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

No, they weren't personally in presence, but the world-famous stars were notably consisted of in a slide discussion on social and sweepstakes gambling establishments - the questionable sites using both free casino-style video games and lucrative rewards, such as cash, present cards or cryptocurrency. In one advertisement, 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 websites are just two cogs in the multibillion-dollar industry that now discovers itself besieged by suits. In the eyes of numerous gaming corporations, not to mention suit plaintiffs and state regulators, sweepstakes casinos serve as conventional casinos, just without the oversight, consumer defenses and tax laws. So not only can they prevent the high 24-percent federal gambling levy, but sweepstakes operators aren't based on regulatory hurdles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the company faces accusations of unlawful sports betting in a New York lawsuit that claims VGW uses celebrity endorsers to 'produce a veneer of authenticity' around its item. (See VGW's statement listed below)

'I'm not sure" if you do not trust us, you can trust Paris Hilton" is a winning message for companies operating multibillion-dollar illegal 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 series of celebrities from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom use any differences between traditional gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among lots of sweepstakes gambling establishments found online

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

Drake has an offer with social sweeps casino, Stake, that he frequently promotes on social media

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Instead, advertisements normally center around the social element of the casinos, while leaving out the potential for actual gambling losses.

Others lure clients with pledges of prizes. One such operator, Stake, ran a social networks ad flaunting Drake's automobiles, planes and mansions before rotating to footage of the rapper playing online casino-style games.

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

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

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

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, most of the players on social-sweepstakes gambling establishments are sports betting complimentary.

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

Social gambling establishments offer consumers a possibility 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 for real cash, but can be used to open different features within the games.

But within the world of social gambling establishments exists sweepstakes gaming, allowing customers to acquire other currency understood 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. 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 money and other things of worth.

The Philadelphia 76ers' Paul George is seen promoting a Worldwide Poker occasion

Social sweeps gambling establishment Stake ran an advertisement displaying Drake's cars, planes 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 seven states, which has actually assisted to sustain the popularity of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, permit clients to submit mail-in ask for complimentary sweeps coins, offered the players follow painfully specific guidelines. What's more, players are often rewarded with sweeps coins just for registering, thereby providing a factor to try their hands at any variety 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 gambling establishments are banned in all but 7?

According to the stakeholders, their item is the free casino-style gaming, and the real-stakes competition is simply a way of promoting their support.

'Social sweepstakes games are simply a form of online home entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is required to dip into social gambling establishments with sweepstakes rewards. Consumers never ever need to spend for a chance to win rewards. That lack of a purchase requirement - or" consideration" - is an essential difference in between social sweeps and traditional online sports betting websites like gambling establishments.'

Think of the manner in which McDonald's utilizes its annual Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and french fries that use them the opportunity to win financially rewarding prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the video game itself doesn't satisfy the definition of gaming in the US.

'Sweepstakes are a long-standing technique for promoting all kinds of daily companies in the United States, whatever from burgers to publication subscriptions to coffee and home enhancement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are routinely utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of gambling industry insiders, that argument doesn't cut it.

For beginners, video gaming attorney Daniel Wallach points out, McDonald's Monopoly game doesn't run forever. Rather, it has a well-defined beginning and end, therefore recommending the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being utilized to promote real products like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [casinos] possess none of the qualities frequently associated with McDonald's-style 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 portion for a temporary promotional sweepstakes is an insignificant share of the income earned by the business [generally less than one percent]'

Wallach is fast to liken the online social sweeps casinos to the internet cafes that sprang up in Florida, using clients the possibility to play casino-style games for genuine prizes. Much of those brick-and-mortar establishments have actually given that been shuttered over allegations of illegal gaming.

DJ Khaled is amongst several star spokespeople for VGW's Global Poker brand name

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

'These differences are not arbitrary,' Wallach said of social sweeps casinos. 'They have consistently been mentioned by courts and state lawyer generals as essential consider identifying that a sweepstakes promotion was in fact a guise for illegal gaming.'

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

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

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action lawsuit, saying the settlement was made to avoid legal expenses and continued litigation.

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

In the current lawsuit, which is mostly comparable to its predecessors, New york city 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 'unlawful sports betting enterprise. '

Apple and Google have actually likewise been named as defendants in claims for hosting the sweepstakes sites. But unlike VGW, neither tech business responded to DailyMail.com's ask for comment.

'We generally don't comment on matters before the courts,' a VGW spokesperson told DailyMail.com via email. 'However, we keep in mind that this claim has only just been submitted with the court and VGW has not been formally served.

'We have full confidence in our compliance with all laws and guidelines where we run, and remain positive about the future,' the representative continued. 'We continue to offer our free-to-play games throughout many of North America, as we have for more than a years, producing not only fantastic games, user experiences and home entertainment, however also ensuring this is done securely, properly and at the greatest level of standards.

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

The issues between traditional online gaming and sweepstakes casinos could 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 traditional video gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking unlawful sports betting wagering 'sweeps' sites while at the exact same time the leagues want to predict a strong stance against illegal sports betting - particularly when attempting to tamp down the periodic sports betting scandal,' Glaser told DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter received a life time 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 gambling establishments.

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

Regardless, Glaser sees sweepstakes casinos as a major problem 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 added.

Neither an NBA spokesman nor the players' agents reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise neglected to respond to DailyMail.com emails.

Asked if their star endorsers have an obligation to discuss to consumers the differences and resemblances between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that requires to be done.

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the representative 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 in a different way.

'Celebrities who lend their names to shady unlawful gambling sites are, at a minimum, putting their credibilities at danger in addition to courting civil and class actions by consumers who declare damage,' Glaser stated. 'There is also some threat that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for helping with unlawful sports betting.'

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