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

No, they weren't personally in participation, however the world-famous celebs were conspicuously included in a slide presentation on social and sweepstakes casinos - the questionable websites using both free casino-style video 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 totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are simply 2 cogs in the multibillion-dollar market that now discovers itself besieged by claims. In the eyes of many gaming corporations, not to point out suit complainants and state regulators, sweepstakes casinos serve as traditional casinos, just without the oversight, consumer securities and tax laws. So not only can they prevent the steep 24-percent federal gambling levy, however sweepstakes operators aren't based on regulatory hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the company deals with allegations of prohibited gaming in a New york city suit that declares VGW utilizes celeb endorsers to 'create a veneer of authenticity' around its product. (See VGW's statement listed below)

'I'm uncertain" 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 places like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of video gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a series of celebs from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom provide any distinctions between standard sports betting and sweepstakes play.

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

Ryan Seacrest prompts fans to dip into Chumba Casino, where many - but not all - games are free

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

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Instead, ads usually focus around the social element of the casinos, while leaving out the potential for actual gambling losses.

Others lure clients with guarantees of prizes. One such operator, Stake, ran a social media advertisement displaying Drake's cars, aircrafts and estates before rotating to footage of the rapper playing online casino-style games.

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

Another caption discussed: 'Because I never offered up.'

The disparity between sports betting websites and social or sweepstakes casinos is a bit intricate, however operators of the latter insist they're not involved with the former.

A representative for an industry 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 totally free.

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

Social gambling establishments use consumers a possibility to play casino-style video games with friends. Players have the choice to buy worthless currency typically referred to as 'gold coins,' which can not be exchanged genuine money, however can be used to open various features within the games.

But within the world of social gambling establishments exists sweepstakes video gaming, allowing customers to obtain other currency called 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the potential 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 casinos in the previous year after continuing to purchase 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 ad displaying Drake's automobiles, aircrafts and estates

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

Traditional online gambling establishments are banned in all but 7 states, which has actually helped to fuel the appeal of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes websites, which don't require normally require recognition. However, sites like Chumba will request IDs from players trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, allow customers to send mail-in requests for totally free sweeps coins, offered the players follow painfully specific instructions. What's more, gamers are frequently rewarded with sweeps coins just for signing up, thereby providing them a reason to try their hands at any number of gambling establishment video games for an opportunity to win - or lose - genuine money.

So why are sweepstakes sites allowed to run in 48 states, while online casinos are banned in all however 7?

According to the stakeholders, their item is the complimentary casino-style gaming, and the real-stakes competitors is just a way of promoting their bread and butter.

'Social sweepstakes video games are just a form of online entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is needed to play at social gambling establishments with sweepstakes prizes. Consumers never have to pay for a chance to win prizes. That absence of a purchase requirement - or" factor to consider" - is an important distinction between social sweeps and standard online gaming websites like casinos.'

Think of 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 buying hamburgers and fries that use them the possibility to win rewarding prizes, such as a $1 million jackpot.

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

'Sweepstakes are a long-standing technique for promoting all type of everyday organizations in the United States, everything from burgers to publication subscriptions to coffee and home enhancement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are regularly used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous sports betting industry experts, that argument does not cut it.

For starters, video gaming attorney Daniel Wallach explains, McDonald's Monopoly video game doesn't run forever. Rather, it has a well-defined beginning and end, therefore recommending 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 permanently and they're typically not connected to casino-style video games of opportunity,' Wallach told DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [gambling establishments] have none of the qualities typically associated 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 incomes, whereas the normal payout portion for a short-term promotional sweepstakes is an unimportant share of the earnings made by the company [typically less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the web coffee shops that sprang up in Florida, using consumers the opportunity to play casino-style games for genuine rewards. Many of those brick-and-mortar facilities have actually considering that been shuttered over claims of unlawful sports betting.

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

Now, Wallach argues, social sweeps casinos need to deal with similar scrutiny.

'These differences are not arbitrary,' Wallach said of social sweeps casinos. 'They have actually repeatedly been mentioned by courts and state attorney general of the United States as crucial aspects in identifying that a sweepstakes promotion was in fact a guise for prohibited gaming.'

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

'Consumers are being denied of protections and states are forgoing considerable tax and revenue opportunities as this sports betting changes that conducted through controlled channels,' read a well-circulated AGA memo.

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

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

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

In the most current suit, which is mostly comparable to its predecessors, New york city state homeowners 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 sports betting enterprise. '

Apple and Google have also been called as defendants in claims for hosting the sweepstakes sites. But unlike VGW, neither tech company responded to DailyMail.com's demand for remark.

'We normally do not comment on matters before the courts,' a VGW representative told DailyMail.com via e-mail. 'However, we keep in mind that this claim has actually only simply been submitted with the court and VGW has not been formally served.

'We have full confidence in our compliance with all laws and regulations where we operate, and stay positive about the future,' the representative continued. 'We continue to provide our free-to-play video games across the majority of North America, as we have for more than a years, creating not just terrific games, user experiences and entertainment, but also ensuring this is done safely, responsibly and at the greatest level of requirements.

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

The issues in between conventional online sports betting and sweepstakes gambling establishments could prove 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 video gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking prohibited sports betting wagering 'sweeps' sites while at the exact same time the leagues wish to forecast a strong position versus illegal sports betting - specifically when attempting to tamp down the occasional gambling scandal,' Glaser informed DailyMail.com.

It was just 8 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 unassociated to anything involving social or sweepstakes casinos.

Together with VGW, Apple and Google are being demanded hosting apparently illegal sports betting websites

Regardless, Glaser sees sweepstakes casinos as a significant concern for leagues such as the NBA.

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

Neither an NBA representative nor the gamers' agents responded to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise overlooked to respond to DailyMail.com emails.

Asked if their celeb endorsers have a responsibility to discuss to customers the distinctions and resemblances in between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that needs to be done.

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our organization practices more broadly,' the spokesperson stated. 'A few of our values are" our gamers come first" and" we do what's right", and we put our values at the core of whatever we do.'

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

'Celebrities who lend their names to dubious unlawful gambling websites are, at a minimum, putting their reputations at risk in addition to courting civil and class actions by consumers who declare harm,' Glaser stated. 'There is also some risk that state regulators and state attorneys basic rope star endorsers into enforcement efforts for assisting in unlawful sports betting.'

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