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

No, they weren't personally in attendance, but the world-famous stars were conspicuously included in a slide presentation on social and sweepstakes gambling establishments - the controversial websites using both free casino-style video games and profitable prizes, such as cash, present cards or cryptocurrency. In one ad, 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 websites are just two cogs in the multibillion-dollar industry that now finds itself besieged by lawsuits. In the eyes of numerous gaming corporations, not to mention suit plaintiffs and state regulators, sweepstakes casinos function as standard casinos, only without the oversight, customer defenses and tax laws. So not only can they prevent the high 24-percent federal sports betting levy, however sweepstakes operators aren't subject to regulative obstacles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the company deals with allegations of unlawful gambling in a New york city claim that claims VGW utilizes star endorsers to 'develop a veneer of legitimacy' around its item. (See VGW's declaration listed below)

'I'm not sure" if you do not trust us, you can rely on Paris Hilton" is a winning message for business operating multibillion-dollar illegal operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers include a series of celebrities from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions in between standard gaming and sweepstakes play.

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

Ryan Seacrest prompts fans to dip into Chumba Casino, where lots of - but not all - games are complimentary

Drake has a deal with social sweeps casino, Stake, that he regularly touts on social media

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Instead, advertisements usually focus around the social element of the casinos, while omitting the capacity for actual sports betting losses.

Others lure clients with guarantees of prizes. One such operator, Stake, ran a social networks ad displaying Drake's cars and trucks, aircrafts and mansions before pivoting to video of the rapper playing online casino-style video games.
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'Daddy, why do we have a lot cash?' read the very first caption on the screen.

Another caption explained: 'Because I never quit.'

The discrepancy in between gaming sites and social or sweepstakes gambling establishments is a bit intricate, however operators of the latter insist they're not included 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 casinos and sportsbooks. Furthermore, according to SPGA data, many of the gamers on social-sweepstakes gambling establishments are sports betting free.

'Most social sweeps clients never buy,' the SPGA representative told DailyMail.com. 'The minority of consumers who make purchases do so in quantities far smaller sized than the normal deposit or wager size at real-money online gaming websites.'

Social gambling establishments use customers a possibility to play casino-style games with friends. Players have the alternative to purchase valueless currency frequently described as 'gold coins,' which can not be exchanged for genuine money, however can be utilized to open numerous features within the video games.

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

And therein lies the potential for financial 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 casinos in the past 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 occasion

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake's automobiles, aircrafts and mansions

Karl-Anthony Towns of the New York City Knicks is another NBA star plugging VGW's Global Poker
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Traditional online gambling establishments are prohibited in all but 7 states, which has assisted to sustain the appeal of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes sites, which don't require generally need identification. However, websites like Chumba will request for IDs from gamers attempting to withdraw any funds.

Many websites, like the crypto-compatible Stake, enable clients to submit mail-in demands for complimentary sweeps coins, offered the gamers follow painfully specific instructions. What's more, gamers are frequently rewarded with sweeps coins simply for signing up, thus providing a reason to try their hands at any number of gambling establishment games for a chance to win - or lose - genuine cash.

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

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

'Social sweepstakes video games are merely a form of online home entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is required to dip into social casinos with sweepstakes rewards. Consumers never ever have to spend for an opportunity to win rewards. That lack of a purchase requirement - or" factor to consider" - is an essential distinction in between social sweeps and traditional online sports betting sites like casinos.'

Consider the manner in which McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and french fries that provide them the opportunity to win profitable prizes, such as a $1 million jackpot.

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

'Sweepstakes are a long-standing approach for promoting all sort of daily businesses in the United States, whatever from hamburgers to magazine memberships to coffee and home enhancement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are routinely used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting industry experts, that argument doesn't cut it.

For starters, gaming lawyer Daniel Wallach mentions, McDonald's Monopoly game does not run forever. Rather, it has a distinct start and end, therefore recommending the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being utilized to promote real items like fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're usually not connected to casino-style games of opportunity,' Wallach informed DailyMail.com. 'They're simply cash giveaways.

'The sweepstakes [gambling establishments] have none of the attributes commonly related to McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos use" casino-like" payouts, typically 80 percent or more of profits, whereas the typical payout percentage for a short-term marketing sweepstakes is an insignificant share of the revenue made by the business [normally less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the internet cafes that emerged in Florida, using consumers the chance to play casino-style video games for real rewards. Many of those brick-and-mortar facilities have actually since 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 casinos ought to face similar analysis.

'These differences are not approximate,' Wallach said of social sweeps gambling establishments. 'They have consistently been mentioned by courts and state lawyer generals as key aspects in identifying that a sweepstakes promotion remained in reality a guise for unlawful gaming.'

Among the gambling establishment market's leading trade organizations, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, in many cases, enact brand-new legislation on the problem.

'Consumers are being denied of protections and states are giving up substantial tax and earnings chances as this gaming replaces that conducted through controlled channels,' read a well-circulated AGA memo.

And then there are the plaintiffs who have actually sued social gambling establishments in more than a dozen states.

Sweepstakes casino operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action claim, saying 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 recent claim, which is mainly similar to its predecessors, New York state residents Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is described in the filing as an 'prohibited gambling enterprise. '

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

'We normally do not talk about matters before the courts,' a VGW representative told DailyMail.com through email. 'However, we note that this claim has only simply been submitted with the court and VGW has actually not been officially served.

'We have full confidence in our compliance with all laws and regulations where we operate, and stay confident about the future,' the spokesperson continued. 'We continue to use our free-to-play games throughout many of The United States and Canada, as we have for more than a decade, creating not only terrific video games, user experiences and entertainment, but also ensuring this is done safely, properly and at the highest level of requirements.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are fairly typical throughout the online social games market (and the US more broadly), and our basic practice is that we intend to intensely protect any claim which might be brought against us.'

The concerns between standard online sports betting and sweepstakes casinos could show troublesome for some celebrity endorsers.

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

'It's ironic that professional athletes are hawking unlawful sports betting wagering 'sweeps' websites while at the very same time the leagues desire to predict a strong position versus illegal sports betting - particularly when trying to tamp down the periodic gaming scandal,' Glaser told DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter received a lifetime restriction from the NBA over allegations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes casinos.

Along with VGW, Apple and Google are being taken legal action against for hosting allegedly unlawful gambling websites

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

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

Neither an NBA spokesperson nor the gamers' agents reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to react to DailyMail.com e-mails.

Asked if their celebrity endorsers have a duty to describe to customers the differences and resemblances between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that needs to be done.

'We have full self-confidence in our and ambassadorial partnerships, and our business practices more broadly,' the spokesperson stated. 'Some of our values are" our players precede" and" we do what's right", and we put our values at the core of everything we do.'

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

'Celebrities who lend their names to dubious illegal sports betting websites are, at a minimum, putting their credibilities at risk in addition to courting civil and class actions by customers who declare damage,' Glaser stated. 'There is likewise some threat that state regulators and state lawyers basic rope star endorsers into enforcement efforts for facilitating prohibited sports betting.'

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