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

No, they weren't personally in presence, but the world-famous celebrities were notably consisted of in a slide discussion on social and sweepstakes casinos - the questionable sites offering both complimentary casino-style video games and financially rewarding rewards, such as cash, gift 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 market that now finds itself besieged by lawsuits. In the eyes of lots of video gaming corporations, not to mention claim plaintiffs and state regulators, sweepstakes casinos serve as conventional casinos, only without the oversight, consumer securities and tax laws. So not only can they prevent the steep 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulatory hurdles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the business deals with accusations of prohibited gaming in a New York suit that declares VGW utilizes celeb endorsers to 'create a veneer of legitimacy' around its item. (See VGW's declaration below)

'I'm not sure" if you do not trust us, you can trust Paris Hilton" is a winning message for companies running multibillion-dollar unlawful 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 consist of a series of celebrities 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 distinctions between conventional sports betting and sweepstakes play.

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

Ryan Seacrest urges fans to play at Chumba Casino, where many - however not all - video games are free

Drake has an offer with social sweeps casino, Stake, that he frequently promotes on social media

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

Others lure clients with pledges of rewards. One such operator, Stake, ran a social networks advertisement displaying Drake's vehicles, aircrafts and mansions before pivoting to video footage of the rapper playing online casino-style games.

'Daddy, why do we have a lot cash?' check out the first caption on the screen.

Another caption described: 'Because I never gave up.'

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

A representative 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 information, the majority of the gamers on social-sweepstakes casinos are playing for complimentary.

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

Social casinos use customers an opportunity to play casino-style games with good friends. Players have the alternative to purchase worthless currency often described as 'gold coins,' which can not be exchanged genuine cash, however can be used to open various functions within the games.

But within the world of social gambling establishments exists sweepstakes video gaming, permitting clients to get 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 plaintiffs 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 money and other things of worth.

The Philadelphia 76ers' Paul George is seen promoting a Global Poker event

Social sweeps casino Stake ran an advertisement revealing off Drake's automobiles, 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 however seven states, which has actually helped to fuel the popularity of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, permit consumers to submit mail-in ask for totally free sweeps coins, provided the gamers follow painfully particular instructions. What's more, players are frequently rewarded with sweeps coins simply for signing up, thus providing a factor to attempt their hands at any variety of casino video games for an opportunity to win - or lose - real money.

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

According to the stakeholders, their item is the free casino-style video gaming, and the real-stakes competition is simply a means of promoting their support.

'Social sweepstakes video games are simply a form of online entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is required to play at social gambling establishments with sweepstakes prizes. Consumers never ever have to spend for a chance to win prizes. That absence of a purchase requirement - or" consideration" - is an essential difference in between social sweeps and standard online gaming websites like gambling establishments.'

Think about the method that McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to gamble, however rather they're buying hamburgers and french fries that use them the possibility to win lucrative rewards, such as a $1 million prize.

And without a purchase requirement, or 'factor to consider', the video game itself doesn't meet the definition of gambling in the US.

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

But to numerous sports betting market insiders, that argument doesn't cut it.

For starters, video gaming lawyer Daniel Wallach explains, McDonald's Monopoly video game doesn't run forever. Rather, it has a well-defined start and end, therefore recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote genuine items like french fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [casinos] possess none of the qualities commonly related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments provide" casino-like" payouts, usually 80 percent or more of revenues, whereas the normal payment percentage for a momentary advertising sweepstakes is a minor share of the profits earned by the company [normally less than one percent]'

Wallach is quick to liken the online social sweeps casinos to the web cafes that emerged in Florida, using customers the possibility to play casino-style games for real rewards. A number of those brick-and-mortar establishments have considering that been shuttered over accusations of prohibited gambling.

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

Now, Wallach argues, social sweeps gambling establishments should face comparable scrutiny.

'These distinctions are not approximate,' Wallach said of social sweeps casinos. 'They have repeatedly been mentioned by courts and state chief law officer as essential elements in figuring out that a sweepstakes promotion was in truth a guise for unlawful sports betting.'

One of the casino industry's leading trade organizations, the American Gaming Association, is now pressing legislators to investigate sweepstakes operators and, in some cases, enact new legislation on the issue.

'Consumers are being denied of protections and states are forgoing substantial tax and profits opportunities as this gaming replaces that conducted through regulated channels,' checked out a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in four different cases in Kentucky without admitting any misbehavior, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action suit, saying the settlement was made to avoid legal costs and continued lawsuits.

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

In the current suit, which is largely 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 'prohibited gambling enterprise. '

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

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

'We have full confidence in our compliance with all laws and guidelines where we operate, and stay confident about the future,' the spokesperson continued. 'We continue to provide our free-to-play video games across the majority of The United States and Canada, as we have for more than a decade, developing not only great video games, user experiences and entertainment, but likewise guaranteeing this is done safely, properly and at the highest level of standards.

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

The concerns between conventional online gambling and sweepstakes gambling establishments might show troublesome 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 video gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking unlawful sports betting 'sweeps' websites while at the exact same time the leagues want to predict a strong position versus illegal gambling - particularly when attempting 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 life time restriction from the NBA over claims he conspired with gamblers. However, to be clear, Porter's scandal is unrelated 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 major problem for leagues such as the NBA.

'I 'd anticipate that a league crackdown on professional athletes backing sweepstakes sites refers when, not if,' Glaser added.

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

Asked if their star endorsers have a duty to explain to consumers the differences and resemblances between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is absolutely nothing more that needs to be done.

'We have full self-confidence in our influencer and ambassadorial collaborations, and our organization practices more broadly,' the spokesperson said. '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 websites, sees things differently.

'Celebrities who lend their names to dubious prohibited sports betting websites are, at a minimum, putting their track records at risk along with courting civil and class actions by customers who declare harm,' Glaser said. 'There is likewise some danger that state regulators and state chief law officers rope celebrity endorsers into enforcement efforts for assisting in unlawful gambling.'

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