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, but the world-famous stars were conspicuously included in a slide discussion on social and sweepstakes gambling establishments - the controversial sites providing both complimentary casino-style games and profitable prizes, such as cash, gift cards 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 sites are just 2 cogs in the multibillion-dollar industry that now discovers itself besieged by suits. In the eyes of lots of video gaming corporations, not to point out lawsuit plaintiffs and state regulators, sweepstakes casinos function as standard casinos, just without the oversight, customer securities and tax laws. So not only can they prevent the steep 24-percent federal sports betting levy, however sweepstakes operators aren't subject to regulative difficulties like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the business faces accusations of illegal gambling in a New York claim that declares VGW utilizes star endorsers to 'produce a veneer of legitimacy' 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 business operating multibillion-dollar unlawful operations out of places like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers consist of a variety of celebs 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 distinctions between traditional sports betting and sweepstakes play.

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

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

Drake has a handle social sweeps casino, Stake, that he routinely touts on social networks

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Instead, ads normally center around the social element of the gambling establishments, while leaving out the capacity for real sports betting losses.

Others tempt clients with promises of rewards. One such operator, Stake, ran a social media ad displaying Drake's cars, planes and estates before rotating to video footage of the rapper playing online casino-style games.

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

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

The disparity in between gaming sites and social or sweepstakes gambling establishments is a bit complicated, but operators of the latter insist they're not included 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 casinos and sportsbooks. Furthermore, according to SPGA information, most of the players on social-sweepstakes casinos are playing for totally free.

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

Social casinos offer clients a chance to play casino-style games with buddies. Players have the choice to buy worthless currency frequently described as 'gold coins,' which can not be exchanged for genuine cash, however can be used to open various features within the video games.

But within the world of social casinos exists sweepstakes gaming, enabling consumers to get other currency called 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the potential for financial losses, like the ones claimed 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 previous year after continuing to purchase more coins in pursuit of cash and other things of value.

The Philadelphia 76ers' Paul George is seen promoting a Global Poker event

Social sweeps casino Stake ran an ad displaying Drake's vehicles, 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 prohibited in all but seven states, which has actually assisted to fuel the popularity of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, enable customers to send mail-in ask for complimentary sweeps coins, provided the players follow painfully particular guidelines. What's more, players are often rewarded with sweeps coins simply for registering, thereby providing them a factor to attempt their hands at any number of casino games for a possibility to win - or lose - real cash.

So why are sweepstakes sites allowed 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 video gaming, and the real-stakes competitors is just a way of promoting their support.

'Social sweepstakes video games are just a type of online entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is required to play at social gambling establishments with sweepstakes rewards. Consumers never ever need to pay for an opportunity to win rewards. That lack of a purchase requirement - or" factor to consider" - is a crucial distinction in between social sweeps and traditional online gaming 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, but rather they're purchasing hamburgers and french fries that use them the possibility to win rewarding prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the game itself does not fulfill the definition of gaming in the US.

'Sweepstakes are an enduring method for promoting all type of everyday organizations in the United States, whatever from hamburgers to publication memberships to coffee and home improvement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are regularly used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling market insiders, that argument doesn't cut it.

For beginners, video gaming attorney Daniel Wallach explains, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a well-defined start and end, consequently suggesting the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being utilized to promote real items like french fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're typically not tied to casino-style video games of chance,' Wallach told DailyMail.com. 'They're simply money free gifts.

'The sweepstakes [gambling establishments] have none of the attributes commonly associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments provide" casino-like" payments, typically 80 percent or more of revenues, whereas the common payout portion for a short-lived advertising sweepstakes is an insignificant share of the profits made by the company [typically less than one percent]'

Wallach is quick to liken the online social sweeps casinos to the web coffee shops that emerged in Florida, providing consumers the opportunity to play casino-style video games for genuine prizes. Much of those brick-and-mortar facilities have actually considering that been shuttered over claims of unlawful gambling.

DJ Khaled is amongst a number of star spokespeople for VGW's Global Poker brand

Now, Wallach argues, social sweeps gambling establishments ought to deal with similar analysis.

'These differences are not arbitrary,' Wallach said of social sweeps casinos. 'They have actually consistently been pointed out by courts and state lawyer generals as essential aspects in identifying that a sweepstakes promotion was in truth a guise for prohibited sports betting.'

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

'Consumers are being deprived of defenses and states are forgoing substantial tax and revenue chances as this gambling replaces that carried out through regulated channels,' read a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action lawsuit, stating the settlement was made to avoid legal costs and continued lawsuits.

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

In the current suit, which is mostly similar to its predecessors, New york city state homeowners 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 gaming enterprise. '

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

'We typically do not discuss matters before the courts,' a VGW representative told DailyMail.com through email. 'However, we keep in mind that this claim has actually only simply been filed with the court and VGW has actually not been officially served.

'We have full confidence in our compliance with all laws and regulations where we run, and stay confident about the future,' the representative continued. 'We continue to provide our free-to-play games across most of North America, as we have for more than a years, producing not just excellent video games, user experiences and entertainment, but likewise guaranteeing this is done safely, properly and at the greatest level of requirements.

'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 standard practice is that we mean to vigorously safeguard any claim which might be brought against us.'

The issues in between traditional online sports betting and sweepstakes casinos might prove bothersome for some star 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 conventional video gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking unlawful sports betting 'sweeps' websites while at the same time the leagues want to project a strong stance against illegal gaming - particularly when trying to tamp down the occasional gambling scandal,' Glaser informed DailyMail.com.

It was simply eight months ago that Toronto Raptors forward Jontay Porter received a life time ban from the NBA over claims he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes gambling establishments.

Along with VGW, Apple and Google are being sued for hosting supposedly illegal sports betting websites

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

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

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

Asked if their star endorsers have a duty to discuss to clients the distinctions and similarities between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that requires to be done.

'We have full confidence in our influencer and ambassadorial collaborations, and our business practices more broadly,' the representative stated. 'A few of our worths are" our players come first" and" we do what's right", and we put our values at the core of everything we do.'

Glaser, an outspoken opponent of sweepstakes websites, sees things in a different way.

'Celebrities who lend their names to dubious illegal sports betting sites are, at a minimum, putting their credibilities at risk in addition to courting civil and class actions by consumers who declare damage,' Glaser said. 'There is also some threat that state regulators and state chief law officers rope star endorsers into enforcement efforts for facilitating prohibited sports betting.'

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