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

No, they weren't personally in presence, however the world-famous celebrities were notably included in a slide presentation on social and sweepstakes casinos - the controversial websites offering both free casino-style video games and profitable rewards, such as cash, present cards or cryptocurrency. In one advertisement, 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 simply two cogs in the multibillion-dollar market that now discovers itself besieged by claims. In the eyes of numerous gaming corporations, not to discuss claim complainants and state regulators, sweepstakes gambling establishments act as traditional casinos, just without the oversight, customer protections and tax laws. So not only can they avoid the steep 24-percent federal gaming levy, however sweepstakes operators aren't subject to regulative difficulties like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits last year alone. Now the company faces allegations of illegal gambling in a New York lawsuit that declares VGW uses celebrity endorsers to 'develop a veneer of authenticity' around its item. (See VGW's statement listed below)

'I'm not sure" if you don't 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 speaker, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers include a series of stars from sports betting 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 differences between traditional gaming and sweepstakes play.

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

Ryan Seacrest prompts fans to play at Chumba Casino, where numerous - but not all - games are totally free

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

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Instead, ads usually center around the social element of the casinos, while omitting the potential for real sports betting losses.

Others lure clients with pledges of prizes. One such operator, Stake, ran a social networks advertisement showing off Drake's cars, planes and estates before pivoting to video of the rap artist playing online casino-style video games.

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

Another caption explained: 'Because I never ever offered up.'

The discrepancy in between sports betting websites and social or sweepstakes gambling establishments is a bit complicated, however operators of the latter insist they're not included with the previous.

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

'Most social sweeps clients never ever buy,' the SPGA spokesperson informed DailyMail.com. 'The minority of customers who make purchases do so in amounts far smaller sized than the normal deposit or wager size at real-money online sports betting websites.'

Social gambling establishments provide consumers an opportunity to play casino-style games with pals. Players have the option to buy worthless currency typically referred to as 'gold coins,' which can not be exchanged for genuine cash, however can be utilized to unlock various functions within the video games.

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

And therein lies the potential for financial losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York. One player told the Washington Post he lost more than $100,000 on sweepstakes casinos 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 Global Poker event

Social sweeps casino Stake ran an advertisement showing off Drake's vehicles, aircrafts and estates

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

Traditional online casinos are prohibited in all but 7 states, which has actually assisted to fuel the popularity of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes sites, which do not require typically need recognition. However, sites like Chumba will ask for IDs from gamers trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, allow clients to send mail-in demands for free sweeps coins, offered the players follow painfully specific directions. What's more, players are often rewarded with sweeps coins simply for signing up, thus providing them a factor to try their hands at any variety of gambling establishment video games for a chance to win - or lose - real cash.

So why are sweepstakes sites allowed to operate in 48 states, while online gambling establishments are prohibited in all however 7?

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

'Social sweepstakes games are merely a type of online entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is needed to dip into social casinos with sweepstakes rewards. Consumers never ever need to pay for a chance to win rewards. That absence of a purchase requirement - or" factor to consider" - is a crucial distinction between social sweeps and conventional online sports betting websites like gambling establishments.'

Think about the way that McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to bet, but rather they're buying hamburgers and fries that provide them the opportunity to win rewarding rewards, 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 gaming in the US.

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

But to numerous sports betting market experts, 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 start and end, thus suggesting the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being utilized to promote genuine items like fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're usually not connected to casino-style games of chance,' Wallach told DailyMail.com. 'They're simply cash giveaways.

'The sweepstakes [gambling establishments] possess none of the attributes frequently related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos provide" casino-like" payments, typically 80 percent or more of revenues, whereas the common payout percentage for a temporary marketing sweepstakes is an insignificant share of the income made by the company [generally less than one percent]'

Wallach is fast to liken the online social sweeps casinos to the web coffee shops that emerged in Florida, providing customers the possibility to play casino-style video games for genuine prizes. Many of those brick-and-mortar facilities have actually considering that been shuttered over claims of prohibited gaming.

DJ Khaled is among numerous celeb spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps casinos ought to deal with similar scrutiny.

'These distinctions are not approximate,' Wallach stated of social sweeps casinos. 'They have actually consistently been mentioned by courts and state chief law officer as key consider figuring out that a sweepstakes promotion was in truth a guise for prohibited gambling.'

One of the casino industry's leading trade organizations, 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 denied of protections and states are giving up substantial tax and profits chances as this sports betting changes that conducted through managed channels,' read a well-circulated AGA memo.

And then there are the plaintiffs who have actually 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 admitting any misbehavior, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action claim, stating the settlement was made to prevent legal costs and continued lawsuits.

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

In the most recent claim, which is mostly similar to its predecessors, New york city 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 also been called as offenders in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech company responded to DailyMail.com's demand for comment.

'We generally do not comment on matters before the courts,' a VGW spokesperson told DailyMail.com via email. 'However, we keep in mind that this claim has only simply been submitted with the court and VGW has not been formally served.

'We have full confidence in our compliance with all laws and regulations where we run, and remain confident about the future,' the spokesperson continued. 'We continue to use our free-to-play games throughout most of North America, as we have for more than a years, creating not only great video games, user experiences and home entertainment, but likewise ensuring this is done securely, properly and at the greatest level of requirements.

'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are fairly typical throughout the online social games market (and the US more broadly), and our standard practice is that we mean to strongly defend any claim which may be brought versus us.'

The problems between traditional online gaming and sweepstakes gambling establishments could prove problematic for some celeb endorsers.

Towns, a star center with the Knicks, and the 76ers' George both back VGW's Global Poker brand name while the NBA is partnered with conventional gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking prohibited sports betting 'sweeps' websites while at the same time the leagues wish to project a strong position against prohibited gaming - specifically when trying to tamp down the occasional gaming scandal,' Glaser told DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter got a lifetime ban from the NBA over claims he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes gambling establishments.

In addition to VGW, Apple and Google are being demanded hosting presumably 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 websites is a matter of 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 also ignored to react to DailyMail.com e-mails.

Asked if their celeb endorsers have an obligation to describe to consumers the differences and resemblances in between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that requires to be done.

'We have complete confidence in our influencer and ambassadorial collaborations, and our business practices more broadly,' the representative said. 'Some of our worths 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 provide their names to dubious illegal gaming sites are, at a minimum, putting their reputations at danger as well as courting civil and class actions by consumers who allege harm,' Glaser stated. 'There is also some risk that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for assisting in unlawful gambling.'

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