comparable scrutiny.


'These differences are not approximate,' Wallach said of social sweeps casinos. 'They have actually repeatedly been cited by courts and state attorney generals as key consider figuring out that a sweepstakes promotion remained in fact a guise for illegal sports betting.'


One of the gambling establishment market's leading trade companies, the American Gaming Association, is now pushing lawmakers to examine sweepstakes operators and, in some cases, enact brand-new legislation on the concern.


'Consumers are being deprived of protections and states are forgoing substantial tax and earnings chances as this gambling changes that conducted through regulated channels,' read a well-circulated AGA memo.


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


Sweepstakes casino operators paid a combined $14.2 million in four different cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action lawsuit, stating the settlement was made to prevent legal costs and continued litigation.


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


In the current lawsuit, which is mainly similar to its predecessors, New York state residents Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited gaming enterprise. '


Apple and Google have also been named as defendants in suits for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's demand for remark.


'We generally don't comment on matters before the courts,' a VGW spokesperson informed DailyMail.com via email. 'However, we keep in mind that this claim has only just been filed with the court and VGW has actually not been formally served.


'We have full confidence in our compliance with all laws and guidelines where we run, and stay positive about the future,' the representative continued. 'We continue to provide our free-to-play video games across most of The United States and Canada, as we have for more than a years, creating not just great video games, user experiences and home entertainment, however likewise guaranteeing this is done securely, properly and at the highest level of requirements.


'More broadly, we 'd restate that class actions and other litigations and arbitrations are relatively typical across the online social games industry (and the US more broadly), and our basic practice is that we mean to strongly protect any claim which might be brought versus us.'


The problems between traditional online gambling 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 gaming titans like FanDuel and DraftKings.


'It's ironic that expert athletes are hawking prohibited sports betting wagering 'sweeps' sites while at the very same time the leagues desire to forecast a strong stance versus illegal sports betting - specifically when attempting to tamp down the periodic gambling scandal,' Glaser informed DailyMail.com.


It was just eight months ago that Toronto Raptors forward Jontay Porter received a lifetime restriction from the NBA over accusations he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes gambling establishments.


Along with VGW, Apple and Google are being taken legal action against for hosting presumably illegal sports betting sites


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


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


Neither an NBA representative nor the players' representatives reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise overlooked to react to DailyMail.com e-mails.


Asked if their celebrity endorsers have an obligation to discuss to consumers the differences and similarities in between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that requires to be done.


'We have full 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 first" and" we do what's right", and we put our values at the core of everything we do.'


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


'Celebrities who lend their names to shady prohibited gambling websites are, at a minimum, putting their track records at threat along with courting civil and class actions by customers who allege damage,' Glaser said. 'There is also some danger that state regulators and state chief law officers rope star endorsers into enforcement efforts for facilitating unlawful sports betting.'


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