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 participation, but the world-famous celebs were notably included in a slide discussion on social and sweepstakes gambling establishments - the controversial sites using both free casino-style games and financially 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.

The sites are just 2 cogs in the multibillion-dollar industry that now finds itself besieged by claims. In the eyes of numerous video gaming corporations, not to mention suit plaintiffs and state regulators, sweepstakes gambling establishments serve as traditional gambling establishments, just without the oversight, customer protections and tax laws. So not just can they prevent the steep 24-percent federal gambling levy, but sweepstakes operators aren't subject to regulatory difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the company deals with accusations of illegal sports betting in a New york city claim that declares VGW uses star endorsers to 'develop a veneer of legitimacy' around its item. (See VGW's statement listed below)

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

Sweepstakes endorsers include a range of stars from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions in between traditional sports betting and sweepstakes play.
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Paris Hilton is seen plugging Wow Vegas, one of lots of sweepstakes gambling establishments found online

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

Drake has a deal with social sweeps gambling establishment, Stake, that he routinely touts on social media

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Instead, advertisements generally center around the social element of the gambling establishments, while leaving out the capacity for real gaming losses.

Others tempt clients with pledges of prizes. One such operator, Stake, ran a social networks ad flaunting Drake's cars, planes and estates before rotating to video footage of the rap artist playing online casino-style games.

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

Another caption explained: 'Because I never quit.'

The disparity in between gambling sites and social or sweepstakes casinos is a bit intricate, however operators of the latter insist they're not involved with the previous.

A spokesperson for a market trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA data, most of the gamers on social-sweepstakes casinos are playing for free.

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

Social casinos use customers an opportunity to play casino-style games with buddies. Players have the choice to buy worthless currency frequently referred to as 'gold coins,' which can not be exchanged for real cash, however can be used to unlock various functions within the games.

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

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

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

Social sweeps gambling establishment Stake ran an ad revealing off Drake's cars and trucks, aircrafts 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 banned in all but 7 states, which has assisted to fuel the appeal of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes sites, which don't need usually need identification. However, websites like Chumba will for IDs from players attempting to withdraw any funds.

Many sites, like the crypto-compatible Stake, enable clients to submit mail-in ask for complimentary sweeps coins, provided the gamers follow painfully specific instructions. What's more, players are frequently rewarded with sweeps coins simply for signing up, therefore giving them a factor to attempt their hands at any number of gambling establishment games for an opportunity to win - or lose - genuine cash.

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

According to the stakeholders, their product is the free casino-style video gaming, and the real-stakes competitors is just a method of promoting their support.

'Social sweepstakes video games are merely a type of online home entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is needed to dip into social casinos with sweepstakes rewards. Consumers never ever have to pay for an opportunity to win prizes. That absence of a purchase requirement - or" factor to consider" - is an essential difference between social sweeps and conventional online gambling sites like casinos.'

Consider the method that McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and french fries that offer them the possibility to win profitable rewards, such as a $1 million jackpot.

And without a purchase requirement, or 'factor to consider', the game itself does not meet the meaning of sports betting in the US.

'Sweepstakes are a long-standing method for promoting all kinds of everyday organizations in the United States, whatever from hamburgers to publication subscriptions to coffee and home enhancement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are routinely used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many gambling market experts, that argument does not cut it.

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

'They don't last permanently and they're normally not connected to casino-style games of chance,' Wallach told DailyMail.com. 'They're simply cash giveaways.

'The sweepstakes [gambling establishments] possess none of the attributes typically associated with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments offer" casino-like" payments, usually 80 percent or more of earnings, whereas the common payout portion for a short-term marketing sweepstakes is an insignificant share of the revenue earned by the company [usually less than one percent]'
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Wallach fasts to liken the online social sweeps casinos to the web cafes that emerged in Florida, using consumers the chance to play casino-style games for real rewards. Many of those brick-and-mortar establishments have actually considering that been shuttered over claims of prohibited gambling.
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DJ Khaled is amongst several celebrity spokespeople for VGW's Global Poker brand

Now, Wallach argues, social sweeps casinos must deal with similar examination.

'These distinctions are not arbitrary,' Wallach said of social sweeps casinos. 'They have actually consistently been cited by courts and state lawyer generals as key factors in determining that a sweepstakes promo remained in fact a guise for unlawful sports betting.'

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

'Consumers are being denied of defenses and states are giving up considerable tax and profits opportunities as this sports betting changes that performed through regulated channels,' checked out a well-circulated AGA memo.

And after that there are the complainants who have actually taken legal action against 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 admitting any misbehavior, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action claim, saying the settlement was made to prevent legal expenses and continued litigation.

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

In the current suit, which is largely similar to its predecessors, New york city 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 'prohibited sports betting business. '

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

'We generally do not talk about matters before the courts,' a VGW representative told DailyMail.com by means of email. 'However, we note that this claim has only simply been submitted with the court and VGW has actually not been formally served.
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'We have complete self-confidence in our compliance with all laws and guidelines where we run, and remain positive about the future,' the representative continued. 'We continue to provide our free-to-play video games across many of The United States and Canada, as we have for more than a years, developing not only great games, user experiences and home 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 lawsuits and arbitrations are reasonably typical across the online social games market (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 concerns in between traditional online gambling and sweepstakes casinos might prove bothersome for some star 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 conventional video gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking illegal sports betting 'sweeps' websites while at the very same time the leagues wish to predict a strong stance against unlawful gaming - specifically when attempting to tamp down the occasional gaming scandal,' Glaser informed DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter got a lifetime ban from the NBA over accusations he conspired with bettors. 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 websites

Regardless, Glaser sees sweepstakes casinos as a significant issue 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 gamers' representatives reacted to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise ignored to react to DailyMail.com e-mails.

Asked if their star endorsers have a responsibility to discuss to clients the distinctions and similarities between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that requires to be done.
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'We have full self-confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the representative stated. 'A few of our worths are" our players come initially" and" we do what's right", and we put our worths at the core of whatever we do.'

Glaser, an outspoken opponent of sweepstakes sites, sees things differently.
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'Celebrities who lend their names to shady unlawful sports betting sites are, at a minimum, putting their track records at threat as well as courting civil and class actions by customers who allege harm,' Glaser said. 'There is also some danger that state regulators and state lawyers basic rope celeb endorsers into enforcement efforts for assisting in unlawful gambling.'

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