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

No, they weren't personally in attendance, however the world-famous celebs were notably included in a slide discussion on social and sweepstakes gambling establishments - the controversial sites using both totally free casino-style video games and profitable rewards, such as money, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are just two cogs in the multibillion-dollar market that now finds itself besieged by claims. In the eyes of lots of video gaming corporations, not to point out claim plaintiffs and state regulators, sweepstakes gambling establishments serve as standard gambling establishments, just without the oversight, customer defenses and tax laws. So not just can they prevent the high 24-percent federal gambling levy, but 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 income in 2015 alone. Now the company faces allegations of prohibited gaming in a New york city claim that claims VGW uses star endorsers to 'create a veneer of authenticity' around its item. (See VGW's declaration below)

'I'm uncertain" if you do not trust us, you can trust Paris Hilton" is a winning message for business running multibillion-dollar unlawful operations out of places like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers consist of a range 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 provide any differences in between conventional gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of lots of sweepstakes gambling establishments discovered online

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

Drake has a deal with social sweeps casino, Stake, that he frequently touts on social networks

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

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

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

Another caption explained: 'Because I never provided up.'

The inconsistency between gambling sites and social or sweepstakes gambling establishments is a bit complex, but operators of the latter insist they're not included with the former.

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

'Most social sweeps customers never ever purchase,' the SPGA representative told DailyMail.com. 'The minority of customers who make purchases do so in quantities far smaller sized than the typical deposit or bet size at real-money online sports betting sites.'

Social casinos offer clients a possibility to play casino-style games with friends. Players have the alternative to purchase worthless currency typically described as 'gold coins,' which can not be exchanged for real money, but can be utilized to unlock various features within the video games.

But within the world of social gambling establishments exists sweepstakes gaming, allowing clients to acquire other currency called 'sweeps coins' that can be exchanged for cash or other rewards.

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

Social sweeps casino Stake ran an ad showing off 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 prohibited in all but seven states, which has actually helped to fuel the popularity of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, allow clients to submit mail-in ask for totally free sweeps coins, offered the gamers follow painfully specific directions. What's more, players are typically rewarded with sweeps coins just for registering, consequently giving them a factor to try their hands at any variety of gambling establishment games for a chance to win - or lose - genuine money.

So why are sweepstakes websites enabled to run in 48 states, while online gambling establishments are banned in all however 7?

According to the stakeholders, their item is the complimentary casino-style gaming, and the real-stakes competitors is simply a method of promoting their support.

'Social sweepstakes games are simply a type of online entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is required to play at social gambling establishments with sweepstakes prizes. Consumers never have to spend for an opportunity to win prizes. That lack of a purchase requirement - or" factor to consider" - is a crucial distinction between social sweeps and traditional online sports betting sites like gambling establishments.'

Consider the manner in which McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and french fries that provide them the possibility to win profitable prizes, such as a $1 million prize.

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

'Sweepstakes are an enduring technique for promoting all kinds of daily services in the United States, whatever from hamburgers to publication subscriptions to coffee and home improvement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are frequently utilized by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many sports betting industry insiders, that argument does not cut it.

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

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

'The sweepstakes [gambling establishments] have none of the qualities commonly related to McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos offer" casino-like" payouts, typically 80 percent or more of earnings, whereas the common payment percentage for a short-term advertising sweepstakes is a minor share of the revenue made by the company [typically less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the web cafes that sprang up in Florida, providing customers the possibility to play casino-style games for genuine rewards. A number of those brick-and-mortar establishments have actually considering that been shuttered over allegations of illegal gaming.

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

Now, Wallach argues, social sweeps gambling establishments should deal with comparable examination.

'These differences are not approximate,' Wallach said of social sweeps gambling establishments. 'They have consistently been mentioned by courts and state chief law officer as key aspects in determining that a sweepstakes promotion remained in reality a guise for prohibited gambling.'

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

'Consumers are being deprived of securities and states are forgoing substantial tax and income chances as this gambling changes that conducted through controlled channels,' checked out a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 different cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action claim, saying the settlement was made to prevent legal costs and continued lawsuits.

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

In the most recent suit, which is mainly comparable to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'unlawful sports betting business. '

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

'We normally don't discuss matters before the courts,' a VGW representative informed DailyMail.com through email. 'However, we keep in mind that this claim has actually only simply been filed with the court and VGW has actually not been formally served.

'We have complete confidence in our compliance with all laws and guidelines where we operate, and remain confident about the future,' the spokesperson continued. 'We continue to use our free-to-play video games throughout the majority of North America, as we have for more than a years, creating not only great games, user experiences and home entertainment, however likewise guaranteeing this is done securely, responsibly and at the highest level of standards.

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

The issues between standard online gaming and sweepstakes casinos could prove problematic for some celeb 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 traditional gaming titans like FanDuel and DraftKings.

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

It was just 8 months ago that Toronto Raptors forward Jontay Porter got a lifetime 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 supposedly unlawful gambling websites

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

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

Neither an NBA spokesperson nor the gamers' agents reacted to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to respond to DailyMail.com emails.

Asked if their celebrity endorsers have an obligation to discuss to customers the distinctions and resemblances between iGaming and sweepstakes casinos, VGW firmly insisted there is absolutely nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial collaborations, and our organization practices more broadly,' the spokesperson stated. 'Some of our worths are" our gamers precede" 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.

'Celebrities who lend their names to shady unlawful gaming websites are, at a minimum, putting their credibilities at risk as well as courting civil and class actions by customers who allege harm,' Glaser said. 'There is also some danger that state regulators and state chief law officers rope celeb endorsers into enforcement efforts for facilitating prohibited sports betting.'

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