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

No, they weren't personally in attendance, however the world-famous celebrities were conspicuously included in a slide discussion on social and sweepstakes casinos - the controversial sites providing both complimentary casino-style video games and profitable prizes, such as cash, present cards or cryptocurrency. In one ad, 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 websites are simply 2 cogs in the multibillion-dollar industry that now finds itself besieged by claims. In the eyes of numerous gaming corporations, not to mention claim plaintiffs and state regulators, sweepstakes gambling establishments function as standard gambling establishments, just without the oversight, consumer protections and tax laws. So not only can they prevent the steep 24-percent federal gambling levy, but sweepstakes operators aren't subject to regulative difficulties 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 deals with allegations of unlawful gaming in a New york city lawsuit that claims VGW uses celeb endorsers to 'develop a veneer of authenticity' around its item. (See VGW's declaration below)

'I'm uncertain" if you don't trust us, you can trust Paris Hilton" is a winning message for companies operating multibillion-dollar unlawful operations out of places 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 gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom offer any differences between conventional sports betting and sweepstakes play.

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

Ryan Seacrest prompts fans to play at Chumba Casino, where lots of - but 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 usually focus around the social element of the gambling establishments, while leaving out the capacity for real gambling losses.

Others lure clients with promises of prizes. One such operator, Stake, ran a social media ad flaunting Drake's cars and trucks, planes and mansions before rotating to video of the rap artist playing online casino-style games.

'Daddy, why do we have so much money?' check out the very first caption on the screen.

Another caption discussed: 'Because I never ever quit.'

The inconsistency between gambling sites and social or sweepstakes casinos is a bit complicated, but operators of the latter insist they're not included with the former.

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, the majority of the players on social-sweepstakes gambling establishments are playing for complimentary.

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

Social casinos provide customers a possibility to play casino-style games with good friends. Players have the alternative to buy valueless currency typically described as 'gold coins,' which can not be exchanged for real cash, but can be utilized to open different functions within the games.

But within the world of social casinos exists sweepstakes gaming, permitting consumers to obtain other currency called 'sweeps coins' that can be exchanged for cash 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 City. One player told 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 value.

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

Social sweeps gambling establishment Stake ran an ad displaying Drake's cars and trucks, 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 7 states, which has actually assisted to sustain the popularity of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, allow consumers to send mail-in requests for totally free sweeps coins, supplied the players follow painfully specific guidelines. What's more, gamers are typically rewarded with sweeps coins simply for registering, therefore offering them a reason to attempt their hands at any number of gambling establishment games for a possibility to win - or lose - real money.

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

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

'Social sweepstakes video games are simply a type of online entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is needed to play at social gambling establishments with sweepstakes rewards. Consumers never ever have to pay for a chance to win rewards. That lack of a purchase requirement - or" factor to consider" - is an essential distinction in between social sweeps and traditional online gaming sites like gambling establishments.'

Think about the manner in which McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and fries that use them the chance to win rewarding rewards, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the game itself doesn't satisfy the meaning of gambling in the US.

'Sweepstakes are an enduring method for promoting all type of everyday businesses in the United States, whatever from burgers to publication memberships to coffee and home enhancement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are regularly used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For beginners, video gaming attorney Daniel Wallach points out, McDonald's Monopoly game doesn't run forever. Rather, it has a distinct beginning and end, consequently suggesting the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being used to promote genuine products like french fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [gambling establishments] have none of the characteristics commonly related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos use" casino-like" payments, generally 80 percent or more of profits, whereas the common payment portion for a short-term advertising sweepstakes is a trivial share of the income made by the company [usually less than one percent]'

Wallach is fast to liken the online social sweeps casinos to the internet coffee shops that sprang up in Florida, using consumers the opportunity to play casino-style games for real rewards. A number of those brick-and-mortar establishments have considering that been shuttered over accusations of unlawful gaming.

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

Now, Wallach argues, social sweeps casinos need to deal with comparable examination.

'These differences are not approximate,' Wallach stated of social sweeps casinos. 'They have consistently been mentioned by courts and state chief law officer as crucial consider identifying that a sweepstakes promotion was in reality a guise for unlawful sports betting.'

One of the gambling establishment industry's leading trade companies, the American Gaming Association, is now pushing lawmakers to examine sweepstakes operators and, in many cases, enact brand-new legislation on the concern.

'Consumers are being denied of defenses and states are forgoing substantial tax and earnings opportunities as this gaming replaces that performed through managed channels,' checked out a well-circulated AGA memo.

And after that there are the complainants who have actually sued social gambling establishments in more than a lots 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 lawsuit, stating the settlement was made to avoid legal costs and continued lawsuits.

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

In the newest lawsuit, which is mostly comparable to its predecessors, New york city state locals 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 gaming business. '

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

'We generally do not discuss matters before the courts,' a VGW representative told DailyMail.com through e-mail. 'However, we note 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 policies where we operate, and remain positive about the future,' the representative continued. 'We continue to use our free-to-play video games across many of North America, as we have for more than a decade, producing not just great video games, user experiences and entertainment, however also guaranteeing this is done securely, responsibly and at the highest level of standards.

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

The concerns in between conventional online sports betting and sweepstakes gambling establishments could prove bothersome for some star endorsers.

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

'It's ironic that professional athletes are hawking unlawful sports betting wagering 'sweeps' sites while at the very same time the leagues wish to predict a strong position versus unlawful gambling - 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 got a lifetime ban from the NBA over accusations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes casinos.

Along with VGW, Apple and Google are being demanded hosting presumably unlawful gambling sites

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

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

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

Asked if their star endorsers have a duty to explain to clients the differences and similarities between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that requires to be done.

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the spokesperson said. 'A few 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 challenger of sweepstakes websites, sees things in a different way.

'Celebrities who lend their names to shady illegal gambling websites are, at a minimum, putting their credibilities at threat as well as courting civil and class actions by customers who allege damage,' Glaser said. 'There is likewise some risk that state regulators and state chief law officers rope celeb endorsers into enforcement efforts for facilitating prohibited gaming.'

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