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

No, they weren't personally in presence, however the world-famous celebs were conspicuously included in a slide presentation on social and sweepstakes gambling establishments - the controversial sites offering both free casino-style video games and rewarding prizes, such as cash, gift 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 simply 2 cogs in the multibillion-dollar market that now finds itself besieged by lawsuits. In the eyes of numerous gaming corporations, not to mention suit complainants and state regulators, sweepstakes gambling establishments function as standard casinos, just without the oversight, customer defenses and tax laws. So not just can they avoid the high 24-percent federal sports betting levy, but sweepstakes operators aren't subject to regulatory difficulties like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income last year alone. Now the business faces accusations of unlawful gambling in a New york city lawsuit that declares VGW uses star endorsers to 'create a veneer of authenticity' around its product. (See VGW's declaration below)

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

Sweepstakes endorsers include a range of celebs from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom provide any distinctions between conventional sports betting and sweepstakes play.

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

Ryan Seacrest urges fans to dip into Chumba Casino, where many - however not all - video games are complimentary

Drake has an offer with social sweeps gambling establishment, Stake, that he routinely touts on social media

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Instead, advertisements typically center around the social element of the casinos, while leaving out the potential for real gaming losses.

Others lure customers with promises of rewards. One such operator, Stake, ran a social networks ad flaunting Drake's vehicles, planes and mansions before rotating to video of the rap artist playing online casino-style games.

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

Another caption explained: 'Because I never ever gave up.'

The disparity in 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), described its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, many of the players on social-sweepstakes casinos are sports betting totally free.

'Most social sweeps clients never purchase,' the SPGA spokesperson informed DailyMail.com. 'The minority of customers who make purchases do so in quantities far smaller sized than the typical deposit or wager size at real-money online gambling websites.'

Social gambling establishments offer customers a chance to play casino-style video games with buddies. Players have the option to purchase valueless currency typically described as 'gold coins,' which can not be exchanged for genuine money, however can be utilized to open various features within the games.

But within the world of social gambling establishments exists sweepstakes gaming, permitting consumers to obtain other currency known as 'sweeps coins' that can be exchanged for money 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 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 money and other things of worth.

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

Social sweeps casino Stake ran an advertisement displaying Drake's automobiles, airplanes 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 helped to sustain the appeal of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, allow clients to submit mail-in ask for free sweeps coins, supplied the players follow painfully particular directions. What's more, gamers are typically rewarded with sweeps coins merely for signing up, thereby offering them a factor to try their hands at any number of casino video games for a chance to win - or lose - genuine cash.

So why are sweepstakes websites permitted to operate in 48 states, while online gambling establishments are banned in all however 7?

According to the stakeholders, their item is the complimentary casino-style gaming, and the real-stakes competition is merely a means of promoting their support.

'Social sweepstakes games are merely a type of online entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is needed to play at social gambling establishments with sweepstakes prizes. Consumers never have to pay for a chance to win prizes. That lack of a purchase requirement - or" consideration" - is a vital difference in between social sweeps and traditional online gambling sites like casinos.'

Think about the manner in which McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and fries that provide them the possibility to win profitable prizes, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the game itself doesn't meet the definition of sports betting in the US.

'Sweepstakes are an enduring technique for promoting all sort of everyday businesses in the United States, everything from burgers to publication subscriptions to coffee and home improvement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are routinely utilized by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For starters, gaming lawyer Daniel Wallach explains, 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 do not last forever and they're normally not tied to casino-style video games of chance,' Wallach informed DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [gambling establishments] possess none of the characteristics commonly connected with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos use" casino-like" payouts, usually 80 percent or more of incomes, whereas the common payment percentage for a temporary marketing sweepstakes is an insignificant share of the income earned by the company [usually less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the internet coffee shops that sprang up in Florida, using consumers the possibility to play casino-style video games for real prizes. Much of those brick-and-mortar facilities have actually considering that been shuttered over claims of prohibited gambling.

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

Now, Wallach argues, social sweeps casinos should face similar examination.

'These differences are not arbitrary,' Wallach said of social sweeps casinos. 'They have actually consistently been mentioned by courts and state attorney general of the United States as essential consider determining that a sweepstakes promo remained in truth a guise for unlawful sports betting.'

Among the gambling establishment industry's leading trade organizations, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, in some cases, enact new legislation on the problem.

'Consumers are being deprived of defenses and states are forgoing substantial tax and profits chances as this gambling changes that conducted through controlled channels,' checked out a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in four different cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action suit, stating the settlement was made to avoid legal expenses and continued lawsuits.

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

In the most recent claim, which is largely comparable to its predecessors, New York state residents Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'illegal sports betting enterprise. '

Apple and Google have actually likewise been named as accuseds in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for remark.

'We usually don't discuss matters before the courts,' a VGW spokesperson informed DailyMail.com via e-mail. 'However, we keep in mind that this claim has only simply 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 run, and remain positive about the future,' the spokesperson continued. 'We continue to provide our free-to-play video games across the majority of The United States and Canada, as we have for more than a decade, producing not only excellent games, user experiences and home entertainment, however also ensuring this is done safely, properly and at the highest level of standards.

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

The concerns in between standard online sports betting and sweepstakes casinos could prove problematic 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 conventional video gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking unlawful sports betting 'sweeps' websites while at the same time the leagues wish to forecast a strong stance versus illegal gaming - especially when attempting to tamp down the periodic gaming scandal,' Glaser told DailyMail.com.

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

Along with VGW, Apple and Google are being taken legal action against for hosting supposedly unlawful sports betting sites

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

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

Neither an NBA spokesman nor the players' agents reacted to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also disregarded to react to DailyMail.com e-mails.

Asked if their celeb endorsers have a duty to describe to customers the differences and resemblances in between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that requires to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the representative said. 'Some of our values are" our players precede" and" we do what's right", and we put our values at the core of everything we do.'

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

'Celebrities who provide their names to dubious illegal gambling sites are, at a minimum, putting their credibilities at risk in addition to courting civil and class actions by consumers who declare damage,' Glaser stated. 'There is likewise some danger that state regulators and state attorneys basic rope celebrity endorsers into enforcement efforts for facilitating illegal gaming.'

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