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

No, they weren't personally in participation, but the world-famous celebs were conspicuously included in a slide discussion on social and sweepstakes gambling establishments - the controversial sites offering both free casino-style video games and financially rewarding prizes, 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 just 2 cogs in the multibillion-dollar market that now finds itself besieged by suits. In the eyes of numerous gaming corporations, not to point out claim plaintiffs and state regulators, sweepstakes gambling establishments function as traditional gambling establishments, just without the oversight, consumer securities and tax laws. So not only can they prevent the steep 24-percent federal sports betting levy, but sweepstakes operators aren't subject to regulatory hurdles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the company deals with accusations of prohibited gaming in a New York suit that claims VGW uses celeb endorsers to 'create a veneer of legitimacy' around its item. (See VGW's statement 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 gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers include 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 use any distinctions in between traditional gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among lots of sweepstakes casinos 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 gambling establishment, Stake, that he regularly promotes on social networks

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Instead, ads normally center around the social element of the casinos, while omitting the potential for actual sports betting losses.

Others tempt customers with promises of rewards. One such operator, Stake, ran a social networks advertisement showing off Drake's cars, planes and estates before pivoting to video of the rap artist playing online casino-style video games.

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

Another caption described: 'Because I never ever provided up.'

The disparity between sports betting sites and social or sweepstakes casinos is a bit complex, but operators of the latter insist they're not involved with the previous.

A spokesperson 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 players on social-sweepstakes casinos are playing for totally free.

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

Social gambling establishments use clients a chance to play casino-style games with buddies. Players have the choice to buy valueless currency often described as 'gold coins,' which can not be exchanged genuine cash, however can be used to unlock numerous features within the video games.

But within the world of social casinos exists sweepstakes gaming, allowing customers to acquire other currency referred to as 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the capacity for monetary losses, like the ones declared by complainants 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 past year after continuing to purchase 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 advertisement flaunting Drake's cars and trucks, planes and mansions

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

Traditional online casinos are banned in all but seven states, which has actually assisted to fuel the popularity of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, allow customers to submit mail-in requests for complimentary sweeps coins, offered the gamers follow painfully specific guidelines. What's more, gamers are typically rewarded with sweeps coins merely for registering, thus providing a reason to attempt their hands at any variety of gambling establishment video games for a possibility to win - or lose - real money.

So why are sweepstakes sites enabled to operate in 48 states, while online casinos are banned in all but 7?

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

'Social sweepstakes games are merely a form of online home entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is needed to play at social gambling establishments with sweepstakes prizes. Consumers never need to pay for a chance to win prizes. That absence of a purchase requirement - or" consideration" - is an essential difference between social sweeps and conventional online gambling sites like gambling establishments.'

Think about the way that McDonald's uses its annual 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 profitable prizes, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the game itself does not fulfill the definition of sports betting in the US.

'Sweepstakes are an enduring approach for promoting all sort of everyday services in the United States, everything from burgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are frequently utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For starters, gaming attorney Daniel Wallach points out, McDonald's Monopoly video game does not run indefinitely. Rather, it has a well-defined 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 forever and they're usually not tied to casino-style games of chance,' Wallach informed DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [gambling establishments] have none of the attributes commonly connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments use" casino-like" payments, typically 80 percent or more of earnings, whereas the common payment portion for a momentary promotional sweepstakes is an unimportant share of the revenue made by the company [normally less than one percent]'

Wallach is quick to liken the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, providing consumers the possibility to play casino-style video games for genuine rewards. Much of those brick-and-mortar facilities have considering that been shuttered over allegations of prohibited gaming.

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

Now, Wallach argues, social sweeps casinos ought to deal with comparable analysis.

'These differences are not approximate,' Wallach stated of social sweeps casinos. 'They have repeatedly been cited by courts and state lawyer generals as key aspects in identifying that a sweepstakes promotion remained in reality a guise for prohibited sports betting.'

One of the gambling establishment market's leading trade companies, the American Gaming Association, is now pushing legislators to examine sweepstakes operators and, sometimes, enact brand-new legislation on the issue.

'Consumers are being denied of defenses and states are forgoing significant tax and earnings chances as this gambling changes that performed through managed channels,' checked out a well-circulated AGA memo.

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

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

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

In the newest lawsuit, which is mainly similar to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is described in the filing as an 'unlawful gaming enterprise. '

Apple and Google have actually likewise been named as accuseds in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com's ask for remark.

'We normally do not talk about matters before the courts,' a VGW representative informed DailyMail.com via email. 'However, we note that this claim has actually only just been filed with the court and VGW has actually not been officially served.

'We have full confidence in our compliance with all laws and policies where we run, and remain confident about the future,' the spokesperson continued. 'We continue to provide our free-to-play games across most of The United States and Canada, as we have for more than a decade, creating not only excellent video games, user experiences and entertainment, but also ensuring this is done securely, responsibly and at the highest level of standards.

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

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

'It's ironic that professional athletes are hawking prohibited sports betting wagering 'sweeps' websites while at the same time the leagues desire to project a strong stance versus unlawful sports betting - particularly when trying to tamp down the occasional gambling scandal,' Glaser informed DailyMail.com.

It was simply eight months ago that Toronto Raptors forward Jontay Porter got a lifetime restriction from the NBA over allegations he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes casinos.

In addition to VGW, Apple and Google are being demanded hosting apparently unlawful gambling websites

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

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

Neither an NBA spokesperson nor the players' agents reacted to DailyMail.com's requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise neglected to react to DailyMail.com emails.

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

'We have complete confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the representative stated. 'Some of our worths are" our players precede" and" we do what's right", and we put our worths at the core of everything we do.'

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

'Celebrities who lend their names to shady illegal gambling websites are, at a minimum, putting their credibilities at danger in addition to courting civil and class actions by customers who declare damage,' Glaser said. 'There is also some danger that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for assisting in illegal gambling.'

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