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

No, they weren't personally in presence, but the world-famous celebs were conspicuously consisted of in a slide presentation on social and sweepstakes gambling establishments - the questionable websites using both free casino-style games and lucrative rewards, such as cash, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are simply two cogs in the multibillion-dollar market that now discovers itself besieged by suits. In the eyes of many gaming corporations, not to discuss lawsuit plaintiffs and state regulators, sweepstakes gambling establishments serve as conventional casinos, only without the oversight, customer protections and tax laws. So not only can they avoid the steep 24-percent federal sports betting levy, but sweepstakes operators aren't based on regulative hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the business deals with allegations of unlawful sports betting in a New York lawsuit that declares VGW utilizes celeb endorsers to 'produce a veneer of authenticity' around its product. (See VGW's statement listed below)

'I'm uncertain" if you do not trust us, you can rely on Paris Hilton" is a winning message for companies operating 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, informed DailyMail.com.

Sweepstakes endorsers consist of a variety of stars 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 use any distinctions in between conventional sports betting and sweepstakes play.

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

Ryan Seacrest urges fans to play at Chumba Casino, where lots of - but not all - games are free

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

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Instead, ads generally center around the social element of the casinos, while omitting the capacity for actual sports betting losses.

Others tempt consumers with pledges of prizes. One such operator, Stake, ran a social media ad revealing off Drake's cars and trucks, planes and estates before pivoting to video of the rapper playing online casino-style games.

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

Another caption described: 'Because I never ever provided up.'

The disparity between sports betting websites and social or sweepstakes casinos is a bit intricate, 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), described its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, many of the gamers on social-sweepstakes casinos are sports betting free.

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

Social gambling establishments offer customers a possibility to play casino-style video games with buddies. Players have the choice to buy worthless currency often referred to as 'gold coins,' which can not be exchanged genuine money, however can be used to unlock different features within the video games.

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

And therein lies the potential for monetary losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York. One gamer 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 money and other things of worth.

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

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake's automobiles, planes and estates

Karl-Anthony Towns of the New York Knicks is another NBA star plugging VGW's Global Poker

Traditional online gambling establishments are prohibited in all but seven states, which has helped to fuel the appeal of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, permit customers to send mail-in demands for free sweeps coins, supplied the players follow painfully specific directions. What's more, players are often rewarded with sweeps coins merely for registering, thereby providing a reason to try their hands at any variety of gambling establishment games for a chance to win - or lose - genuine cash.

So why are sweepstakes websites enabled to run in 48 states, while online casinos are prohibited in all however 7?

According to the stakeholders, their product is the complimentary casino-style gaming, and the real-stakes competition is simply a way of promoting their bread and butter.

'Social sweepstakes video games are merely a type of online entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is needed to dip into social gambling establishments with sweepstakes rewards. Consumers never have to pay for an opportunity to win rewards. That lack of a purchase requirement - or" consideration" - is an important difference between social sweeps and conventional online gaming sites like gambling establishments.'

Consider the manner in which McDonald's uses its yearly Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and fries that provide them the chance to win profitable prizes, such as a $1 million jackpot.

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

'Sweepstakes are an enduring approach for promoting all type of everyday services in the United States, everything from burgers to magazine memberships to coffee and home enhancement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are frequently used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For beginners, gaming lawyer Daniel Wallach explains, McDonald's Monopoly video game doesn't run forever. 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 real items like fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're normally not tied to casino-style games of possibility,' Wallach informed DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [gambling establishments] have none of the characteristics frequently related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos provide" casino-like" payouts, usually 80 percent or more of earnings, whereas the normal payout percentage for a momentary marketing sweepstakes is a minor share of the profits made by the company [normally less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the web coffee shops that emerged in Florida, using consumers the possibility to play casino-style games for genuine prizes. A lot of those brick-and-mortar facilities have actually since been shuttered over claims of unlawful sports betting.

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

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

'These differences are not arbitrary,' Wallach said of social sweeps casinos. 'They have repeatedly been cited by courts and state chief law officer as key consider figuring out that a sweepstakes promotion was in truth a guise for unlawful gambling.'

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

'Consumers are being denied of securities and states are forgoing substantial tax and profits chances as this gaming changes that carried out through managed channels,' read a well-circulated AGA memo.

And after that there are the plaintiffs who have taken legal action against social casinos in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW accepted 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 an offer with the VGW Group, which owns Global Poker

In the most current claim, which is mainly similar to its predecessors, New York state homeowners 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 gaming business. '

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

'We generally don't comment on matters before the courts,' a VGW representative told 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 officially served.

'We have complete self-confidence in our compliance with all laws and policies where we operate, and stay confident about the future,' the representative continued. 'We continue to use our free-to-play games throughout most of North America, as we have for more than a years, developing not only terrific games, user experiences and entertainment, however likewise guaranteeing this is done safely, properly and at the highest level of requirements.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are relatively common throughout the online social games industry (and the US more broadly), and our basic practice is that we mean to vigorously safeguard any claim which may be brought versus us.'

The problems between conventional online sports betting and sweepstakes casinos might show troublesome for some celebrity 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 gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking prohibited sports betting 'sweeps' sites while at the very same time the leagues wish to project a strong stance versus prohibited gambling - particularly when trying to tamp down the periodic gaming scandal,' Glaser informed DailyMail.com.

It was just 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 unrelated to anything involving social or sweepstakes gambling establishments.

Together with VGW, Apple and Google are being demanded hosting apparently prohibited gambling websites

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

'I 'd anticipate that a league crackdown on professional athletes backing sweepstakes websites refers 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 disregarded to react to DailyMail.com emails.

Asked if their star endorsers have an obligation to explain to clients the differences and similarities in between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that needs to be done.

'We have full self-confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the spokesperson said. 'A few of our worths are" our gamers come initially" 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 provide their names to shady illegal sports betting websites are, at a minimum, putting their credibilities at danger as well as courting civil and class actions by customers who declare damage,' Glaser stated. 'There is also some danger that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for helping with illegal gambling.'

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