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

No, they weren't personally in presence, however the world-famous celebrities were notably included in a slide discussion on social and sweepstakes casinos - the questionable websites providing both free casino-style games and profitable prizes, such as money, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are simply 2 cogs in the multibillion-dollar market that now discovers itself besieged by suits. In the eyes of many gaming corporations, not to point out claim plaintiffs and state regulators, sweepstakes casinos act as standard casinos, just without the oversight, consumer protections and tax laws. So not only can they avoid the steep 24-percent federal sports betting levy, however sweepstakes operators aren't subject to regulatory hurdles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the business faces accusations of prohibited sports betting in a New york city suit that declares VGW utilizes star endorsers to 'create a veneer of legitimacy' around its item. (See VGW's statement below)

'I'm unsure" if you don't trust us, you can trust 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, informed DailyMail.com.

Sweepstakes endorsers include a variety of celebs 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 sports betting and sweepstakes play.

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

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

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

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Instead, ads usually center around the social aspect of the casinos, while omitting the capacity for real gambling losses.

Others tempt customers with promises of rewards. One such operator, Stake, ran a social networks ad revealing off Drake's automobiles, aircrafts and mansions before pivoting to video footage of the rap artist playing online casino-style games.

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

Another caption discussed: 'Because I never ever quit.'

The disparity in between gambling sites and social or sweepstakes gambling establishments is a bit complex, but operators of the latter insist they're not involved with the previous.

A representative 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 sports betting totally free.

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

Social casinos use consumers a possibility 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 for real money, but can be utilized to open numerous functions within the games.

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

And therein lies the capacity for financial losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York City. One gamer informed the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the past year after continuing to buy more coins in pursuit of cash and other things of value.

The Philadelphia 76ers' Paul George is seen promoting an International Poker occasion

Social sweeps casino Stake ran an ad flaunting Drake's vehicles, airplanes and mansions

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

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

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

Many sites, like the crypto-compatible Stake, allow customers to send mail-in ask for totally free sweeps coins, supplied the gamers follow painfully particular instructions. What's more, gamers are typically rewarded with sweeps coins simply for signing up, thereby providing a factor to attempt their hands at any variety of gambling establishment games for a chance to win - or lose - real cash.

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

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

'Social sweepstakes video games are simply a kind of online home entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is required to play at social casinos with sweepstakes rewards. Consumers never have to pay for an opportunity to win prizes. That lack of a purchase requirement - or" factor to consider" - is a vital distinction in between social sweeps and standard online gambling websites like casinos.'

Think of the manner in which McDonald's utilizes its yearly Monopoly 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 rewarding prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the game itself doesn't satisfy the definition of gambling in the US.

'Sweepstakes are a long-standing approach for promoting all sort of daily organizations in the United States, whatever from burgers to publication memberships to coffee and home enhancement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are routinely utilized by a who's who of household 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 beginners, video gaming lawyer Daniel Wallach mentions, McDonald's Monopoly game doesn't run forever. Rather, it has a well-defined start and end, thereby recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote real products like french fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're typically not connected to casino-style games of chance,' Wallach told DailyMail.com. 'They're just money giveaways.

'The sweepstakes [casinos] possess none of the qualities frequently related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments provide" casino-like" payments, generally 80 percent or more of earnings, whereas the normal payout portion for a short-term marketing sweepstakes is a minor share of the income made by the company [normally less than one percent]'

Wallach is quick to compare the online social sweeps casinos to the web coffee shops that emerged in Florida, providing clients the possibility to play casino-style video games for real rewards. A number of those brick-and-mortar facilities have given that been shuttered over claims of unlawful gaming.

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

Now, Wallach argues, social sweeps casinos need to deal with comparable examination.

'These distinctions are not approximate,' Wallach said of social sweeps casinos. 'They have actually consistently been mentioned by courts and state attorney general of the United States as essential consider identifying that a sweepstakes promo remained in fact a guise for unlawful gaming.'

Among the casino market's leading trade companies, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, in many cases, enact brand-new legislation on the issue.

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

And then there are the plaintiffs who have taken legal action against social casinos in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in four separate cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action lawsuit, saying 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 lawsuit, which is mostly 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 'unlawful gaming enterprise. '

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

'We normally do not comment on matters before the courts,' a VGW representative informed DailyMail.com through e-mail. 'However, we note that this claim has actually 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 run, and stay confident about the future,' the representative continued. 'We continue to use our free-to-play games across many of North America, as we have for more than a years, producing not just great games, user experiences and entertainment, however likewise guaranteeing this is done securely, responsibly and at the greatest level of requirements.

'More broadly, we 'd restate that class actions and other litigations and arbitrations are fairly common across the online social games market (and the US more broadly), and our basic practice is that we intend to strongly protect any claim which may be brought against us.'

The concerns in 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 name while the NBA is partnered with traditional gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking prohibited sports betting 'sweeps' sites while at the same time the leagues want to predict a strong stance versus unlawful gaming - particularly when trying to tamp down the occasional gaming scandal,' Glaser informed DailyMail.com.

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

In addition to VGW, Apple and Google are being demanded hosting presumably illegal 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' agents reacted to DailyMail.com's requests 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 star endorsers have a duty to discuss to customers 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 confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the representative stated. 'A few of our worths are" our gamers come initially" 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 in a different way.

'Celebrities who lend their names to dubious illegal gambling websites are, at a minimum, putting their reputations at threat as well as courting civil and class actions by consumers who allege damage,' Glaser stated. 'There is also some danger that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for helping with illegal sports betting.'

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