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

No, they weren't personally in presence, but the world-famous celebs were notably consisted of in a slide discussion on social and sweepstakes casinos - the questionable websites using both totally 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 anybody can 'play for complimentary,' 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 market that now finds itself besieged by lawsuits. In the eyes of numerous gaming corporations, not to point out lawsuit plaintiffs and state regulators, sweepstakes gambling establishments act as standard casinos, only without the oversight, customer defenses and tax laws. So not just can they prevent the steep 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulatory difficulties like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the company deals with allegations of prohibited sports betting in a New York lawsuit that declares VGW utilizes celeb endorsers to 'develop a veneer of authenticity' around its product. (See VGW's statement listed 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 unlawful operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers include a series of stars from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, along with 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, among many sweepstakes casinos found online

Ryan Seacrest urges fans to play at Chumba Casino, where lots of - however not all - games are complimentary

Drake has a deal with social sweeps casino, Stake, that he regularly promotes on social networks

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Instead, advertisements generally center around the social aspect of the casinos, while omitting the potential for actual sports betting losses.

Others lure customers with guarantees of rewards. One such operator, Stake, ran a social media ad showing off Drake's vehicles, airplanes and estates before pivoting to video footage of the rap artist playing online casino-style games.
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'Daddy, why do we have so much money?' read the first caption on the screen.

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

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

A spokesperson 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, many of the gamers on social-sweepstakes casinos are playing for free.

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

Social casinos provide clients a chance to play casino-style games with good friends. Players have the option to buy valueless currency typically referred to as 'gold coins,' which can not be exchanged genuine cash, but can be utilized to unlock numerous features within the video games.

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

And therein lies the capacity for monetary losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York. One gamer 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 worth.

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

Social sweeps gambling establishment Stake ran an advertisement showing off Drake's vehicles, 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 7 states, which has actually helped to sustain the appeal of sweepstakes casinos.
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Anyone over the age of 18 can access the sweepstakes websites, which do not require typically need recognition. However, sites like Chumba will ask for IDs from players attempting to withdraw any funds.

Many websites, like the crypto-compatible Stake, enable customers to send mail-in requests for free sweeps coins, provided the players follow painfully specific guidelines. What's more, gamers are typically rewarded with sweeps coins simply for registering, thereby providing a reason to try their hands at any number of for a possibility to win - or lose - real money.

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

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

'Social sweepstakes games are simply a form of online home entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is required to dip into social casinos with sweepstakes prizes. Consumers never ever need to spend for an opportunity to win rewards. That lack of a purchase requirement - or" consideration" - is an essential difference between social sweeps and traditional online gaming websites like casinos.'

Think of the way that McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and french fries that offer them the possibility to win financially rewarding rewards, such as a $1 million jackpot.

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

'Sweepstakes are a long-standing approach for promoting all type of daily services in the United States, everything from hamburgers 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 lots of gambling market insiders, that argument does not cut it.

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

'They do not last forever and they're usually not connected to casino-style games of possibility,' Wallach informed DailyMail.com. 'They're just money free gifts.

'The sweepstakes [gambling establishments] have none of the characteristics frequently related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments offer" casino-like" payments, normally 80 percent or more of profits, whereas the normal payment percentage for a short-term marketing sweepstakes is an insignificant share of the income made by the business [usually less than one percent]'

Wallach is fast to compare the online social sweeps gambling establishments to the web coffee shops that emerged in Florida, using consumers the chance to play casino-style video games for genuine prizes. A lot of those brick-and-mortar establishments have because been shuttered over allegations of illegal sports betting.

DJ Khaled is amongst a number of celebrity spokespeople for VGW's Global Poker brand

Now, Wallach argues, social sweeps casinos need to face comparable analysis.

'These distinctions are not arbitrary,' Wallach stated of social sweeps casinos. 'They have actually repeatedly been pointed out by courts and state lawyer generals as essential aspects in figuring out that a sweepstakes promotion was in truth a guise for unlawful sports betting.'

Among the casino industry's leading trade companies, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, sometimes, enact new legislation on the issue.

'Consumers are being deprived of defenses and states are forgoing significant tax and profits opportunities as this gambling changes that performed through regulated channels,' checked out a well-circulated AGA memo.
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And after that there are the plaintiffs who have actually taken legal action against social casinos in more than a dozen states.

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

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

In the current lawsuit, which is mostly comparable to its predecessors, New York state homeowners Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is explained in the filing as an 'illegal sports betting business. '

Apple and Google have likewise been named as offenders in claims for hosting the sweepstakes sites. But unlike VGW, neither tech company responded to DailyMail.com's request for comment.

'We usually do not talk about matters before the courts,' a VGW representative told DailyMail.com through e-mail. 'However, we keep in mind that this claim has only just been submitted with the court and VGW has not been officially served.

'We have full confidence in our compliance with all laws and policies where we run, and stay confident about the future,' the representative continued. 'We continue to offer our free-to-play video games throughout the majority of The United States and Canada, as we have for more than a decade, creating not only excellent video games, user experiences and home entertainment, however also ensuring this is done safely, properly and at the highest level of standards.

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

The problems between standard online gambling and sweepstakes gambling establishments could show troublesome for some star 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 conventional gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking unlawful sports betting 'sweeps' sites while at the same time the leagues desire to forecast a strong position versus illegal gambling - especially when trying to tamp down the periodic gaming scandal,' Glaser told DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter got a life time ban from the NBA over claims he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes casinos.

Along with VGW, Apple and Google are being demanded hosting presumably illegal gambling websites

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

'I 'd expect 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' agents reacted to DailyMail.com's requests for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also ignored to react to DailyMail.com e-mails.

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

'We have full confidence in our influencer and ambassadorial collaborations, and our business practices more broadly,' the spokesperson said. 'A few of our values are" our gamers precede" and" we do what's right", and we put our values at the core of whatever we do.'

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

'Celebrities who provide their names to shady illegal gaming sites are, at a minimum, putting their credibilities at threat in addition to courting civil and class actions by consumers who allege harm,' Glaser stated. 'There is also some risk that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for facilitating prohibited gambling.'

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