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

No, they weren't personally in presence, but the world-famous celebs were notably consisted of in a slide discussion on social and sweepstakes gambling establishments - the controversial sites using both complimentary casino-style games and rewarding prizes, such as money, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet totally free,' 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 discovers itself besieged by lawsuits. In the eyes of many video gaming corporations, not to discuss claim complainants and state regulators, sweepstakes casinos act as standard casinos, only without the oversight, consumer defenses and tax laws. So not just can they prevent the steep 24-percent federal sports betting levy, however sweepstakes operators aren't subject to regulative obstacles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings last year alone. Now the business faces allegations of prohibited gambling in a New york city claim that declares VGW utilizes celeb endorsers to 'develop a veneer of legitimacy' around its item. (See VGW's declaration below)

'I'm uncertain" if you don't 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, told DailyMail.com.

Sweepstakes endorsers consist of a series of celebs from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom offer any differences between conventional gaming and sweepstakes play.

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

Ryan Seacrest urges fans to play at Chumba Casino, where lots of - however not all - games are complimentary

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

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Instead, ads usually center around the social aspect of the casinos, while leaving out the potential for real gaming losses.

Others lure customers with guarantees of prizes. One such operator, Stake, ran a social networks ad displaying Drake's automobiles, airplanes and estates before pivoting to video of the rapper playing online casino-style video games.

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

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

The discrepancy between sports betting websites and social or sweepstakes casinos is a bit complicated, but operators of the latter insist they're not involved with the previous.

A representative for an industry trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA information, the majority of the players on social-sweepstakes casinos are sports betting complimentary.

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

Social casinos use consumers an opportunity to play casino-style video games with buddies. Players have the alternative to purchase worthless currency typically described as 'gold coins,' which can not be exchanged for real money, but can be used to open different features within the games.

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

And therein lies the capacity for monetary losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York City. One player told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the past year after continuing to buy 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 gambling establishment Stake ran an advertisement displaying Drake's cars, aircrafts and mansions

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 however 7 states, which has helped to fuel the appeal of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, enable consumers to send mail-in ask for totally free sweeps coins, provided the players follow painfully specific guidelines. What's more, gamers are often rewarded with sweeps coins merely for registering, thereby giving them a factor to try their hands at any number of casino video games for a chance to win - or lose - genuine money.

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 video gaming, and the real-stakes competitors is simply a means of promoting their bread and butter.

'Social sweepstakes games are just a form of online entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is needed to play at social casinos with sweepstakes prizes. Consumers never ever have to spend for a chance to win rewards. That absence of a purchase requirement - or" factor to consider" - is a vital difference between social sweeps and standard online gaming websites like casinos.'
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Think about the manner in which McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and fries that provide them the opportunity 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 gambling in the US.

'Sweepstakes are a long-standing approach for promoting all type of daily companies in the United States, whatever from hamburgers to magazine memberships to coffee and home enhancement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are regularly utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many gambling industry experts, that argument does not 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, thereby recommending 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 don't last permanently and they're usually not connected to casino-style video games of opportunity,' Wallach informed DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [casinos] possess none of the attributes typically connected with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes casinos provide" casino-like" payouts, usually 80 percent or more of profits, whereas the common payment percentage for a short-lived advertising sweepstakes is a trivial share of the revenue made by the company [generally less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the web coffee shops that emerged in Florida, offering consumers the opportunity to play casino-style video games for real prizes. A lot of those brick-and-mortar establishments have actually considering that been shuttered over claims of prohibited gambling.

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

Now, Wallach argues, social sweeps casinos should deal with similar examination.

'These distinctions are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have actually repeatedly been mentioned by courts and state chief law officer as key consider figuring out that a sweepstakes promotion was in truth a guise for prohibited gaming.'

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 issue.

'Consumers are being deprived of defenses and states are passing up significant tax and revenue chances as this sports betting replaces that conducted through managed channels,' read a well-circulated AGA memo.

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

Sweepstakes casino 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 lawsuit, saying the settlement was made to prevent legal expenses and continued litigation.

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

In the current lawsuit, which is largely comparable to its predecessors, New York state homeowners 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 'unlawful sports betting enterprise. '

Apple and Google have actually also been called as offenders in suits for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for remark.

'We generally don't comment on matters before the courts,' a VGW representative told DailyMail.com through e-mail. 'However, we note that this claim has only just been submitted with the court and VGW has actually not been formally served.

'We have complete confidence in our compliance with all laws and regulations where we run, and stay confident about the future,' the spokesperson continued. 'We continue to use our free-to-play video games across the majority of North America, as we have for more than a years, creating not just great games, user experiences and home entertainment, but likewise ensuring this is done safely, responsibly and at the greatest level of standards.

'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are fairly common across the online social games industry (and the US more broadly), and our standard practice is that we plan to strongly safeguard any claim which might be against us.'

The issues between traditional online sports betting and sweepstakes casinos might show troublesome for some celeb endorsers.

Towns, a star center with the Knicks, and the 76ers' George both endorse VGW's Global Poker brand while the NBA is partnered with conventional gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking illegal sports betting wagering 'sweeps' websites while at the same time the leagues desire to predict a strong position against unlawful gaming - particularly when trying to tamp down the occasional sports betting scandal,' Glaser informed DailyMail.com.

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

Together with VGW, Apple and Google are being taken legal action against for hosting presumably prohibited gambling sites
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Regardless, Glaser sees sweepstakes casinos as a significant issue for leagues such as the NBA.

'I 'd expect that a league crackdown on professional athletes endorsing sweepstakes sites refers when, not if,' Glaser added.

Neither an NBA spokesperson nor the players' representatives reacted to DailyMail.com's requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also ignored to respond to DailyMail.com e-mails.

Asked if their celeb endorsers have a responsibility to explain to consumers the distinctions and similarities between iGaming and sweepstakes casinos, VGW firmly insisted there is absolutely nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial collaborations, and our service practices more broadly,' the representative said. 'Some 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 opponent of sweepstakes websites, sees things in a different way.
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'Celebrities who provide their names to dubious unlawful sports betting sites are, at a minimum, putting their credibilities at risk along with courting civil and class actions by customers who allege damage,' Glaser said. 'There is likewise some danger that state regulators and state attorneys general rope star endorsers into enforcement efforts for facilitating unlawful gambling.'

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