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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 attendance, but the world-famous stars were notably consisted of in a slide discussion on social and sweepstakes casinos - the controversial sites 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 anyone can 'bet complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are simply 2 cogs in the multibillion-dollar market that now finds itself besieged by lawsuits. In the eyes of lots of video gaming corporations, not to discuss lawsuit plaintiffs and state regulators, sweepstakes casinos act as standard gambling establishments, only without the oversight, consumer protections and tax laws. So not only can they prevent the steep 24-percent federal sports betting levy, but sweepstakes operators aren't subject to regulative hurdles 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 accusations of unlawful gaming in a New York suit that claims VGW utilizes celebrity endorsers to 'create a veneer of authenticity' around its product. (See VGW's declaration below)

'I'm not sure" if you don't trust us, you can trust Paris Hilton" is a winning message for companies operating multibillion-dollar illegal 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 variety of celebs from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom offer any differences between traditional gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of lots of sweepstakes gambling establishments discovered online

Ryan Seacrest urges fans to play at Chumba Casino, where lots of - but not all - video games are free

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

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Instead, advertisements usually center around the social aspect of the casinos, while leaving out the capacity for actual gambling losses.

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

'Daddy, why do we have a lot money?' read the first caption on the screen.

Another caption discussed: 'Because I never gave up.'

The discrepancy in between sports betting sites and social or sweepstakes gambling establishments is a bit intricate, but operators of the latter insist they're not included with the former.

A representative for an industry 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 information, the majority of the gamers on social-sweepstakes gambling establishments are sports betting free.

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

Social gambling establishments offer clients an opportunity to play casino-style video games with friends. Players have the choice 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 games.

But within the world of social casinos exists sweepstakes gaming, enabling consumers to obtain other currency called 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the potential for financial losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York City. One gamer told the Washington Post he lost more than $100,000 on sweepstakes casinos in the past year after continuing to more coins in pursuit of cash and other things of worth.

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

Social sweeps casino Stake ran an advertisement flaunting Drake's cars, aircrafts and mansions

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

Traditional online casinos are banned in all however 7 states, which has actually helped to fuel the appeal of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, enable customers to submit mail-in ask for free sweeps coins, offered the players follow painfully specific guidelines. What's more, players are frequently rewarded with sweeps coins merely for signing up, therefore providing a factor to attempt their hands at any variety of casino video games for a chance to win - or lose - real cash.

So why are sweepstakes sites permitted to run in 48 states, while online gambling establishments are prohibited in all however 7?

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

'Social sweepstakes video games are just a type of online entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is required to play at social casinos with sweepstakes rewards. Consumers never ever need to pay for a chance to win rewards. That lack of a purchase requirement - or" factor to consider" - is an essential difference between social sweeps and conventional online gambling sites like gambling establishments.'

Think of the method that McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and fries that use them the possibility to win lucrative prizes, such as a $1 million prize.

And without a purchase requirement, or 'factor to consider', the video game itself doesn't fulfill the definition of gaming in the US.

'Sweepstakes are an enduring approach for promoting all sort of everyday services in the United States, everything from hamburgers to magazine subscriptions to coffee and home improvement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are frequently utilized by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous sports betting industry experts, that argument does not cut it.

For starters, gaming lawyer Daniel Wallach mentions, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a distinct start and end, thereby recommending the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being used to promote real items like french fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [gambling establishments] possess none of the characteristics frequently related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos use" casino-like" payments, typically 80 percent or more of incomes, whereas the normal payout portion for a short-lived marketing sweepstakes is a minor share of the revenue made by the company [usually less than one percent]'

Wallach is fast to liken the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, offering consumers the opportunity to play casino-style games for genuine prizes. Much of those brick-and-mortar establishments have actually because been shuttered over claims of illegal gaming.

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

Now, Wallach argues, social sweeps gambling establishments ought to deal with comparable scrutiny.

'These distinctions are not arbitrary,' Wallach stated of social sweeps casinos. 'They have repeatedly been mentioned by courts and state attorney generals as key consider determining that a sweepstakes promotion remained in fact a guise for prohibited gambling.'

Among the gambling establishment industry's leading trade organizations, the American Gaming Association, is now pressing legislators to investigate sweepstakes operators and, sometimes, enact brand-new legislation on the problem.

'Consumers are being denied of protections and states are giving up significant tax and profits chances as this gaming changes that performed through managed channels,' read a well-circulated AGA memo.

And after that there are the complainants who have taken legal action against social gambling establishments 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 lawsuit, stating the settlement was made to prevent legal costs and continued litigation.

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

In the newest claim, which is mainly comparable to its predecessors, New York state residents Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is described in the filing as an 'illegal gambling enterprise. '

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

'We normally do not comment on matters before the courts,' a VGW spokesperson told DailyMail.com via email. 'However, we note that this claim has only simply been filed with the court and VGW has not been officially served.

'We have full confidence in our compliance with all laws and policies where we operate, and stay positive about the future,' the spokesperson continued. 'We continue to use our free-to-play games across the majority of North America, as we have for more than a decade, developing not only excellent games, user experiences and entertainment, but also guaranteeing this is done safely, responsibly and at the greatest level of standards.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are relatively typical throughout the online social video games market (and the US more broadly), and our basic practice is that we mean to strongly safeguard any claim which may be brought against us.'

The issues between conventional online gaming and sweepstakes casinos could prove problematic for some celeb 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 traditional video gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking prohibited sports betting wagering 'sweeps' websites while at the very same time the leagues wish to forecast a strong position against unlawful gambling - particularly when trying to tamp down the occasional sports betting scandal,' Glaser told DailyMail.com.

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

Together with VGW, Apple and Google are being sued for hosting presumably prohibited gambling websites

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

'I 'd anticipate 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 gamers' agents reacted to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also ignored to react to DailyMail.com emails.

Asked if their star endorsers have a duty to discuss to customers 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 confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the spokesperson stated. 'A few of our worths are" our players 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.
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'Celebrities who provide their names to dubious prohibited gaming websites are, at a minimum, putting their reputations at threat as well as courting civil and class actions by customers who declare harm,' Glaser stated. 'There is likewise some danger that state regulators and state lawyers basic rope celeb endorsers into enforcement efforts for helping with illegal gaming.'

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