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 presence, but the world-famous celebs were conspicuously consisted of in a slide presentation on social and sweepstakes casinos - the questionable websites providing both complimentary casino-style video games and rewarding rewards, such as money, gift cards or cryptocurrency. In one advertisement, 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 market that now discovers itself besieged by suits. In the eyes of numerous gaming corporations, not to mention lawsuit plaintiffs and state regulators, sweepstakes gambling establishments function as conventional gambling establishments, only without the oversight, customer securities and tax laws. So not just can they prevent the steep 24-percent federal gaming levy, however sweepstakes operators aren't subject to regulatory difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the company faces accusations of illegal gaming in a New york city lawsuit that declares VGW utilizes celebrity endorsers to 'create a veneer of legitimacy' around its product. (See VGW's declaration below)

'I'm uncertain" if you do not trust us, you can trust Paris Hilton" is a winning message for companies running multibillion-dollar illegal operations out of places like Malta, Isle of Man, or US mail drops,' Friday's speaker, 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, along with 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, among many sweepstakes gambling establishments found online

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

Drake has an offer with social sweeps casino, Stake, that he frequently promotes on social networks

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

Others lure consumers with pledges of prizes. One such operator, Stake, ran a social media ad displaying Drake's cars, aircrafts and estates before rotating to footage of the rapper playing online casino-style video games.

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

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

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

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, most of the gamers on social-sweepstakes casinos are sports betting complimentary.

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

Social gambling establishments provide customers a chance to play casino-style games with good friends. Players have the alternative to purchase valueless currency often described as 'gold coins,' which can not be exchanged for real money, but can be used to open different functions within the video games.

But within the world of social casinos exists sweepstakes gaming, permitting clients to obtain other currency referred to as 'sweeps coins' that can be exchanged for cash or other prizes.

And therein lies the capacity for monetary losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York. One gamer 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 value.

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

Social sweeps gambling establishment Stake ran an ad revealing off Drake's cars and trucks, planes and estates

Karl-Anthony Towns of the New York City Knicks is another NBA star plugging VGW's Global Poker

Traditional online casinos 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 don't need normally require identification. However, sites like Chumba will ask for IDs from gamers attempting to withdraw any funds.

Many sites, like the crypto-compatible Stake, enable clients to send mail-in demands for free sweeps coins, offered the gamers follow painfully particular directions. What's more, players are frequently rewarded with sweeps coins just for registering, therefore providing a factor to try their hands at any number of casino games for a chance to win - or lose - genuine money.

So why are sweepstakes sites permitted to run in 48 states, while online gambling establishments are banned in all but 7?

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

'Social sweepstakes video games are simply a type of online home entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is required to dip into social gambling establishments with sweepstakes prizes. Consumers never have to spend for a chance to win rewards. That lack of a purchase requirement - or" factor to consider" - is an essential difference in between social sweeps and traditional online gaming websites like gambling establishments.'

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

And without a purchase requirement, or 'factor to consider', the video game itself doesn't satisfy the definition of gaming in the US.

'Sweepstakes are a long-standing method for promoting all sort of everyday companies in the United States, whatever from hamburgers to publication subscriptions to coffee and home enhancement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are regularly used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of gambling industry insiders, that argument does not cut it.

For beginners, gaming lawyer Daniel Wallach points out, McDonald's Monopoly video game does not run indefinitely. Rather, it has a well-defined beginning and end, consequently suggesting the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being utilized to promote genuine products like fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're typically not connected to casino-style video games of possibility,' Wallach informed DailyMail.com. 'They're just money free gifts.

'The sweepstakes [casinos] possess none of the characteristics frequently associated with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments provide" casino-like" payments, normally 80 percent or more of incomes, whereas the common payment portion for a temporary marketing sweepstakes is an insignificant share of the revenue made by the business [normally less than one percent]'

Wallach is fast to liken the online social sweeps casinos to the internet cafes that sprang up in Florida, providing customers the opportunity to play casino-style games for genuine prizes. A lot of those brick-and-mortar establishments have actually considering that been shuttered over claims of unlawful gaming.

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

Now, Wallach argues, social sweeps gambling establishments ought to deal with comparable analysis.

'These differences are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have actually consistently been cited by courts and state attorney general of the United States as crucial consider determining that a sweepstakes promo remained in reality a guise for illegal sports betting.'

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

'Consumers are being deprived of defenses and states are passing up considerable tax and profits chances as this sports betting changes that conducted through regulated channels,' read a well-circulated AGA memo.

And then there are the plaintiffs who have sued social casinos in more than a lots states.

Sweepstakes casino operators paid a combined $14.2 million in four separate cases in Kentucky without confessing 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 avoid legal expenses and continued lawsuits.

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

In the most current suit, which is mainly comparable to its predecessors, New York state homeowners Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited gaming business. '

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

'We generally don't discuss matters before the courts,' a VGW spokesperson informed DailyMail.com by means of email. 'However, we keep in mind that this claim has actually only simply been submitted 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 remain positive about the future,' the spokesperson continued. 'We continue to offer our free-to-play video games across many of North America, as we have for more than a decade, creating not only fantastic video games, user experiences and entertainment, however likewise ensuring 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 fairly typical throughout the online social video games industry (and the US more broadly), and our basic practice is that we plan to vigorously protect any claim which might be brought against us.'

The problems between conventional online sports betting and sweepstakes casinos could show problematic for some star 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 traditional gaming titans like FanDuel and DraftKings.

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

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

Along with VGW, Apple and Google are being demanded hosting presumably unlawful gambling sites

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

'I 'd expect that a league crackdown on athletes endorsing sweepstakes websites refers when, not if,' Glaser added.

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

Asked if their celebrity endorsers have a responsibility to discuss to clients the differences and similarities between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that requires to be done.

'We have full confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the spokesperson stated. 'A few of our worths 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 differently.

'Celebrities who lend their names to dubious illegal gaming sites are, at a minimum, putting their track records at risk along with courting civil and class actions by consumers who declare damage,' Glaser stated. 'There is likewise some threat that state regulators and state attorneys basic rope celeb endorsers into enforcement efforts for assisting in illegal sports betting.'

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