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

No, they weren't personally in participation, however the world-famous stars were notably included in a slide discussion on social and sweepstakes gambling establishments - the questionable sites providing both complimentary casino-style video games and lucrative prizes, such as cash, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for 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 finds itself besieged by lawsuits. In the eyes of lots of video gaming corporations, not to mention claim plaintiffs and state regulators, sweepstakes casinos function as standard casinos, just without the oversight, customer securities and tax laws. So not only can they avoid the high 24-percent federal gambling levy, but sweepstakes operators aren't subject to regulative hurdles like anti-money laundering and responsible-gaming protections.

One operator, Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the company faces accusations of prohibited gambling in a New york city lawsuit that claims VGW uses celebrity endorsers to 'develop a veneer of authenticity' around its item. (See VGW's declaration listed below)

'I'm uncertain" if you don't trust us, you can trust Paris Hilton" is a winning message for business operating multibillion-dollar illegal 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 include a variety of celebrities from sports betting enthusiasts 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 gambling and sweepstakes play.

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

Ryan Seacrest advises fans to play at Chumba Casino, where numerous - however not all - games are complimentary

Drake has a deal with social sweeps gambling establishment, Stake, that he routinely touts on social media

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Instead, advertisements typically focus around the social element of the casinos, while omitting the capacity for real sports betting losses.

Others lure consumers with pledges of prizes. One such operator, Stake, ran a social networks advertisement revealing off Drake's vehicles, airplanes and mansions 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 provided up.'

The disparity between gambling sites and social or sweepstakes casinos is a bit complicated, but 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), described its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, many of the players on social-sweepstakes gambling establishments are playing for free.

'Most social sweeps clients never make a purchase,' the SPGA representative informed DailyMail.com. 'The minority of consumers who make purchases do so in amounts far smaller sized than the normal deposit or bet size at real-money online gaming sites.'
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Social casinos use customers a chance to play casino-style games with friends. Players have the option to purchase valueless currency often described as 'gold coins,' which can not be exchanged for real cash, however can be utilized to open different functions within the video games.

But within the world of social casinos exists sweepstakes gaming, allowing customers to get other currency referred to as 'sweeps coins' that can be exchanged for cash or other rewards.

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

The Philadelphia 76ers' Paul George is seen promoting an International Poker occasion

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake's vehicles, airplanes and estates

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 actually assisted to fuel the appeal of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, enable customers to send mail-in ask for free sweeps coins, provided the players follow painfully particular instructions. What's more, players are frequently rewarded with sweeps coins merely for registering, thus offering them a factor to attempt their hands at any variety of casino 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 banned in all but 7?

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

'Social sweepstakes video games are simply a kind of online home entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is needed to dip into social casinos with sweepstakes prizes. Consumers never ever have to spend for a chance to win prizes. That lack of a purchase requirement - or" factor to consider" - is a crucial distinction in between social sweeps and standard online gambling sites like gambling establishments.'

Think of the way that McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and fries that offer them the possibility to win financially rewarding rewards, such as a $1 million jackpot.

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

'Sweepstakes are an enduring method for promoting all sort of daily services in the United States, everything from hamburgers to publication subscriptions to coffee and home enhancement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are routinely used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous sports betting industry experts, that argument doesn't cut it.

For beginners, video gaming attorney Daniel Wallach points out, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a distinct start and end, therefore recommending the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being utilized to promote genuine items like fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're usually not tied to casino-style games of chance,' Wallach told DailyMail.com. 'They're simply money free gifts.

'The sweepstakes [gambling establishments] 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" payments, usually 80 percent or more of earnings, whereas the typical payment percentage for a short-term promotional sweepstakes is a minor share of the earnings made by the business [generally less than one percent]'
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Wallach is quick to liken the online social sweeps casinos to the internet cafes that emerged in Florida, offering customers the chance to play casino-style games for genuine rewards. Many of those brick-and-mortar facilities have actually because been shuttered over allegations of prohibited gambling.
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DJ Khaled is among numerous celeb spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps casinos must deal with comparable examination.

'These differences are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have repeatedly been cited by courts and state attorney generals as crucial elements in determining that a sweepstakes promotion remained in reality a guise for prohibited sports betting.'

Among the casino market's leading trade companies, the American Gaming Association, is now pressing legislators to investigate sweepstakes operators and, in some cases, enact new legislation on the concern.

'Consumers are being denied of protections and states are giving up significant tax and income opportunities as this sports betting replaces that carried out through managed channels,' read a well-circulated AGA memo.

And after that there are the plaintiffs who have sued social casinos in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without admitting any misbehavior, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action suit, stating 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 most recent claim, which is mainly similar to its predecessors, New York state citizens 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 gaming business. '

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

'We normally do not comment on matters before the courts,' a VGW representative informed DailyMail.com by means of e-mail. 'However, we note that this claim has only just been submitted with the court and VGW has not been officially served.

'We have full confidence in our compliance with all laws and policies where we run, and remain positive about the future,' the spokesperson continued. 'We continue to use our free-to-play video games throughout the majority of North America, as we have for more than a decade, developing not just great games, user experiences and entertainment, but likewise ensuring this is done securely, properly and at the highest level of requirements.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are fairly typical across the online social games market (and the US more broadly), and our basic practice is that we mean to vigorously defend any claim which may be brought against us.'

The problems in between conventional online gaming and sweepstakes gambling establishments might prove troublesome for some celeb endorsers.

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

'It's ironic that expert athletes are hawking prohibited sports betting 'sweeps' sites while at the very same time the leagues wish to project a strong stance versus prohibited gaming - particularly when attempting to tamp down the periodic gaming scandal,' Glaser informed DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter got a lifetime ban from the NBA over accusations he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes gambling establishments.

Together with VGW, Apple and Google are being demanded hosting allegedly illegal sports betting websites

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

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

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

Asked if their celebrity endorsers have a responsibility to explain to clients the differences and similarities between iGaming and sweepstakes casinos, VGW insisted there is nothing more that requires to be done.

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the spokesperson said. 'A few of our values 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 challenger of sweepstakes websites, sees things in a different way.
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'Celebrities who provide their names to shady illegal gaming websites are, at a minimum, putting their track records at danger along with courting civil and class actions by consumers who declare damage,' Glaser said. 'There is also some risk that state regulators and state chief law officers rope celeb endorsers into enforcement efforts for assisting in prohibited sports betting.'

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