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The smiling faces of Paris Hilton and Ryan Seacrest made surprise looks before the Louisiana Senate for Friday's hearing on unlawful gambling.
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No, they weren't personally in participation, but the world-famous celebrities were conspicuously included in a slide presentation on social and sweepstakes casinos - the controversial websites offering both complimentary casino-style video games and profitable prizes, such as cash, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for 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 market that now discovers itself besieged by lawsuits. In the eyes of many gaming corporations, not to discuss suit complainants and state regulators, sweepstakes gambling establishments function as standard casinos, just without the oversight, consumer protections and tax laws. So not only can they avoid the steep 24-percent federal gambling levy, however sweepstakes operators aren't based on regulatory difficulties like anti-money laundering and responsible-gaming protections.

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

'I'm not exactly sure" if you don't trust us, you can rely on Paris Hilton" is a winning message for business running multibillion-dollar unlawful operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of video gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers include a series of celebrities 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 use any distinctions in between conventional sports betting and sweepstakes play.

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

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

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

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Instead, ads generally focus around the social element of the casinos, while leaving out the potential for actual gaming losses.

Others lure consumers with promises of rewards. One such operator, Stake, ran a social media advertisement showing off Drake's cars and trucks, airplanes and mansions before rotating to footage of the rap artist playing online casino-style games.

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

Another caption explained: 'Because I never quit.'

The discrepancy between gaming websites and social or sweepstakes gambling establishments is a bit complicated, but operators of the latter insist they're not included with the former.

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, the majority of the players on social-sweepstakes casinos are playing for free.

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

Social casinos offer customers an opportunity to play casino-style games with friends. Players have the choice to purchase worthless currency frequently described as 'gold coins,' which can not be exchanged genuine cash, however can be used to open numerous features within the video games.

But within the world of social casinos exists sweepstakes video gaming, allowing clients to acquire other currency referred to as 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the potential for financial losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York City. One player 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 money and other things of worth.

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

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

Karl-Anthony Towns of the New York City 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 appeal of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes websites, which do not require generally need identification. However, sites like Chumba will request for IDs from players trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, permit consumers to submit mail-in ask for totally free sweeps coins, offered the players follow painfully specific directions. What's more, players are often rewarded with sweeps coins just for registering, consequently providing a factor to attempt their hands at any variety of gambling establishment games for an opportunity to win - or lose - real money.

So why are sweepstakes websites enabled to run in 48 states, while online gambling establishments are banned in all but 7?

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

'Social sweepstakes video games are merely a kind of online entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is required to dip into social gambling establishments with sweepstakes rewards. Consumers never have to pay for an opportunity to win rewards. That lack of a purchase requirement - or" factor to consider" - is an essential difference between social sweeps and conventional online gaming websites like gambling establishments.'

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

And without a purchase requirement, or 'consideration', the video game itself does not fulfill the definition 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 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 lots of sports betting industry experts, that argument does not cut it.

For beginners, lawyer Daniel Wallach points out, McDonald's Monopoly video game does not run indefinitely. Rather, it has a distinct start and end, therefore suggesting the sweepstakes is not the fast-food giant's main item. 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 typically not connected to casino-style games of possibility,' Wallach told DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [gambling establishments] possess none of the characteristics commonly connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments offer" casino-like" payments, normally 80 percent or more of earnings, whereas the common payout percentage for a temporary advertising sweepstakes is a minor share of the income earned by the business [generally less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the web coffee shops that emerged in Florida, offering customers the chance to play casino-style video games for real rewards. A number of those brick-and-mortar facilities have considering that been shuttered over allegations of illegal sports betting.

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

Now, Wallach argues, social sweeps casinos need to face similar scrutiny.

'These differences are not approximate,' Wallach said of social sweeps casinos. 'They have repeatedly been mentioned by courts and state attorney general of the United States as crucial consider figuring out that a sweepstakes promo was in truth a guise for illegal sports betting.'

One of the casino market's leading trade companies, the American Gaming Association, is now pressing lawmakers to investigate sweepstakes operators and, sometimes, enact brand-new legislation on the concern.

'Consumers are being deprived of securities and states are forgoing substantial tax and earnings opportunities as this gaming changes that carried out through regulated channels,' checked out a well-circulated AGA memo.

And then there are the plaintiffs who have sued 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 admitting any wrongdoing, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action suit, saying the settlement was made to prevent legal costs and continued lawsuits.

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

In the most current suit, which is mostly similar 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 explained in the filing as an 'prohibited sports betting enterprise. '

Apple and Google have also been named as accuseds in claims for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's demand for comment.

'We typically don't discuss matters before the courts,' a VGW representative informed DailyMail.com by means of e-mail. 'However, we keep in mind that this claim has only simply been submitted with the court and VGW has actually not been officially served.

'We have full self-confidence in our compliance with all laws and policies where we operate, and remain positive about the future,' the representative continued. 'We continue to use our free-to-play video games throughout many of North America, as we have for more than a years, developing not just great video games, user experiences and entertainment, but also guaranteeing this is done securely, responsibly and at the greatest level of standards.

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

The issues between conventional online gambling and sweepstakes casinos could prove troublesome for some celebrity endorsers.

Towns, a star center with the Knicks, and the 76ers' George both back VGW's Global Poker brand 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 'sweeps' sites while at the exact same time the leagues want to project a strong position versus illegal gaming - especially when trying to tamp down the periodic sports betting scandal,' Glaser told DailyMail.com.

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

Together with VGW, Apple and Google are being taken legal action against for hosting allegedly illegal gambling websites

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 backing sweepstakes websites is a matter of when, not if,' Glaser added.

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

Asked if their celebrity endorsers have an obligation to explain to clients the differences and similarities between iGaming and sweepstakes gambling establishments, 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 stated. 'A few of our worths are" our gamers precede" and" we do what's right", and we put our values at the core of everything we do.'

Glaser, an outspoken opponent of sweepstakes websites, sees things in a different way.

'Celebrities who lend their names to dubious illegal gambling websites are, at a minimum, putting their reputations at threat in addition to courting civil and class actions by customers who declare harm,' Glaser said. 'There is also some danger that state regulators and state chief law officers rope star endorsers into enforcement efforts for assisting in prohibited gaming.'

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