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The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances 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 consisted of in a slide presentation on social and sweepstakes gambling establishments - the controversial sites providing both totally free casino-style games and rewarding rewards, such as cash, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.
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The websites 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 discuss claim complainants and state regulators, sweepstakes gambling establishments act as conventional casinos, only without the oversight, customer securities and tax laws. So not only can they prevent the steep 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulatory hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the business deals with allegations of prohibited gambling in a New York suit that claims VGW uses celebrity endorsers to 'develop a veneer of authenticity' around its product. (See VGW's statement below)

'I'm not exactly sure" if you do not trust us, you can rely on Paris Hilton" is a winning message for business operating multibillion-dollar illegal operations out of places like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers include a variety of celebrities from sports betting 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 numerous sweepstakes gambling establishments found online

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

Drake has a deal with social sweeps casino, Stake, that he regularly touts on social media

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Instead, advertisements usually center around the social aspect of the casinos, while omitting the capacity for actual gambling losses.

Others lure clients with guarantees of rewards. One such operator, Stake, ran a social networks advertisement flaunting Drake's cars and trucks, planes and mansions before rotating to video footage of the rap artist playing online casino-style games.

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

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

The inconsistency in between sports betting websites and social or sweepstakes casinos is a bit complicated, 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 playing for totally free.

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

Social casinos provide consumers an opportunity to play casino-style video games with good friends. Players have the option to purchase valueless currency often described as 'gold coins,' which can not be exchanged for genuine cash, but can be used to unlock various features within the games.

But within the world of social casinos exists sweepstakes gaming, permitting consumers to obtain other currency understood as 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the capacity for monetary 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 casinos 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 an International Poker occasion

Social sweeps gambling establishment Stake ran an ad flaunting Drake's automobiles, aircrafts 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 but seven states, which has helped to sustain the appeal of sweepstakes casinos.

Anyone over the age of 18 can access the sites, which don't need usually need recognition. However, sites like Chumba will request IDs from gamers trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, enable clients to send mail-in ask for free sweeps coins, offered the players follow painfully specific guidelines. What's more, players are typically rewarded with sweeps coins simply for registering, thus giving them a factor to attempt their hands at any number of casino video games for a possibility to win - or lose - real cash.

So why are sweepstakes websites permitted to operate in 48 states, while online casinos are prohibited in all but 7?

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

'Social sweepstakes video games are just a type of online entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is needed to dip into social gambling establishments with sweepstakes prizes. Consumers never have to spend for a chance to win rewards. That lack of a purchase requirement - or" factor to consider" - is an essential difference in between social sweeps and conventional online gaming websites like casinos.'

Consider the manner in which McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and fries that use them the possibility to win profitable rewards, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the video game itself does not meet the meaning of gambling in the US.

'Sweepstakes are an enduring technique for promoting all type of daily businesses in the United States, whatever from burgers to publication memberships to coffee and home enhancement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are frequently utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many gambling industry insiders, 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 beginning and end, consequently recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote genuine products like french fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're typically not tied to casino-style video games of opportunity,' Wallach told DailyMail.com. 'They're just money free gifts.

'The sweepstakes [gambling establishments] have none of the characteristics commonly associated with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments use" casino-like" payments, typically 80 percent or more of earnings, whereas the normal payment portion for a short-lived promotional sweepstakes is a minor share of the profits earned by the business [generally less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the internet cafes that emerged in Florida, offering clients the opportunity to play casino-style games for genuine prizes. A lot of those brick-and-mortar facilities have since been shuttered over claims of illegal gaming.

DJ Khaled is among a number of celebrity spokespeople for VGW's Global Poker brand name

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

'These distinctions are not arbitrary,' Wallach stated of social sweeps casinos. 'They have actually consistently been mentioned by courts and state attorney general of the United States as key aspects in identifying that a sweepstakes promo was in reality a guise for unlawful gambling.'

Among the gambling establishment market's leading trade companies, the American Gaming Association, is now pressing legislators to investigate sweepstakes operators and, sometimes, enact brand-new legislation on the concern.

'Consumers are being deprived of securities and states are passing up significant tax and earnings chances as this gambling replaces that carried out through controlled channels,' checked out a well-circulated AGA memo.

And after that there are the plaintiffs who have sued social gambling establishments in more than a dozen states.

Sweepstakes casino operators paid a combined $14.2 million in four separate cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action suit, stating 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 latest claim, which is mainly comparable to its predecessors, New york city state citizens Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited gambling enterprise. '

Apple and Google have actually also been called as offenders in suits for hosting the sweepstakes sites. But unlike VGW, neither tech company responded to DailyMail.com's ask for comment.

'We usually don't talk about 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 formally served.

'We have full confidence in our compliance with all laws and guidelines where we operate, and remain confident about the future,' the spokesperson continued. 'We continue to use our free-to-play games across the majority of The United States and Canada, as we have for more than a years, developing not only fantastic games, user experiences and entertainment, however also ensuring this is done safely, properly and at the highest level of requirements.

'More broadly, we 'd restate that class actions and other litigations and arbitrations are reasonably common across the online social video games industry (and the US more broadly), and our standard practice is that we plan to vigorously protect any claim which may be brought versus us.'

The problems between conventional online sports betting and sweepstakes casinos might show troublesome for some star endorsers.

Towns, a star center with the Knicks, and the 76ers' George both endorse VGW's Global Poker brand name while the NBA is partnered with traditional video gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking illegal sports betting wagering 'sweeps' websites while at the very same time the leagues wish to project a strong position versus prohibited sports betting - especially when trying to tamp down the occasional gaming scandal,' Glaser informed DailyMail.com.

It was simply eight months ago that Toronto Raptors forward Jontay Porter received a lifetime 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 apparently unlawful sports betting sites

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

'I 'd anticipate that a league crackdown on athletes endorsing sweepstakes sites is a matter of when, not if,' Glaser included.

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

Asked if their star endorsers have an obligation to describe to consumers the distinctions and resemblances in between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that needs to be done.

'We have full confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the spokesperson said. '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 shady illegal gambling websites are, at a minimum, putting their track records at threat in addition to courting civil and class actions by customers who declare harm,' Glaser said. 'There is also some threat that state regulators and state chief law officers rope celebrity endorsers into enforcement efforts for helping with unlawful gaming.'

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