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

No, they weren't personally in attendance, but the world-famous celebrities were conspicuously included in a slide discussion on social and sweepstakes casinos - the controversial websites using both free casino-style games and lucrative rewards, such as cash, or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are simply 2 cogs in the multibillion-dollar market that now discovers itself besieged by claims. In the eyes of lots of video gaming corporations, not to mention suit complainants and state regulators, sweepstakes casinos function as traditional casinos, only without the oversight, customer protections and tax laws. So not just can they avoid the steep 24-percent federal gambling levy, but sweepstakes operators aren't based on regulatory difficulties like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the company faces allegations of unlawful sports betting in a New york city suit that claims VGW uses star endorsers to 'produce a veneer of authenticity' around its item. (See VGW's statement below)

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

Sweepstakes endorsers include a variety of celebs from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions in between traditional gambling and sweepstakes play.

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

Ryan Seacrest prompts fans to dip into Chumba Casino, where numerous - however not all - games are totally free

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

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Instead, advertisements typically focus around the social element of the casinos, while leaving out the capacity for actual gambling losses.

Others tempt clients with promises of prizes. One such operator, Stake, ran a social networks advertisement flaunting Drake's automobiles, planes and estates before pivoting to video of the rapper playing online casino-style video games.

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

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

The inconsistency between sports betting websites and social or sweepstakes gambling establishments is a bit intricate, however operators of the latter insist they're not involved with the former.

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

'Most social sweeps clients never ever buy,' the SPGA representative informed DailyMail.com. 'The minority of consumers who make purchases do so in amounts far smaller than the typical deposit or bet size at real-money online gaming websites.'

Social gambling establishments use consumers a possibility to play casino-style games with pals. Players have the option to purchase worthless currency frequently described as 'gold coins,' which can not be exchanged genuine money, however can be used to unlock numerous functions within the video games.

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

And therein lies the capacity for monetary losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York. One gamer informed 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 a Worldwide Poker event

Social sweeps gambling establishment Stake ran an ad 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 gambling establishments are prohibited in all but 7 states, which has actually assisted to sustain the popularity of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes websites, which do not need generally require recognition. However, sites like Chumba will ask for IDs from gamers attempting to withdraw any funds.

Many sites, like the crypto-compatible Stake, permit consumers to send mail-in demands for complimentary sweeps coins, offered the players follow painfully specific guidelines. What's more, players are typically rewarded with sweeps coins simply for registering, thereby providing them a factor to attempt their hands at any number of gambling establishment video games for a chance to win - or lose - real cash.

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

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

'Social sweepstakes video games are just a kind of online entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is required to dip into social casinos with sweepstakes prizes. Consumers never need to pay for a chance to win prizes. That absence of a purchase requirement - or" factor to consider" - is a crucial distinction between social sweeps and standard online gambling sites like gambling establishments.'

Think about the manner in which McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and french fries that use them the opportunity 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 meet the definition of gaming in the US.

'Sweepstakes are an enduring approach for promoting all sort of everyday services in the United States, whatever from burgers to magazine memberships to coffee and home enhancement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are regularly used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting market experts, that argument does not cut it.

For beginners, gaming lawyer Daniel Wallach points out, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a well-defined beginning and end, therefore suggesting the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being used to promote real items like french fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're generally not connected to casino-style video games of opportunity,' Wallach told DailyMail.com. 'They're simply money free gifts.
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'The sweepstakes [casinos] possess none of the attributes frequently connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments use" casino-like" payouts, normally 80 percent or more of earnings, whereas the typical payout portion for a temporary promotional sweepstakes is an insignificant share of the earnings made by the company [typically less than one percent]'
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Wallach fasts to compare the online social sweeps casinos to the internet coffee shops that sprang up in Florida, using customers the opportunity to play casino-style games for real rewards. Many of those brick-and-mortar facilities have given that been shuttered over accusations of unlawful gambling.

DJ Khaled is amongst several star spokespeople for VGW's Global Poker brand
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Now, Wallach argues, social sweeps casinos must face similar examination.

'These differences are not arbitrary,' Wallach said of social sweeps casinos. 'They have consistently been cited by courts and state chief law officer as key elements in identifying that a sweepstakes promo remained in truth a guise for unlawful sports betting.'

One of the gambling establishment industry's leading trade companies, the American Gaming Association, is now pressing legislators to examine sweepstakes operators and, sometimes, enact brand-new legislation on the issue.

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

And after that there are the plaintiffs who have taken legal action against social gambling establishments 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 wrongdoing, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action suit, saying the settlement was made to avoid legal expenses and continued litigation.

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

In the most recent suit, which is mostly comparable to its predecessors, New York 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 'unlawful sports betting enterprise. '

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

'We usually do not discuss matters before the courts,' a VGW representative told DailyMail.com via email. 'However, we keep in mind that this claim has only just been filed with the court and VGW has not been formally served.

'We have complete self-confidence in our compliance with all laws and guidelines where we operate, and remain confident about the future,' the spokesperson continued. 'We continue to provide our free-to-play games throughout most of North America, as we have for more than a years, creating not just fantastic games, user experiences and entertainment, however also ensuring this is done securely, responsibly and at the highest level of standards.
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'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are relatively typical across the online social video games industry (and the US more broadly), and our standard practice is that we mean to strongly safeguard any claim which might be brought against us.'

The concerns in between traditional online gambling and sweepstakes casinos could prove bothersome for some celeb 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 standard gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking prohibited sports betting 'sweeps' websites while at the same time the leagues want to predict a strong stance versus prohibited sports betting - particularly when attempting to tamp down the periodic gambling 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 unassociated to anything involving social or sweepstakes gambling establishments.

Together with VGW, Apple and Google are being demanded hosting presumably illegal sports betting sites
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Regardless, Glaser sees sweepstakes casinos as a significant issue for leagues such as the NBA.

'I 'd anticipate that a league crackdown on professional athletes backing sweepstakes sites refers when, not if,' Glaser included.

Neither an NBA spokesperson nor the players' agents reacted to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise disregarded to respond to DailyMail.com e-mails.
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Asked if their celebrity endorsers have an obligation to explain to consumers the distinctions and resemblances in between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is absolutely nothing more that needs 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 values are" our gamers come first" and" we do what's right", and we put our worths at the core of whatever we do.'

Glaser, an outspoken challenger of sweepstakes sites, sees things differently.

'Celebrities who lend their names to dubious unlawful 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 likewise some threat that state regulators and state attorneys basic rope celebrity endorsers into enforcement efforts for assisting in prohibited sports betting.'

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