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 celebrities were conspicuously consisted of in a slide discussion on social and sweepstakes gambling establishments - the questionable websites using both free casino-style games and rewarding rewards, such as money, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are just two cogs in the multibillion-dollar market that now finds itself besieged by claims. In the eyes of numerous gaming corporations, not to point out lawsuit plaintiffs and state regulators, sweepstakes casinos serve as conventional casinos, only without the oversight, customer protections and tax laws. So not just 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 income in 2015 alone. Now the business deals with allegations of prohibited gaming in a New York lawsuit that declares VGW uses celebrity endorsers to 'develop a veneer of legitimacy' around its item. (See VGW's declaration listed below)

'I'm uncertain" 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 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 range of stars from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom offer any differences in between traditional gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among many sweepstakes casinos discovered online

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

Drake has an offer with social sweeps casino, Stake, that he routinely promotes on social networks

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Instead, advertisements generally focus around the social element of the gambling establishments, while leaving out the potential for actual gambling losses.

Others lure customers with promises of prizes. One such operator, Stake, ran a social media ad flaunting Drake's cars, planes and estates before pivoting to footage of the rap artist playing online casino-style games.

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

Another caption discussed: 'Because I never quit.'

The disparity in between gaming sites and social or sweepstakes casinos is a bit complex, but operators of the latter insist they're not included with the former.

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA information, the majority of the gamers on social-sweepstakes casinos are sports betting free.

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

Social casinos offer consumers a possibility to play casino-style games with friends. Players have the option to buy worthless currency often described as 'gold coins,' which can not be exchanged genuine cash, however can be utilized to unlock numerous features within the games.

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

And therein lies the capacity for monetary losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York. One player informed 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 cash and other things of worth.

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

Social sweeps casino Stake ran an advertisement flaunting Drake's cars, planes and estates

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 but seven states, which has assisted to sustain the popularity of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, permit consumers to submit mail-in demands for free sweeps coins, supplied the players follow painfully particular guidelines. What's more, gamers are frequently rewarded with sweeps coins simply for registering, consequently providing a factor to try their hands at any variety of casino video games for a possibility to win - or lose - real money.

So why are sweepstakes sites enabled to operate in 48 states, while online gambling establishments are prohibited in all however 7?

According to the stakeholders, their item is the free casino-style video gaming, and the real-stakes competitors is simply a means of promoting their bread and butter.

'Social sweepstakes video games are simply a form of online home entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is needed to dip into social casinos with sweepstakes prizes. Consumers never need to pay for a chance to win rewards. That lack of a purchase requirement - or" consideration" - is a crucial difference in between social sweeps and standard online gambling websites like casinos.'

Think about the method that McDonald's utilizes its annual Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're buying hamburgers and french fries that provide them the possibility to win rewarding rewards, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the video game itself does not satisfy the definition of sports betting in the US.

'Sweepstakes are an enduring technique for promoting all sort of daily businesses in the United States, whatever from burgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are regularly used 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 market experts, that argument doesn't cut it.

For starters, gaming attorney Daniel Wallach points out, McDonald's Monopoly game does not run indefinitely. Rather, it has a distinct start and end, therefore recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote real items like fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're typically not connected to casino-style games of chance,' Wallach informed DailyMail.com. 'They're just cash free gifts.

'The sweepstakes [gambling establishments] possess none of the attributes commonly related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes casinos use" casino-like" payments, generally 80 percent or more of incomes, whereas the common payment portion for a momentary marketing sweepstakes is a trivial share of the revenue made by the business [generally less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the internet coffee shops that sprang up in Florida, providing customers the possibility to play casino-style video games for real prizes. A number of those brick-and-mortar establishments have because been shuttered over claims of illegal sports betting.

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

Now, Wallach argues, social sweeps casinos ought to deal with comparable scrutiny.

'These differences are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have actually repeatedly been mentioned by courts and state chief law officer as essential aspects in figuring out that a sweepstakes promotion remained in reality a guise for prohibited sports betting.'

Among the casino industry's leading trade organizations, the American Gaming Association, is now pressing legislators to examine sweepstakes operators and, sometimes, enact brand-new legislation on the problem.

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

And then there are the complainants who have sued 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 claim, saying the settlement was made to avoid legal costs and continued litigation.

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

In the newest claim, which is mainly similar to its predecessors, New york city state locals 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 'prohibited sports betting enterprise. '

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

'We typically do not talk about matters before the courts,' a VGW spokesperson informed DailyMail.com by means of email. 'However, we note that this claim has actually only simply been submitted with the court and VGW has actually not been formally served.

'We have full self-confidence in our compliance with all laws and policies where we run, and remain confident about the future,' the representative continued. 'We continue to use our free-to-play games across most of North America, as we have for more than a years, creating not only fantastic video games, user experiences and home entertainment, but also guaranteeing this is done safely, properly and at the highest level of standards.

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

The problems between standard online sports betting and sweepstakes casinos might prove problematic 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 traditional gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking prohibited sports betting wagering 'sweeps' websites while at the same time the leagues want to project a strong stance versus unlawful gaming - specifically when attempting to tamp down the occasional gambling scandal,' Glaser told DailyMail.com.

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

Along with VGW, Apple and Google are being sued for hosting presumably unlawful sports betting sites

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

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

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

Asked if their star endorsers have a duty to explain to clients the distinctions and resemblances in between iGaming and sweepstakes casinos, VGW firmly insisted there is absolutely nothing more that needs to be done.

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our business practices more broadly,' the spokesperson stated. 'A few of our worths are" our players come initially" and" we do what's right", and we put our values at the core of whatever we do.'

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

'Celebrities who lend their names to shady prohibited gambling sites are, at a minimum, putting their reputations at danger as well as courting civil and class actions by consumers who allege damage,' Glaser stated. 'There is also some danger that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for assisting in illegal gaming.'

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