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

No, they weren't personally in presence, however the world-famous celebrities were conspicuously consisted of in a slide presentation on social and sweepstakes casinos - the questionable websites offering both free casino-style games and profitable prizes, such as cash, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are just two 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 serve as standard gambling establishments, only without the oversight, consumer protections and tax laws. So not only can they avoid the steep 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulative obstacles 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 business faces allegations of unlawful gaming in a New york city suit that declares VGW uses star endorsers to 'produce a veneer of legitimacy' around its item. (See VGW's statement below)

'I'm not exactly sure" if you don't trust us, you can rely on Paris Hilton" is a winning message for business running multibillion-dollar prohibited operations out of places 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 stars 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 provide any distinctions between traditional sports betting and sweepstakes play.

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

Ryan Seacrest urges fans to dip into Chumba Casino, where many - however not all - video games are totally free

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

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

Others lure clients with guarantees of prizes. One such operator, Stake, ran a social networks advertisement displaying Drake's cars and trucks, planes and estates before pivoting to footage of the rap artist playing online casino-style video games.

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

Another caption discussed: 'Because I never quit.'

The discrepancy between sports betting websites and social or sweepstakes casinos is a bit complex, however operators of the latter insist they're not involved with the former.

A representative for a market 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 information, the majority of the gamers on social-sweepstakes casinos are sports betting totally free.

'Most social sweeps consumers never ever make a purchase,' the SPGA representative informed DailyMail.com. 'The minority of customers who make purchases do so in amounts far smaller than the common deposit or bet size at real-money online sports betting sites.'

Social gambling establishments provide consumers a possibility to play casino-style games with friends. Players have the option to purchase valueless currency typically described as 'gold coins,' which can not be exchanged for real cash, however can be utilized to open numerous features within the games.

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

And therein lies the potential for financial losses, like the ones claimed 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 gambling establishments 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 Worldwide Poker occasion

Social sweeps gambling establishment Stake ran an advertisement showing off Drake's cars and trucks, planes and estates

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

Traditional online casinos are banned in all but 7 states, which has actually helped to sustain the popularity of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, permit customers to submit mail-in ask for complimentary sweeps coins, offered the gamers follow painfully particular directions. What's more, gamers are frequently rewarded with sweeps coins merely for registering, therefore providing a reason to try their hands at any variety of gambling establishment video games for a possibility to win - or lose - genuine money.

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

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

'Social sweepstakes games are simply a type of online home entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is needed to play at social gambling establishments with sweepstakes prizes. Consumers never have to spend for an opportunity to win prizes. That absence of a purchase requirement - or" consideration" - is a vital distinction in between social sweeps and standard online gambling websites like casinos.'

Think of the manner in which McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're buying hamburgers and fries that use them the opportunity to win financially rewarding rewards, such as a $1 million prize.

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

'Sweepstakes are a long-standing technique for promoting all sort of daily organizations in the United States, whatever from hamburgers to publication memberships to coffee and home improvement shops,' the SPGA representative 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 lots of gambling industry experts, that argument does not cut it.

For beginners, gaming lawyer Daniel Wallach explains, McDonald's Monopoly video game does not run forever. Rather, it has a distinct start and end, thus recommending the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being utilized to promote real 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 chance,' Wallach informed DailyMail.com. 'They're just money free gifts.

'The sweepstakes [casinos] have none of the qualities frequently associated with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos use" casino-like" payments, usually 80 percent or more of revenues, whereas the typical payment portion for a short-lived marketing sweepstakes is an unimportant share of the profits made by the business [generally less than one percent]'

Wallach is quick to liken the online social sweeps gambling establishments to the internet cafes that emerged in Florida, offering consumers the chance to play casino-style video games for real prizes. A lot of those brick-and-mortar establishments have since been shuttered over accusations of prohibited sports betting.

DJ Khaled is among a number of celeb spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps gambling establishments should deal with comparable analysis.

'These differences are not arbitrary,' Wallach stated of social sweeps casinos. 'They have actually repeatedly been cited by courts and state lawyer generals as key consider determining that a sweepstakes promotion was in fact a guise for unlawful gaming.'

One of the gambling establishment market's leading trade companies, the American Gaming Association, is now pushing legislators to examine sweepstakes operators and, in many cases, enact new legislation on the problem.

'Consumers are being denied of securities and states are passing up considerable tax and income opportunities as this gaming changes that performed through regulated channels,' checked out a well-circulated AGA memo.

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

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

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

In the current claim, which is largely similar to its predecessors, New york city 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 'unlawful gaming enterprise. '

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

'We usually do not talk about matters before the courts,' a VGW spokesperson informed DailyMail.com via e-mail. 'However, we note that this claim has actually only just been submitted with the court and VGW has actually not been officially served.

'We have complete confidence in our compliance with all laws and regulations where we operate, and stay positive about the future,' the spokesperson continued. 'We continue to provide our free-to-play video games throughout many of The United States and Canada, as we have for more than a years, developing not just excellent video games, user experiences and home entertainment, however likewise ensuring this is done safely, properly and at the highest level of requirements.

'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are relatively typical throughout the online social games industry (and the US more broadly), and our basic practice is that we plan to strongly protect any claim which might be brought versus us.'

The issues between standard online gambling and sweepstakes gambling establishments could prove problematic for some star 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 professional athletes are hawking illegal sports betting wagering 'sweeps' websites while at the exact same time the leagues wish to predict a strong position against unlawful gaming - especially when attempting to tamp down the occasional sports betting 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 gamblers. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes casinos.

In addition to VGW, Apple and Google are being demanded hosting allegedly unlawful sports betting websites

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

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

Neither an NBA representative nor the players' agents reacted to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise ignored to react to DailyMail.com emails.

Asked if their celebrity endorsers have an obligation to describe to clients the differences and resemblances in between iGaming and sweepstakes casinos, VGW firmly insisted there is absolutely nothing more that requires to be done.

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the representative stated. '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 opponent of sweepstakes sites, sees things in a different way.

'Celebrities who provide their names to dubious illegal gaming sites are, at a minimum, putting their track records at danger along with courting civil and class actions by customers who allege damage,' Glaser stated. 'There is likewise some risk that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for helping with illegal gambling.'

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