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

No, they weren't personally in presence, however the world-famous celebs were notably consisted of in a slide discussion on social and sweepstakes casinos - the questionable sites using both totally free casino-style video games and financially rewarding prizes, such as cash, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet 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 discovers itself besieged by claims. In the eyes of numerous gaming corporations, not to mention claim complainants and state regulators, sweepstakes gambling establishments function as conventional gambling establishments, just without the oversight, customer protections and tax laws. So not only can they prevent the steep 24-percent federal gambling levy, but sweepstakes operators aren't based on regulatory obstacles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings last year alone. Now the company faces accusations of unlawful gaming in a New york city lawsuit that claims VGW uses celeb endorsers to 'develop a veneer of legitimacy' 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 presenter, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.

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

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

Ryan Seacrest urges fans to dip into Chumba Casino, where numerous - but not all - video games are free

Drake has a handle social sweeps gambling establishment, Stake, that he regularly touts on social networks

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Instead, ads usually center around the social element of the casinos, while omitting the potential for actual gaming losses.

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

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

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

The disparity in between gaming sites and social or sweepstakes casinos is a bit complex, however operators of the latter insist they're not included with the previous.

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), described 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 playing for free.

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

Social gambling establishments offer customers an opportunity to play casino-style games with pals. 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 unlock various features within the games.

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

And therein lies the potential for monetary losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York. One player informed the Washington Post he lost more than $100,000 on sweepstakes casinos in the previous year after continuing to buy 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 casino Stake ran an ad displaying Drake's cars and trucks, airplanes and mansions

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

Traditional online casinos are prohibited in all but seven states, which has helped to sustain the appeal of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, enable customers to send mail-in ask for free sweeps coins, provided the gamers follow painfully particular instructions. What's more, players are often rewarded with sweeps coins just for signing up, thus providing a factor to try their hands at any number of gambling establishment games for a chance to win - or lose - genuine money.

So why are sweepstakes sites allowed to operate in 48 states, while online casinos are prohibited in all but 7?

According to the stakeholders, their item is the free casino-style gaming, and the real-stakes competition is merely a method of promoting their bread and butter.

'Social sweepstakes games are simply a form 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 need to pay for a chance to win rewards. That lack of a purchase requirement - or" consideration" - is an essential difference in between social sweeps and standard online sports betting sites like casinos.'

Think about the way that McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're buying hamburgers and fries that use them the possibility to win rewarding prizes, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the video game itself doesn't meet the definition of gaming in the US.

'Sweepstakes are an enduring approach for promoting all kinds of daily organizations in the United States, whatever from hamburgers to magazine memberships to coffee and home enhancement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are regularly used by a who's who of family 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 starters, gaming lawyer Daniel Wallach explains, McDonald's Monopoly video game does not run forever. Rather, it has a well-defined start and end, therefore 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 do not last forever and they're typically not connected to casino-style video games of chance,' Wallach told DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [gambling establishments] have none of the qualities frequently related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes casinos use" casino-like" payments, generally 80 percent or more of profits, whereas the normal payment percentage for a momentary promotional sweepstakes is a minor share of the income made by the company [normally less than one percent]'

Wallach is fast to liken the online social sweeps casinos to the internet cafes that emerged in Florida, offering customers the possibility to play casino-style games for genuine rewards. Much of those brick-and-mortar facilities have actually because been shuttered over accusations of illegal gaming.

DJ Khaled is amongst several celeb spokespeople for VGW's Global Poker brand

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

'These differences are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have actually consistently been cited by courts and state lawyer generals as key aspects in figuring out that a sweepstakes promo was in fact a guise for illegal sports betting.'

One of 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 new legislation on the issue.

'Consumers are being deprived of defenses and states are passing up considerable tax and profits opportunities as this sports betting replaces that performed through managed 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 4 different cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action claim, stating the settlement was made to avoid legal costs and continued lawsuits.

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

In the most recent claim, which is mainly comparable to its predecessors, New York state homeowners 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 enterprise. '

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

'We usually don't talk about matters before the courts,' a VGW spokesperson told DailyMail.com by means of e-mail. 'However, we note that this claim has only simply been filed with the court and VGW has actually not been officially served.

'We have complete self-confidence in our compliance with all laws and guidelines where we operate, and remain positive about the future,' the spokesperson continued. 'We continue to provide our free-to-play video games across many of North America, as we have for more than a years, developing not only great games, user experiences and home entertainment, however likewise guaranteeing this is done securely, properly and at the greatest level of standards.

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

The problems in between conventional online gambling and sweepstakes casinos could show troublesome for some star 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 standard gaming titans like FanDuel and DraftKings.

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

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

In addition to VGW, Apple and Google are being sued for hosting presumably illegal gambling sites

Regardless, Glaser sees sweepstakes gambling establishments as a major concern for leagues such as the NBA.

'I 'd expect that a league crackdown on professional athletes endorsing sweepstakes sites refers when, not if,' Glaser included.

Neither an NBA representative nor the gamers' representatives reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise disregarded to react to DailyMail.com emails.

Asked if their star endorsers have an obligation to describe to customers the distinctions and resemblances in between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that requires to be done.

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the spokesperson said. 'Some of our values are" our gamers precede" and" we do what's right", and we put our values at the core of whatever we do.'

Glaser, an outspoken challenger of sweepstakes websites, sees things in a different way.

'Celebrities who lend their names to dubious unlawful gambling sites are, at a minimum, putting their reputations at danger in addition to courting civil and class actions by customers who allege damage,' Glaser stated. 'There is also some risk that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for assisting in illegal gaming.'

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