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

No, they weren't personally in participation, but the world-famous celebrities were conspicuously consisted of in a slide presentation on social and sweepstakes casinos - the controversial sites using both totally free casino-style games and rewarding prizes, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are just two cogs in the multibillion-dollar industry that now discovers itself besieged by lawsuits. In the eyes of numerous video gaming corporations, not to discuss claim complainants and state regulators, sweepstakes casinos act as standard gambling establishments, only without the oversight, customer defenses and tax laws. So not only can they avoid the steep 24-percent federal sports betting levy, however sweepstakes operators aren't subject to regulatory difficulties like anti-money laundering and responsible-gaming protections.

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 claim that declares VGW utilizes celebrity endorsers to 'produce a veneer of authenticity' around its product. (See VGW's declaration below)

'I'm not exactly sure" if you do not trust us, you can trust 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 consist of a range 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 provide any differences between standard sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of many sweepstakes casinos found online

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

Drake has an offer with social sweeps casino, Stake, that he frequently promotes on social networks

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Instead, advertisements normally center around the social element of the casinos, while omitting the capacity for actual gambling losses.

Others tempt customers with guarantees of rewards. One such operator, Stake, ran a social networks advertisement revealing off Drake's vehicles, planes and mansions before pivoting to footage of the rapper playing online casino-style video games.

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

Another caption explained: 'Because I never quit.'

The inconsistency in between sports betting websites and social or sweepstakes gambling establishments is a bit complicated, 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), discussed its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, the majority of the gamers on social-sweepstakes gambling establishments are sports betting complimentary.

'Most social sweeps clients never ever purchase,' the SPGA representative told DailyMail.com. 'The minority of customers who make purchases do so in amounts far smaller sized than the typical deposit or wager size at real-money online gambling sites.'

Social gambling establishments use consumers an opportunity to play casino-style games with good friends. Players have the choice to purchase worthless currency frequently described as 'gold coins,' which can not be exchanged genuine cash, but can be utilized to unlock different features within the games.

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

And therein lies the potential for monetary losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York City. One player informed 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 cash and other things of worth.

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

Social sweeps casino Stake ran an advertisement displaying Drake's vehicles, planes and estates

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 helped to sustain the appeal of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, enable customers to submit mail-in ask for free sweeps coins, supplied the gamers follow painfully specific directions. What's more, players are frequently rewarded with sweeps coins simply for registering, thus providing a reason to attempt their hands at any number of casino video games for a chance to win - or lose - real cash.

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

'Social sweepstakes video games are merely a form of online home entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is needed to dip into social casinos with sweepstakes prizes. Consumers never ever need to pay for a chance to win rewards. That absence of a purchase requirement - or" consideration" - is an essential distinction between social sweeps and standard online sports betting sites like gambling establishments.'

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

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

'Sweepstakes are a long-standing technique for promoting all kinds of daily businesses in the United States, whatever from hamburgers to publication memberships to coffee and home improvement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are routinely utilized by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting industry insiders, that argument does not cut it.

For starters, video gaming lawyer Daniel Wallach mentions, McDonald's Monopoly game doesn't run forever. Rather, it has a distinct beginning and end, thus 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 don't last forever and they're usually not connected to casino-style video games of opportunity,' Wallach informed DailyMail.com. 'They're simply cash giveaways.

'The sweepstakes [casinos] possess none of the characteristics typically connected with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes casinos offer" casino-like" payments, usually 80 percent or more of revenues, whereas the normal payout portion for a short-lived promotional sweepstakes is an insignificant share of the revenue earned by the business [usually less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, using customers the opportunity to play casino-style video games for genuine prizes. A lot of those brick-and-mortar establishments have actually considering that been shuttered over accusations of unlawful sports betting.

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

Now, Wallach argues, social sweeps gambling establishments need to deal with similar scrutiny.

'These distinctions are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have consistently been pointed out by courts and state attorney generals as essential aspects in determining that a sweepstakes promo remained in truth a guise for prohibited sports betting.'

One of the casino industry's leading trade companies, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, in many cases, enact new legislation on the concern.

'Consumers are being denied of securities and states are passing up substantial tax and income opportunities as this sports betting changes that carried out through controlled channels,' read 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 gambling establishment operators paid a combined $14.2 million in 4 different cases in Kentucky without admitting any misbehavior, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action claim, saying the settlement was made to avoid legal costs and continued lawsuits.

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

In the most recent claim, which is mainly comparable to its predecessors, New york city state locals 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 'prohibited sports betting enterprise. '

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

'We usually don't discuss matters before the courts,' a VGW spokesperson told DailyMail.com by means of email. 'However, we note that this claim has actually only simply been submitted with the court and VGW has actually not been formally served.

'We have complete confidence in our compliance with all laws and policies where we run, and stay positive about the future,' the spokesperson continued. 'We continue to provide our free-to-play video games across many of North America, as we have for more than a years, creating not just terrific video games, user experiences and home entertainment, however likewise ensuring this is done securely, properly and at the highest level of requirements.

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

The issues between standard online gaming and sweepstakes gambling establishments could prove 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 paradoxical that professional athletes are hawking unlawful sports betting wagering 'sweeps' websites while at the exact same time the leagues wish to predict a strong position versus illegal sports betting - especially when trying to tamp down the periodic gambling scandal,' Glaser informed DailyMail.com.

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

Along with VGW, Apple and Google are being sued for hosting supposedly prohibited gambling sites

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

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

Neither an NBA spokesperson nor the players' agents responded to DailyMail.com's demands for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise overlooked to react to DailyMail.com e-mails.

Asked if their celebrity endorsers have a responsibility to describe to consumers the distinctions and resemblances in between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that needs to be done.

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our service practices more broadly,' the spokesperson said. 'Some of our worths are" our players come initially" 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 gaming websites are, at a minimum, putting their credibilities at risk along with courting civil and class actions by consumers who declare damage,' Glaser said. 'There is likewise some risk that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for assisting in illegal gaming.'

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