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

No, they weren't personally in attendance, but the world-famous celebs were conspicuously consisted of in a slide discussion on social and sweepstakes casinos - the controversial websites providing both free casino-style games and rewarding rewards, such as money, present cards or cryptocurrency. In one ad, 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 just 2 cogs in the multibillion-dollar industry that now discovers itself besieged by lawsuits. In the eyes of lots of gaming corporations, not to mention claim plaintiffs and state regulators, sweepstakes casinos function as traditional gambling establishments, just without the oversight, customer securities and tax laws. So not just can they avoid the steep 24-percent federal gambling levy, however sweepstakes operators aren't subject to regulatory difficulties like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the company deals with accusations of illegal sports betting in a New york city lawsuit that declares VGW utilizes celeb endorsers to 'create a veneer of authenticity' around its item. (See VGW's statement below)

'I'm unsure" if you do not trust us, you can rely on Paris Hilton" is a winning message for business running multibillion-dollar prohibited operations out of locations 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 include a series of celebs from sports betting 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 distinctions in between standard gambling and sweepstakes play.

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

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

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

Read More

Donald Trump 'set to name NBA team owner as US ambassador to Italy'

Instead, ads normally center around the social element of the gambling establishments, while leaving out the potential for real gaming losses.

Others tempt customers with guarantees of prizes. One such operator, Stake, ran a social media ad flaunting Drake's vehicles, aircrafts and estates before rotating to footage of the rap artist playing online casino-style video games.

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

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

The disparity in between gaming sites and social or sweepstakes casinos is a bit complex, however operators of the latter insist they're not included with the previous.

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), explained 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 totally free.

'Most social sweeps consumers never buy,' the SPGA representative told DailyMail.com. 'The minority of consumers who make purchases do so in quantities far smaller than the normal deposit or bet size at real-money online sites.'

Social gambling establishments offer customers a chance to play casino-style video games with pals. Players have the option to buy valueless currency frequently described as 'gold coins,' which can not be exchanged genuine cash, but can be used to open numerous functions within the video games.

But within the world of social casinos exists sweepstakes gaming, allowing consumers to get other currency referred to as 'sweeps coins' that can be exchanged for money or other prizes.
bit.ly
And therein lies the potential for monetary losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York. 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 advertisement flaunting Drake's automobiles, airplanes 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 banned 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 do not require typically require identification. However, websites like Chumba will request IDs from gamers attempting to withdraw any funds.

Many websites, like the crypto-compatible Stake, allow consumers to submit mail-in requests for free sweeps coins, supplied the players follow painfully specific directions. What's more, gamers are frequently rewarded with sweeps coins just for registering, consequently offering them a reason to try their hands at any variety of gambling establishment video games for a chance to win - or lose - genuine cash.
bit.ly
So why are sweepstakes websites allowed to operate in 48 states, while online gambling establishments are prohibited in all but 7?

According to the stakeholders, their item is the complimentary casino-style gaming, and the real-stakes competitors is just a means of promoting their support.
bit.ly
'Social sweepstakes video games are merely 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 have to pay for a chance to win rewards. That absence of a purchase requirement - or" consideration" - is an important distinction between social sweeps and standard online sports betting websites like gambling establishments.'
bit.ly
Think of the manner in which McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and fries that offer them the chance to win profitable rewards, such as a $1 million jackpot.

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

'Sweepstakes are a long-standing method for promoting all sort of everyday services in the United States, everything from burgers to publication memberships to coffee and home enhancement 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 many gambling industry experts, that argument doesn't cut it.

For beginners, gaming lawyer Daniel Wallach points out, McDonald's Monopoly game does not run forever. Rather, it has a distinct 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 items like fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're normally not tied to casino-style video games of opportunity,' Wallach told DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [gambling establishments] have none of the qualities commonly related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos offer" casino-like" payouts, generally 80 percent or more of incomes, whereas the common payout portion for a short-lived marketing sweepstakes is an insignificant share of the profits earned by the company [typically less than one percent]'

Wallach is fast to compare the online social sweeps casinos to the internet coffee shops that emerged in Florida, providing clients the chance to play casino-style games for genuine rewards. A lot of those brick-and-mortar facilities have given that been shuttered over allegations of illegal gambling.

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

Now, Wallach argues, social sweeps gambling establishments need to face similar analysis.

'These distinctions are not approximate,' Wallach said of social sweeps gambling establishments. 'They have actually repeatedly been pointed out by courts and state lawyer generals as key aspects in identifying that a sweepstakes promo remained in truth a guise for illegal sports betting.'

One of the gambling establishment market's leading trade companies, the American Gaming Association, is now pressing legislators to investigate sweepstakes operators and, in some cases, enact new legislation on the issue.

'Consumers are being denied of securities and states are forgoing considerable tax and earnings opportunities as this sports betting changes that carried out through regulated channels,' read a well-circulated AGA memo.

And after that there are the plaintiffs who have actually sued social casinos in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action lawsuit, stating the settlement was made to avoid legal costs and continued litigation.

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

In the newest suit, which is largely comparable to its predecessors, New York state citizens Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'unlawful gambling enterprise. '

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

'We normally don't discuss matters before the courts,' a VGW representative told DailyMail.com by means of email. 'However, we note that this claim has actually only simply been filed with the court and VGW has not been officially served.

'We have complete confidence in our compliance with all laws and guidelines where we run, and remain positive about the future,' the spokesperson continued. 'We continue to use our free-to-play games across most of The United States and Canada, as we have for more than a decade, creating not only fantastic games, user experiences and entertainment, however likewise guaranteeing this is done safely, responsibly and at the greatest level of standards.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are fairly typical across the online social video games industry (and the US more broadly), and our standard practice is that we mean to strongly safeguard any claim which may be brought versus us.'

The issues between standard online gambling and sweepstakes casinos might prove problematic for some celeb endorsers.

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

'It's paradoxical that expert athletes are hawking prohibited sports betting 'sweeps' sites while at the same time the leagues desire to project a strong stance versus unlawful gaming - particularly when attempting to tamp down the periodic gambling scandal,' Glaser told DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter got a life time ban from the NBA over accusations he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes casinos.

Together with VGW, Apple and Google are being demanded hosting apparently unlawful sports betting sites

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

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

Neither an NBA representative nor the gamers' representatives responded to DailyMail.com's requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also ignored to react to DailyMail.com e-mails.

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

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the spokesperson said. 'Some of our values 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 differently.

'Celebrities who lend their names to dubious prohibited gaming websites are, at a minimum, putting their track records at danger as well as courting civil and class actions by customers who allege damage,' Glaser stated. 'There is also some danger that state regulators and state lawyers general rope celebrity endorsers into enforcement efforts for facilitating unlawful sports betting.'

New YorkNBADrakeParis Hilton