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

No, they weren't personally in presence, but the world-famous celebrities were notably included in a slide discussion on social and sweepstakes gambling establishments - the questionable websites using both complimentary casino-style video games and profitable rewards, such as money, gift cards or cryptocurrency. In one advertisement, 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 sites are just two cogs in the multibillion-dollar market that now discovers itself besieged by lawsuits. In the eyes of numerous gaming corporations, not to mention suit complainants and state regulators, sweepstakes gambling establishments function as traditional gambling establishments, only without the oversight, customer defenses and tax laws. So not just can they prevent the high 24-percent federal sports betting levy, but sweepstakes operators aren't subject to regulatory obstacles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income last year alone. Now the business deals with allegations of illegal gaming in a New York suit that claims VGW uses celeb endorsers to 'create a veneer of legitimacy' around its product. (See VGW's statement below)

'I'm unsure" if you don't trust us, you can rely on Paris Hilton" is a winning message for companies operating 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 lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions in between conventional gambling and sweepstakes play.

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

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

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

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Instead, advertisements typically focus around the social aspect of the casinos, while leaving out the potential for real gambling losses.

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

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

Another caption described: 'Because I never quit.'

The inconsistency between gaming sites 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 a market trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, many of the players on social-sweepstakes gambling establishments are sports betting free.

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

Social casinos use customers a possibility to play casino-style video games with pals. Players have the alternative to buy worthless currency frequently referred to as 'gold coins,' which can not be exchanged genuine cash, however can be utilized to unlock numerous functions within the video games.

But within the world of social gambling establishments exists sweepstakes video gaming, allowing clients to acquire 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 declared 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 previous 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 event

Social sweeps casino Stake ran an advertisement displaying Drake's vehicles, aircrafts and mansions

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

Traditional online casinos are banned in all but 7 states, which has assisted to sustain the appeal of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, enable clients to send mail-in demands for free sweeps coins, offered the players follow painfully particular directions. What's more, gamers are frequently rewarded with sweeps coins merely for registering, thereby providing a reason to try their hands at any number of casino games for a possibility to win - or lose - real money.
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So why are sweepstakes websites enabled to operate in 48 states, while online casinos are prohibited in all however 7?

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

'Social sweepstakes games are merely a type of online home entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is needed to dip into social casinos with sweepstakes prizes. Consumers never ever need to pay for a chance to win rewards. That lack of a purchase requirement - or" consideration" - is a vital difference between social sweeps and standard online gambling sites like casinos.'

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

And without a purchase requirement, or 'consideration', the video game itself does not fulfill the meaning of gaming in the US.

'Sweepstakes are a long-standing technique for promoting all kinds of daily businesses in the United States, whatever from burgers to publication memberships to coffee and home improvement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are routinely used 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 market experts, that argument doesn't cut it.
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For starters, gaming lawyer Daniel Wallach points out, McDonald's Monopoly video game does not run forever. Rather, it has a well-defined beginning and end, thus suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote genuine products like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [gambling establishments] have none of the qualities commonly connected with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes casinos offer" casino-like" payouts, typically 80 percent or more of earnings, whereas the common payment percentage for a short-lived promotional sweepstakes is a minor share of the profits made by the business [typically less than one percent]'

Wallach is quick to liken the online social sweeps casinos to the internet coffee shops that emerged in Florida, providing customers the opportunity to play casino-style games for real rewards. Much of those brick-and-mortar facilities have actually considering that been shuttered over claims of unlawful sports betting.

DJ Khaled is amongst a number of celebrity spokespeople for VGW's Global Poker brand name

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

'These differences are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have consistently been cited by courts and state attorney generals as crucial consider determining that a sweepstakes promotion remained in reality a guise for prohibited sports betting.'

Among the casino market's leading trade companies, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, in some cases, enact brand-new legislation on the concern.

'Consumers are being deprived of protections and states are passing up substantial tax and profits chances as this gaming replaces that conducted through managed channels,' checked out a well-circulated AGA memo.

And after that there are the complainants 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 confessing any wrongdoing, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, stating the settlement was made to prevent legal costs and continued litigation.

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

In the current claim, which is largely 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 described in the filing as an 'prohibited sports betting business. '
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Apple and Google have actually likewise been called as defendants in suits for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's request for remark.

'We usually don't talk about matters before the courts,' a VGW representative told .com via email. 'However, we keep in mind that this claim has only just been filed with the court and VGW has actually not been officially served.

'We have full self-confidence in our compliance with all laws and guidelines where we run, and remain positive about the future,' the representative continued. 'We continue to use our free-to-play video games throughout the majority of North America, as we have for more than a decade, creating not just fantastic video games, user experiences and entertainment, however also guaranteeing this is done safely, properly and at the highest level of standards.

'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are relatively common throughout the online social video games industry (and the US more broadly), and our standard practice is that we intend to strongly defend any claim which might be brought versus us.'

The problems between conventional online gambling and sweepstakes gambling establishments might show bothersome 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 professional athletes are hawking illegal sports betting wagering 'sweeps' websites while at the very same time the leagues want to predict a strong stance against unlawful sports betting - particularly when attempting to tamp down the periodic gaming scandal,' Glaser informed DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter received a life time restriction from the NBA over claims he conspired with bettors. 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 taken legal action against for hosting apparently unlawful sports betting sites

Regardless, Glaser sees sweepstakes casinos as a major problem for leagues such as the NBA.

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

Neither an NBA spokesman nor the gamers' representatives reacted to DailyMail.com's requests for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also disregarded to respond to DailyMail.com e-mails.

Asked if their celebrity endorsers have a duty to explain to clients the distinctions and similarities in between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the spokesperson stated. 'A few of our worths are" our gamers precede" and" we do what's right", and we put our worths at the core of whatever we do.'
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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 track records at risk as well as courting civil and class actions by customers who allege harm,' Glaser stated. 'There is also some threat that state regulators and state chief law officers rope celeb endorsers into enforcement efforts for facilitating unlawful sports betting.'

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