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

No, they weren't personally in participation, however the world-famous stars were conspicuously included in a slide discussion on social and sweepstakes gambling establishments - the controversial websites offering both free casino-style video games and financially rewarding rewards, 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 sites are just two cogs in the multibillion-dollar market that now discovers itself besieged by claims. In the eyes of lots of video gaming corporations, not to discuss suit plaintiffs and state regulators, sweepstakes gambling establishments function as traditional gambling establishments, just without the oversight, customer protections and tax laws. So not just can they prevent the steep 24-percent federal gambling levy, but sweepstakes operators aren't subject to regulatory hurdles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the company faces accusations of prohibited gaming in a New York lawsuit that claims VGW uses star endorsers to 'develop a veneer of authenticity' around its product. (See VGW's declaration listed below)

'I'm not exactly sure" if you do not trust us, you can trust Paris Hilton" is a winning message for business operating multibillion-dollar prohibited operations out of places like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.

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

Paris Hilton is seen plugging Wow Vegas, among numerous sweepstakes gambling establishments discovered online

Ryan Seacrest prompts fans to play at Chumba Casino, where many - however not all - video games are free

Drake has a deal with social sweeps casino, Stake, that he routinely promotes on social media

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Instead, ads typically center around the social element of the casinos, while leaving out the potential for actual sports betting losses.

Others tempt clients with pledges of rewards. One such operator, Stake, ran a social media advertisement flaunting 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 money?' check out the first caption on the screen.

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

The inconsistency in between gambling websites and social or sweepstakes casinos is a bit intricate, but operators of the latter insist they're not involved with the former.

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, many of the players on social-sweepstakes casinos are sports betting complimentary.

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

Social gambling establishments use customers a chance to play casino-style video games with good friends. Players have the option to purchase worthless currency frequently described as 'gold coins,' which can not be exchanged for genuine money, but can be used to unlock numerous functions within the games.

But within the world of social casinos exists sweepstakes video gaming, permitting customers to get other currency called 'sweeps coins' that can be exchanged for cash or other prizes.

And therein lies the capacity for financial losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York. One gamer informed the Washington Post he lost more than $100,000 on sweepstakes gambling establishments 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 a Worldwide Poker occasion

Social sweeps casino Stake ran an advertisement revealing off Drake's cars, aircrafts and estates

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 assisted to fuel the popularity of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes websites, which do not require usually need identification. However, websites like Chumba will ask for IDs from players attempting to withdraw any funds.

Many websites, like the crypto-compatible Stake, permit customers to send mail-in ask for totally free sweeps coins, supplied the players follow painfully specific guidelines. What's more, gamers are frequently rewarded with sweeps coins merely for signing up, thereby providing a reason to attempt their hands at any variety of casino video 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 prohibited in all however 7?

According to the stakeholders, their item is the complimentary casino-style gaming, and the real-stakes competition is just a way of promoting their bread and butter.

'Social sweepstakes games are simply a type 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 need to spend for an opportunity to win rewards. That lack of a purchase requirement - or" factor to consider" - is a vital distinction between social sweeps and standard online gaming websites like casinos.'

Think about the manner in which McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and fries that provide them the possibility to win lucrative prizes, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the video game itself doesn't satisfy the meaning of gambling in the US.

'Sweepstakes are an enduring technique for promoting all type of everyday businesses in the United States, whatever from burgers to publication memberships to coffee and home enhancement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are routinely 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 doesn't cut it.

For starters, gaming lawyer Daniel Wallach points out, McDonald's Monopoly game does not run forever. Rather, it has a well-defined start and end, therefore recommending the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being used to promote genuine products like fries, shakes, and the Filet-O-Fish.

'They don't 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 [casinos] possess none of the characteristics commonly associated with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments offer" casino-like" payments, normally 80 percent or more of earnings, whereas the typical payout percentage for a momentary advertising sweepstakes is a minor share of the revenue made by the business [usually less than one percent]'

Wallach is fast to compare the online social sweeps casinos to the internet cafes that emerged in Florida, providing clients the opportunity to play casino-style video games for real prizes. A lot of those brick-and-mortar facilities have actually considering that been shuttered over allegations of illegal gambling.

DJ Khaled is among numerous celeb 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 consistently been pointed out by courts and state chief law officer as crucial factors in determining that a sweepstakes promotion remained in fact a guise for illegal sports betting.'

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

'Consumers are being deprived of protections and states are giving up significant tax and revenue opportunities as this gaming replaces that performed through controlled channels,' read a well-circulated AGA memo.

And then there are the plaintiffs who have actually sued social gambling establishments in more than a dozen 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 agreed to pay $11.75 million in one class-action claim, stating the settlement was made to avoid legal expenses and continued litigation.

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

In the most recent claim, which is mainly comparable to its predecessors, New York state locals Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is described in the filing as an 'prohibited sports betting business. '

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

'We typically do not discuss matters before the courts,' a VGW representative told DailyMail.com via email. 'However, we keep in mind that this claim has only just been submitted with the court and VGW has actually not been formally served.

'We have complete self-confidence in our compliance with all laws and regulations where we run, and remain positive about the future,' the representative continued. 'We continue to use our free-to-play video games throughout most of North America, as we have for more than a years, producing not only fantastic video games, user experiences and home entertainment, however likewise guaranteeing this is done safely, properly and at the greatest level of requirements.

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

The problems in between standard online sports betting and sweepstakes casinos could show troublesome for some celebrity 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 standard gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking unlawful sports betting 'sweeps' websites while at the exact same time the leagues wish to project a strong stance against prohibited gambling - especially when trying to tamp down the periodic gambling scandal,' Glaser told DailyMail.com.

It was just 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 unrelated to anything including social or sweepstakes gambling establishments.

In addition to VGW, Apple and Google are being taken legal action against for hosting allegedly prohibited sports betting websites

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

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

Neither an NBA spokesman nor the gamers' agents reacted to DailyMail.com's demands for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also disregarded to respond to DailyMail.com emails.

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

'We have full self-confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the spokesperson stated. 'Some of our values are" our gamers 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 websites, sees things differently.

'Celebrities who lend their names to dubious unlawful sports betting sites are, at a minimum, putting their track records at risk along with courting civil and class actions by customers who allege harm,' Glaser said. 'There is likewise some danger that state regulators and state lawyers general rope star endorsers into enforcement efforts for assisting in prohibited gaming.'

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