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

No, they weren't personally in presence, however the world-famous stars were conspicuously consisted of in a slide presentation on social and sweepstakes gambling establishments - the controversial sites using both complimentary casino-style games and rewarding prizes, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for complimentary,' 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 lawsuits. In the eyes of numerous video gaming corporations, not to discuss suit complainants and state regulators, sweepstakes casinos serve as standard gambling establishments, only without the oversight, customer protections and tax laws. So not just can they prevent the high 24-percent federal gambling levy, however sweepstakes operators aren't subject to regulative hurdles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits last year alone. Now the business deals with accusations of unlawful gambling in a New York lawsuit that declares VGW utilizes star endorsers to 'produce a veneer of authenticity' around its product. (See VGW's declaration listed below)

'I'm not sure" if you don't trust us, you can rely on Paris Hilton" is a winning message for business operating 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, told DailyMail.com.

Sweepstakes endorsers include a variety of stars from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions between conventional gaming and sweepstakes play.

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

Ryan Seacrest prompts fans to play at Chumba Casino, where lots of - however not all - games are free

Drake has a handle social sweeps casino, Stake, that he frequently touts on social media

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Instead, advertisements typically focus around the social aspect of the casinos, while leaving out the capacity for actual gaming losses.

Others lure consumers with guarantees of prizes. One such operator, Stake, ran a social media advertisement showing off Drake's automobiles, aircrafts and estates before rotating to video footage of the rapper playing online casino-style games.

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

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

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

A representative for an industry trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, the majority of the gamers on social-sweepstakes gambling establishments are sports betting free.

'Most social sweeps consumers never ever buy,' the SPGA spokesperson told DailyMail.com. 'The minority of clients who make purchases do so in amounts far smaller than the common deposit or bet size at real-money online gambling sites.'

Social gambling establishments offer clients an opportunity to play casino-style video games with pals. Players have the option to purchase worthless currency often described as 'gold coins,' which can not be exchanged genuine cash, but can be utilized to open different features within the games.

But within the world of social casinos exists sweepstakes video gaming, allowing consumers to obtain other currency called 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the capacity for financial losses, like the ones declared by complainants 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 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 an International Poker event

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake's cars and trucks, aircrafts and estates

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

Traditional online casinos are banned in all however 7 states, which has actually helped to sustain the popularity of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes websites, which don't need typically need recognition. However, sites like Chumba will request IDs from gamers trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, permit consumers to send mail-in requests for totally free sweeps coins, provided the players follow painfully particular guidelines. What's more, players are typically rewarded with sweeps coins simply for signing up, thereby providing them a reason to try their hands at any number of casino games for an opportunity to win - or lose - genuine money.

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

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

'Social sweepstakes games are simply a kind of online home entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is needed to play at social gambling establishments with sweepstakes rewards. Consumers never ever have to spend for a chance to win prizes. That absence of a purchase requirement - or" consideration" - is a crucial difference in between social sweeps and conventional online sports betting websites like gambling establishments.'

Think about the way that 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 french fries that use them the opportunity to win lucrative rewards, such as a $1 million prize.

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

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

But to many sports betting market experts, that argument doesn't cut it.

For starters, video gaming attorney Daniel Wallach points out, McDonald's Monopoly video game does not run indefinitely. Rather, it has a distinct beginning and end, therefore recommending the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being utilized to promote real products like french fries, shakes, and the Filet-O-Fish.

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

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

Wallach is quick to liken the online social sweeps gambling establishments to the internet coffee shops that sprang up in Florida, providing consumers the opportunity to play casino-style video games for real rewards. A number of those brick-and-mortar facilities have given that been shuttered over accusations of illegal sports betting.

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

Now, Wallach argues, social sweeps casinos ought to face comparable analysis.

'These differences are not arbitrary,' Wallach stated of social sweeps casinos. 'They have actually consistently been cited by courts and state attorney general of the United States as key consider identifying that a sweepstakes promo was in truth a guise for illegal sports betting.'

One of the casino market's leading trade companies, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, sometimes, enact new legislation on the issue.

'Consumers are being denied of defenses and states are giving up considerable tax and earnings chances as this sports betting replaces that carried out through regulated channels,' read a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action suit, stating the settlement was made to avoid legal expenses and continued lawsuits.

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

In the current suit, which is mainly similar to its predecessors, New york city state citizens Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'prohibited sports betting business. '

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

'We generally do not discuss matters before the courts,' a VGW spokesperson told DailyMail.com by means of email. 'However, we note that this claim has only just been filed with the court and VGW has actually not been formally served.

'We have full self-confidence in our compliance with all laws and guidelines where we run, and stay positive about the future,' the spokesperson continued. 'We continue to use our free-to-play video games across many of The United States and Canada, as we have for more than a years, creating not only great games, user experiences and 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 relatively typical throughout the online social games industry (and the US more broadly), and our standard practice is that we plan to vigorously defend any claim which may be brought against us.'

The concerns between traditional online gaming and sweepstakes gambling establishments could prove 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 conventional video gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking unlawful sports betting wagering 'sweeps' websites while at the very same time the leagues want to project a strong stance against illegal sports betting - particularly 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 life time ban from the NBA over allegations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes gambling establishments.

Along with VGW, Apple and Google are being demanded hosting apparently illegal gambling sites

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

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

Neither an NBA representative nor the gamers' agents reacted to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise overlooked to react to DailyMail.com emails.

Asked if their celeb endorsers have a duty to explain to clients the distinctions and similarities in between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that needs to be done.

'We have full self-confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the spokesperson said. 'A few of our values are" our gamers come first" and" we do what's right", and we put our worths at the core of everything we do.'

Glaser, an outspoken opponent of sweepstakes sites, sees things differently.

'Celebrities who provide their names to dubious prohibited sports betting sites are, at a minimum, putting their credibilities at threat in addition to courting civil and class actions by customers who declare damage,' Glaser stated. 'There is also some threat that state regulators and state chief law officers rope star endorsers into enforcement efforts for facilitating unlawful gambling.'

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