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

No, they weren't personally in participation, but the world-famous celebrities were notably included in a slide discussion on social and sweepstakes gambling establishments - the controversial websites providing both totally free casino-style games and rewarding rewards, such as money, gift cards or cryptocurrency. In one advertisement, 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 sites are simply two cogs in the multibillion-dollar industry that now discovers itself besieged by suits. In the eyes of lots of video gaming corporations, not to point out claim complainants and state regulators, sweepstakes gambling establishments serve as traditional gambling establishments, just without the oversight, consumer protections and tax laws. So not only can they avoid the high 24-percent federal sports betting 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 sports betting in a New York lawsuit that declares VGW utilizes celeb endorsers to 'create a veneer of authenticity' around its product. (See VGW's statement listed below)

'I'm not exactly sure" 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 video 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, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions between traditional sports betting and sweepstakes play.

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

Ryan Seacrest urges fans to play at Chumba Casino, where many - however not all - games are totally free
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Drake has a handle social sweeps gambling establishment, Stake, that he frequently touts on social networks

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Instead, ads typically center around the social aspect of the gambling establishments, while omitting the potential for actual gambling losses.
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Others lure consumers with promises of rewards. One such operator, Stake, ran a social networks advertisement flaunting Drake's cars and trucks, 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 provided up.'

The disparity between sports betting websites and social or sweepstakes gambling establishments is a bit intricate, 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), explained its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, most of the gamers on social-sweepstakes gambling establishments are sports betting totally free.

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

Social casinos provide customers a chance to play casino-style games with pals. Players have the choice to purchase worthless currency frequently referred to as 'gold coins,' which can not be exchanged for genuine cash, but can be used to open different features within the games.

But within the world of social gambling establishments exists sweepstakes video gaming, allowing clients to get other currency called 'sweeps coins' that can be exchanged for cash or other rewards.

And therein lies the capacity for financial losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York. One player 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 value.

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

Social sweeps gambling establishment Stake ran an advertisement displaying Drake's cars, aircrafts and mansions

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

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

Anyone over the age of 18 can access the sweepstakes sites, which don't need typically require recognition. However, websites like Chumba will request IDs from gamers trying to withdraw any funds.
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Many websites, like the crypto-compatible Stake, enable clients to submit mail-in ask for free sweeps coins, offered the gamers follow painfully specific instructions. What's more, gamers are frequently rewarded with sweeps coins just for signing up, therefore offering them a factor to try their hands at any number of casino video games for a chance to win - or lose - real money.

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

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

'Social sweepstakes video games are just a type of online home entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is needed to dip into social gambling establishments with sweepstakes rewards. Consumers never need to pay for an opportunity to win prizes. That lack of a purchase requirement - or" consideration" - is a crucial distinction in between social sweeps and conventional online gaming websites like casinos.'

Consider the method that McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and fries that use them the chance to win rewarding rewards, such as a $1 million jackpot.
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And without a purchase requirement, or 'factor to consider', the video game itself does not meet the definition of gaming in the US.

'Sweepstakes are a long-standing method for promoting all kinds of everyday services in the United States, whatever from hamburgers to magazine memberships to coffee and home enhancement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are routinely utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling market experts, that argument does not cut it.
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For beginners, video gaming attorney Daniel Wallach points out, McDonald's Monopoly video game does not run forever. Rather, it has a distinct beginning and end, therefore suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote real items like french fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're generally not connected to casino-style video games of opportunity,' Wallach told DailyMail.com. 'They're simply money free gifts.

'The sweepstakes [gambling establishments] possess none of the qualities commonly associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes casinos offer" casino-like" payments, usually 80 percent or more of revenues, whereas the typical payment percentage for a momentary promotional sweepstakes is a trivial share of the profits made by the business [generally less than one percent]'

Wallach is fast to liken the online social sweeps gambling establishments to the internet coffee shops that emerged in Florida, using consumers the chance to play casino-style video games for real prizes. A number of those brick-and-mortar establishments have because been shuttered over claims of prohibited gaming.

DJ Khaled is amongst numerous celeb spokespeople for VGW's Global Poker brand name
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Now, Wallach argues, social sweeps gambling establishments should deal with comparable scrutiny.

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

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

'Consumers are being denied of defenses and states are giving up considerable tax and income opportunities as this gambling changes that conducted through controlled channels,' read a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in 4 separate cases in Kentucky without admitting any misbehavior, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action lawsuit, saying the settlement was made to prevent legal expenses and continued lawsuits.

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

In the newest claim, which is mainly similar to its predecessors, New York state residents Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is explained in the filing as an 'illegal sports betting enterprise. '

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

'We generally do not discuss matters before the courts,' a VGW representative informed DailyMail.com by means of e-mail. 'However, we keep in mind that this claim has only just been filed with the court and VGW has actually not been formally served.

'We have complete confidence in our compliance with all laws and policies where we run, and stay confident about the future,' the spokesperson continued. 'We continue to use our free-to-play games throughout many of The United States and Canada, as we have for more than a decade, creating not just great video games, user experiences and entertainment, however likewise guaranteeing this is done securely, responsibly and at the greatest level of requirements.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are fairly 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 might be brought against us.'

The concerns in between traditional online gaming and sweepstakes casinos might show problematic for some celebrity endorsers.

Towns, a star center with the Knicks, and the 76ers' George both back VGW's Global Poker brand while the NBA is partnered with conventional gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking illegal sports betting 'sweeps' sites while at the very same time the leagues wish to predict a strong stance against prohibited gambling - specifically when trying to tamp down the occasional gaming scandal,' Glaser told DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter got a lifetime ban from the NBA over claims he conspired with gamblers. 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 allegedly prohibited sports betting sites

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

'I 'd expect that a league crackdown on professional athletes endorsing sweepstakes websites is a matter of when, not if,' Glaser added.

Neither an NBA spokesperson nor the players' representatives responded to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to react to DailyMail.com emails.

Asked if their celeb endorsers have a responsibility to explain to consumers the distinctions and similarities between iGaming and sweepstakes casinos, VGW firmly insisted there is absolutely nothing more that needs to be done.

'We have full confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the representative said. 'Some of our values are" our players come first" and" we do what's right", and we put our worths at the core of whatever we do.'

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

'Celebrities who provide their names to shady illegal gaming websites are, at a minimum, putting their credibilities 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 chief law officers rope celeb endorsers into enforcement efforts for facilitating unlawful gaming.'

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