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

No, they weren't personally in presence, but the world-famous celebrities were conspicuously included in a slide discussion on social and sweepstakes casinos - the controversial websites offering both free casino-style video games and financially rewarding prizes, such as money, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for 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 industry that now discovers itself besieged by lawsuits. In the eyes of numerous gaming corporations, not to point out suit complainants and state regulators, sweepstakes gambling establishments function as conventional gambling establishments, only without the oversight, customer protections and tax laws. So not only can they avoid the steep 24-percent federal sports betting levy, but sweepstakes operators aren't subject to regulatory obstacles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings last year alone. Now the company faces accusations of unlawful gaming in a New york city suit that declares VGW uses celeb endorsers to 'develop a veneer of authenticity' around its item. (See VGW's declaration listed below)

'I'm unsure" if you don't trust us, you can trust Paris Hilton" is a winning message for companies running multibillion-dollar prohibited operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers consist of 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 provide any differences between conventional sports betting and sweepstakes play.

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

Ryan Seacrest urges fans to dip into Chumba Casino, where lots of - however not all - video games are free

Drake has a deal with social sweeps gambling establishment, Stake, that he frequently promotes on social networks

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Instead, ads typically focus around the social aspect of the casinos, while leaving out the capacity for real sports betting losses.

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

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

Another caption discussed: 'Because I never ever offered up.'

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

A spokesperson for a market trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA data, most of the players on social-sweepstakes casinos are sports betting complimentary.

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

Social casinos offer clients a chance to play casino-style video games with good friends. Players have the choice to buy valueless currency frequently described as 'gold coins,' which can not be exchanged genuine cash, however can be utilized to unlock various functions within the games.

But within the world of social gambling establishments exists sweepstakes gaming, enabling customers to acquire other currency called 'sweeps coins' that can be exchanged for cash or other rewards.

And therein lies the potential for financial losses, like the ones claimed 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 previous year after continuing to buy more coins in pursuit of cash and other things of value.
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The Philadelphia 76ers' Paul George is seen promoting a Worldwide Poker event

Social sweeps gambling establishment Stake ran an ad flaunting Drake's vehicles, aircrafts and mansions

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

Traditional online gambling establishments are banned in all but 7 states, which has actually assisted to sustain the appeal of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, enable customers to send mail-in ask for complimentary sweeps coins, offered the players follow painfully specific instructions. What's more, gamers are often rewarded with sweeps coins simply for registering, thereby offering them a reason to attempt their hands at any number of casino games for an opportunity to win - or lose - genuine cash.

So why are sweepstakes sites enabled to run in 48 states, while online casinos are prohibited in all however 7?

According to the stakeholders, their item is the totally free casino-style video gaming, and the real-stakes competition is simply a method of promoting their bread and butter.

'Social sweepstakes games are merely a kind of online entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is needed to dip into social gambling establishments with sweepstakes prizes. Consumers never ever need to spend for a chance to win rewards. That absence of a purchase requirement - or" consideration" - is an essential difference between social sweeps and traditional online gambling sites like casinos.'

Think of the method that McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and fries that provide them the chance to win profitable rewards, such as a $1 million jackpot.

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

'Sweepstakes are a long-standing approach for promoting all type of everyday services in the United States, everything from hamburgers to publication memberships to coffee and home enhancement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are regularly 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 experts, that argument doesn't cut it.
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For starters, video gaming lawyer Daniel Wallach mentions, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a well-defined start and end, thereby suggesting the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being used to promote real items like fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're normally not connected to casino-style games of chance,' Wallach told DailyMail.com. 'They're just money giveaways.

'The sweepstakes [casinos] have none of the characteristics frequently associated with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments provide" casino-like" payouts, typically 80 percent or more of incomes, whereas the common payment percentage for a momentary promotional sweepstakes is a trivial share of the income made by the company [normally less than one percent]'

Wallach is quick to liken the online social sweeps gambling establishments to the internet coffee shops that emerged in Florida, using customers the chance to play casino-style games for real rewards. Much of those brick-and-mortar establishments have since been shuttered over claims of prohibited gambling.

DJ Khaled is amongst numerous celeb spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps gambling establishments must face similar analysis.

'These distinctions are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have consistently been mentioned by courts and state attorney general of the United States as key factors in figuring out that a sweepstakes promotion was in reality a guise for illegal gambling.'

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

'Consumers are being deprived of securities and states are giving up substantial tax and revenue opportunities as this gambling replaces that carried out through managed channels,' read a well-circulated AGA memo.

And then 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 four separate cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action claim, stating the settlement was made to avoid legal costs and continued litigation.

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

In the latest claim, which is mostly comparable to its predecessors, New York state citizens 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 gambling business. '

Apple and Google have also been named as defendants in claims for hosting the sweepstakes websites. But unlike VGW, neither tech company responded to DailyMail.com's request for remark.
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'We generally do not comment on matters before the courts,' a VGW spokesperson told DailyMail.com via e-mail. 'However, we keep in mind that this claim has only just been filed with the court and VGW has not been formally served.
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'We have full self-confidence in our compliance with all laws and regulations where we operate, and remain positive about the future,' the spokesperson continued. 'We continue to provide our free-to-play video games across the majority of North America, as we have for more than a decade, producing not only great video games, user experiences and entertainment, but also ensuring this is done securely, properly and at the highest level of requirements.
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'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are reasonably common throughout the online social games market (and the US more broadly), and our basic practice is that we plan to strongly defend any claim which may be brought versus us.'

The issues in between conventional online gaming and sweepstakes casinos might prove problematic 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 conventional video gaming titans like FanDuel and DraftKings.

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

It was simply 8 months ago that Toronto Raptors forward Jontay Porter received a lifetime ban from the NBA over allegations he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes casinos.

Along with VGW, Apple and Google are being taken legal action against for hosting supposedly unlawful gambling sites

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

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

Neither an NBA spokesman nor the gamers' representatives reacted to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise ignored to respond to DailyMail.com emails.

Asked if their celeb endorsers have a responsibility to explain to clients the differences and similarities in between iGaming and sweepstakes casinos, 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 business practices more broadly,' the spokesperson stated. 'Some of our worths 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 opponent of sweepstakes sites, sees things differently.

'Celebrities who lend their names to shady illegal gambling websites are, at a minimum, putting their credibilities at risk along with courting civil and class actions by consumers who allege damage,' Glaser said. 'There is likewise some risk that state regulators and state attorneys basic rope star endorsers into enforcement for helping with illegal gaming.'

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