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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 attendance, but the world-famous celebrities were notably consisted of in a slide presentation on social and sweepstakes gambling establishments - the questionable sites using both complimentary casino-style video games and rewarding prizes, such as money, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are simply two cogs in the multibillion-dollar market that now discovers itself besieged by suits. In the eyes of numerous video gaming corporations, not to point out claim plaintiffs and state regulators, sweepstakes casinos function as traditional casinos, only without the oversight, consumer defenses and tax laws. So not only can they prevent the high 24-percent federal sports betting levy, however sweepstakes operators aren't based on regulative obstacles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the business deals with accusations of unlawful gambling in a New York suit that claims VGW uses celeb endorsers to 'develop a veneer of legitimacy' around its item. (See VGW's statement listed below)

'I'm not exactly sure" 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 presenter, Howard Glaser of video gaming corporation Light & Wonder, told DailyMail.com.

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

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

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

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

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Instead, ads generally center around the social aspect of the gambling establishments, while leaving out the capacity for real sports betting losses.

Others tempt consumers with pledges of rewards. One such operator, Stake, ran a social networks advertisement displaying Drake's vehicles, aircrafts and estates before rotating to video of the rapper playing online casino-style games.

'Daddy, why do we have a lot cash?' read the first caption on the screen.

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

The discrepancy between gambling sites and social or sweepstakes casinos is a bit intricate, however operators of the latter insist they're not included with the previous.

A representative for an industry trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA information, the majority of the players on social-sweepstakes gambling establishments are playing for totally free.

'Most social sweeps customers never ever make a purchase,' the SPGA spokesperson told 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 gambling sites.'

Social casinos offer clients a possibility to play casino-style games with buddies. Players have the choice to buy worthless currency typically referred to as 'gold coins,' which can not be exchanged for real cash, but can be utilized to open various functions within the games.

But within the world of social gambling establishments exists sweepstakes video gaming, permitting clients to obtain other currency called 'sweeps coins' that can be exchanged for cash 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 player told 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 event

Social sweeps casino Stake ran an ad displaying Drake's automobiles, airplanes and estates

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

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

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

Many websites, like the crypto-compatible Stake, allow customers to send mail-in ask for free sweeps coins, supplied the players follow painfully particular instructions. What's more, players are often rewarded with sweeps coins just for registering, therefore providing a factor to attempt their hands at any number of gambling establishment games for an opportunity to win - or lose - genuine money.

So why are sweepstakes websites enabled to run in 48 states, while online gambling establishments are banned in all but 7?

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

'Social sweepstakes video games are merely a kind of online home entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is required to play at social casinos with sweepstakes rewards. Consumers never have to spend for an opportunity to win prizes. That lack of a purchase requirement - or" factor to consider" - is a crucial difference between social sweeps and conventional online gaming websites like gambling establishments.'

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

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

'Sweepstakes are a long-standing technique for promoting all type of everyday companies in the United States, whatever from hamburgers to magazine memberships to coffee and home enhancement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are frequently used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For starters, video gaming lawyer Daniel Wallach mentions, McDonald's Monopoly video game doesn't run forever. Rather, it has a well-defined beginning and end, thus recommending the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being used 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 video games of opportunity,' Wallach told DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [casinos] have none of the attributes typically related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos provide" casino-like" payments, typically 80 percent or more of revenues, whereas the normal payment percentage for a temporary promotional sweepstakes is a trivial share of the revenue earned by the company [typically less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the web coffee shops that emerged in Florida, using consumers the possibility to play casino-style games for real prizes. A lot of those brick-and-mortar facilities have since been shuttered over claims of prohibited gambling.

DJ Khaled is among several celebrity spokespeople for VGW's Global Poker brand

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

'These distinctions are not approximate,' Wallach said of social sweeps casinos. 'They have actually repeatedly been pointed out by courts and state attorney general of the United States as key consider figuring out that a sweepstakes promo remained in truth a guise for illegal sports betting.'

One of the casino industry's leading trade organizations, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, in some cases, enact new legislation on the concern.

'Consumers are being denied of protections and states are forgoing substantial tax and earnings opportunities as this gambling replaces that carried out through controlled channels,' checked out a well-circulated AGA memo.

And then there are the plaintiffs who have sued social gambling establishments in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in four different cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action claim, saying the settlement was made to avoid legal expenses and continued litigation.

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

In the most recent suit, which is mostly similar to its predecessors, New York state locals Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is described in the filing as an 'illegal gambling business. '

Apple and Google have likewise been called as accuseds in claims for hosting the sweepstakes sites. But unlike VGW, neither tech business responded to DailyMail.com's ask for remark.
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'We generally do not talk about matters before the courts,' a VGW spokesperson informed DailyMail.com via email. 'However, we keep in mind that this claim has actually only just been filed with the court and VGW has not been officially served.

'We have full self-confidence in our compliance with all laws and guidelines where we operate, and stay positive about the future,' the representative continued. 'We continue to provide our free-to-play games throughout many of The United States and Canada, as we have for more than a years, developing not just excellent games, user experiences and home entertainment, but 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 relatively typical throughout the online social games market (and the US more broadly), and our basic practice is that we plan to intensely safeguard any claim which may be brought versus us.'

The problems between conventional online gambling and sweepstakes gambling establishments might prove bothersome for some celeb 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 standard video gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking prohibited sports betting wagering 'sweeps' sites while at the very same time the leagues want to project a strong stance versus prohibited gambling - particularly when attempting to tamp down the occasional sports betting scandal,' Glaser told DailyMail.com.

It was simply eight 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 unassociated to anything including social or sweepstakes gambling establishments.

Along with VGW, Apple and Google are being sued for hosting apparently illegal gambling websites

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

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

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

Asked if their celebrity endorsers have a duty to describe to consumers the differences and resemblances in between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that requires to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the representative said. 'A few of our worths are" our gamers come initially" and" we do what's right", and we put our worths at the core of whatever we do.'

Glaser, an outspoken challenger of sweepstakes websites, sees things in a different way.
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'Celebrities who provide their names to dubious unlawful sports betting websites are, at a minimum, putting their reputations at danger along with courting civil and class actions by customers who allege harm,' Glaser stated. 'There is also some threat that state regulators and state lawyers basic rope celebrity endorsers into enforcement efforts for facilitating unlawful gaming.'

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