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

No, they weren't personally in presence, however the world-famous stars were notably included in a slide discussion on social and sweepstakes casinos - the questionable websites providing both free casino-style video games and rewarding rewards, such as money, present cards or cryptocurrency. In one ad, 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 2 cogs in the multibillion-dollar market that now discovers itself besieged by suits. In the eyes of many video gaming corporations, not to point out claim plaintiffs and state regulators, sweepstakes gambling establishments act as standard casinos, just without the oversight, consumer securities and tax laws. So not just can they avoid the high 24-percent federal sports betting levy, but sweepstakes operators aren't based on regulatory hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the business deals with accusations of illegal sports betting in a New York lawsuit that declares VGW utilizes star endorsers to 'produce a veneer of authenticity' around its item. (See VGW's declaration listed below)

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

Sweepstakes endorsers include a variety of celebrities from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions between conventional gaming and sweepstakes play.

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

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

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

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

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

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

Another caption described: 'Because I never quit.'

The discrepancy between gambling sites and social or sweepstakes gambling establishments is a bit complex, but operators of the latter insist they're not involved with the previous.

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA data, many of the gamers on social-sweepstakes casinos are sports betting totally free.

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

Social gambling establishments use clients a possibility to play casino-style video games with good friends. Players have the option to buy valueless currency often described as 'gold coins,' which can not be exchanged genuine cash, however can be used to unlock different functions within the video games.

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

And therein lies the potential for monetary losses, like the ones claimed by plaintiffs 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 previous year after continuing to purchase more coins in pursuit of cash and other things of worth.

The Philadelphia 76ers' Paul George is seen promoting an International Poker event

Social sweeps casino Stake ran an ad displaying Drake's cars and trucks, aircrafts and estates

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

Traditional online gambling establishments are prohibited in all however 7 states, which has helped to sustain the popularity of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, allow consumers to send mail-in ask for free sweeps coins, offered the players follow painfully specific instructions. What's more, players are frequently rewarded with sweeps coins just for registering, consequently providing them a factor to attempt their hands at any variety of casino video games for an opportunity to win - or lose - genuine cash.

So why are sweepstakes sites enabled to operate in 48 states, while online gambling establishments are banned in all however 7?

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

'Social sweepstakes games are just a form of online home entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is needed to play at social gambling establishments with sweepstakes rewards. Consumers never ever have to spend for a chance to win prizes. That lack of a purchase requirement - or" consideration" - is an important distinction between social sweeps and conventional online sports betting websites like gambling establishments.'

Think of the manner in which McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and french fries that offer them the chance to win lucrative prizes, such as a $1 million prize.

And without a purchase requirement, or 'factor to consider', the game itself doesn't fulfill the meaning of sports betting in the US.

'Sweepstakes are a long-standing approach for promoting all sort of daily businesses in the United States, whatever from hamburgers to magazine subscriptions to coffee and home enhancement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are frequently used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous sports betting market insiders, that argument does not cut it.

For beginners, video gaming attorney Daniel Wallach explains, McDonald's Monopoly game does not run indefinitely. Rather, it has a distinct beginning and end, thereby suggesting the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being utilized to promote genuine products like fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're typically not connected to casino-style video games of chance,' Wallach told DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [casinos] possess none of the qualities typically associated with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments provide" casino-like" payments, typically 80 percent or more of profits, whereas the normal payment percentage for a short-lived promotional sweepstakes is an insignificant share of the earnings earned by the company [generally less than one percent]'

Wallach is fast to compare the online social sweeps casinos to the internet coffee shops that sprang up in Florida, offering customers the opportunity to play casino-style video games for genuine rewards. A lot of those brick-and-mortar facilities have given that been shuttered over allegations of unlawful sports betting.

DJ Khaled is among several star spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps gambling establishments must face comparable examination.

'These differences are not approximate,' Wallach said of social sweeps casinos. 'They have consistently been mentioned by courts and state attorney general of the United States as crucial consider determining that a sweepstakes promo was in fact a guise for unlawful gambling.'

One of the casino industry's leading trade organizations, the American Gaming Association, is now pushing legislators to examine sweepstakes operators and, in some cases, enact brand-new legislation on the problem.

'Consumers are being denied of protections and states are forgoing substantial tax and income opportunities as this gambling changes that carried out through regulated channels,' read a well-circulated AGA memo.

And then there are the plaintiffs who have actually taken legal action against social casinos in more than a lots states.

Sweepstakes casino operators paid a combined $14.2 million in four different cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action claim, saying the settlement was made to prevent legal costs and continued litigation.

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

In the most recent lawsuit, which is mainly comparable to its predecessors, New york city state locals Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'unlawful sports betting enterprise. '

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

'We typically do not comment on matters before the courts,' a VGW spokesperson informed DailyMail.com by means of e-mail. 'However, we note that this claim has only simply been submitted with the court and VGW has actually not been officially served.

'We have complete self-confidence in our compliance with all laws and regulations where we run, and stay confident about the future,' the representative continued. 'We continue to provide our free-to-play video games throughout most of North America, as we have for more than a years, developing not only great games, user experiences and entertainment, but also ensuring this is done securely, properly and at the highest level of requirements.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are reasonably typical across the online social games industry (and the US more broadly), and our standard practice is that we mean to vigorously defend any claim which may be brought against us.'

The problems between standard online gaming and sweepstakes casinos might show bothersome for some celebrity 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 traditional video gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking prohibited sports betting wagering 'sweeps' sites while at the same time the leagues wish to predict a strong stance versus illegal gambling - especially when attempting to tamp down the occasional gaming scandal,' Glaser told DailyMail.com.

It was simply eight months ago that Toronto Raptors forward Jontay Porter got a lifetime ban from the NBA over allegations he conspired with bettors. 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 concern 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 spokesperson nor the gamers' representatives reacted to DailyMail.com's requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise ignored to respond to DailyMail.com e-mails.

Asked if their star endorsers have an obligation to describe to customers the distinctions and similarities in between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that requires to be done.

'We have complete confidence in our influencer and ambassadorial collaborations, 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 whatever we do.'

Glaser, an outspoken challenger of sweepstakes sites, sees things differently.

'Celebrities who provide their names to dubious unlawful gaming websites are, at a minimum, putting their track records at danger in addition to courting civil and class actions by customers who declare damage,' 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 helping with prohibited sports betting.'

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