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, however the world-famous celebrities were notably included in a slide discussion on social and sweepstakes gambling establishments - the controversial sites offering both free casino-style games and financially rewarding prizes, such as cash, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone 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 lawsuits. In the eyes of many video gaming corporations, not to discuss lawsuit plaintiffs and state regulators, sweepstakes casinos function as traditional casinos, just without the oversight, consumer protections and tax laws. So not just can they prevent the steep 24-percent federal gaming levy, however 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 profits last year alone. Now the business faces accusations of illegal gambling in a New York claim that claims VGW utilizes star endorsers to 'develop a veneer of legitimacy' around its product. (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 running multibillion-dollar unlawful operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of video gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers include a variety of celebrities from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom use any differences in between traditional gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of lots of sweepstakes casinos discovered online

Ryan Seacrest advises fans to dip into Chumba Casino, where lots of - but not all - video games are totally free

Drake has a deal with social sweeps casino, Stake, that he frequently promotes on social media

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Instead, ads typically center around the social element of the casinos, while omitting the capacity for actual gambling losses.

Others tempt customers with guarantees of rewards. One such operator, Stake, ran a social media advertisement displaying Drake's cars and trucks, aircrafts and estates before rotating to video of the rapper playing online casino-style games.

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

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

The inconsistency in between sports betting sites 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 an industry 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 information, the majority of the players on social-sweepstakes gambling establishments are playing for complimentary.

'Most social sweeps consumers never ever purchase,' the SPGA representative told DailyMail.com. 'The minority of clients who make purchases do so in quantities far smaller sized than the common deposit or bet size at real-money online sports betting sites.'

Social gambling establishments provide consumers a chance to play casino-style video games with pals. Players have the choice to buy worthless currency often referred to as 'gold coins,' which can not be exchanged for real money, however can be utilized to open numerous functions within the games.

But within the world of social casinos exists sweepstakes gaming, allowing clients to obtain other currency known 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 City. One gamer informed the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the past year after continuing to buy more coins in pursuit of money and other things of worth.

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

Social sweeps gambling establishment Stake ran an ad flaunting Drake's vehicles, aircrafts and mansions

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

Traditional online casinos are prohibited in all but 7 states, which has assisted to sustain the popularity of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, allow clients to submit mail-in ask for free sweeps coins, supplied the players follow painfully particular guidelines. What's more, gamers are often rewarded with sweeps coins simply for signing up, consequently providing a factor to try their hands at any number of casino video games for a chance to win - or lose - genuine cash.

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

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

'Social sweepstakes video games are merely a kind of online home entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is required to dip into social casinos with sweepstakes rewards. Consumers never have to pay for an opportunity to win prizes. That absence of a purchase requirement - or" consideration" - is an essential difference in between social sweeps and traditional online betting sites like gambling establishments.'

Think of the manner in which McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and fries that use them the chance to win rewarding prizes, such as a $1 million prize.

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

'Sweepstakes are a long-standing approach for promoting all kinds of everyday companies in the United States, everything from hamburgers to magazine subscriptions to coffee and home enhancement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are frequently used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous sports betting industry insiders, that argument doesn't cut it.

For beginners, video gaming attorney Daniel Wallach points out, McDonald's Monopoly video game does not run forever. Rather, it has a well-defined beginning and end, thus 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 do not last forever and they're usually not connected to casino-style games of opportunity,' Wallach informed DailyMail.com. 'They're just money giveaways.

'The sweepstakes [gambling establishments] possess none of the characteristics frequently associated with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments use" casino-like" payouts, typically 80 percent or more of earnings, whereas the common payment portion for a short-term advertising sweepstakes is an unimportant share of the income made by the company [normally less than one percent]'

Wallach is quick to compare the online social sweeps gambling establishments to the internet cafes that emerged in Florida, using clients the chance to play casino-style video games for real rewards. Much of those brick-and-mortar facilities have since been shuttered over allegations of unlawful sports betting.

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

Now, Wallach argues, social sweeps casinos should face comparable analysis.

'These differences are not approximate,' Wallach stated of social sweeps casinos. 'They have repeatedly been mentioned by courts and state attorney generals as essential consider determining that a sweepstakes promo was in fact a guise for illegal gaming.'

One of the casino industry's leading trade organizations, the American Gaming Association, is now pressing lawmakers to investigate sweepstakes operators and, in many cases, enact new legislation on the issue.

'Consumers are being deprived of defenses and states are passing up substantial tax and revenue opportunities as this gaming changes 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 4 separate cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action claim, stating the settlement was made to prevent legal expenses and continued lawsuits.

Michael Phelps has signed an offer with the VGW Group, which owns Global Poker

In the current suit, which is largely comparable to its predecessors, New York state citizens Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is described in the filing as an 'prohibited gaming business. '

Apple and Google have actually also been named as accuseds in claims for hosting the sweepstakes sites. But unlike VGW, neither tech company responded to DailyMail.com's ask for remark.

'We usually don't discuss matters before the courts,' a VGW spokesperson told DailyMail.com via e-mail. 'However, we keep in mind that this claim has actually only simply been filed with the court and VGW has not been formally 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 video games across many of North America, as we have for more than a decade, producing not only excellent games, user experiences and entertainment, however likewise ensuring this is done safely, responsibly and at the highest level of standards.

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

The concerns between standard online gaming and sweepstakes casinos might show problematic for some celeb 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 conventional video gaming titans like FanDuel and DraftKings.

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

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

In addition to VGW, Apple and Google are being taken legal action against for hosting presumably prohibited sports betting sites

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

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

Neither an NBA spokesperson nor the players' agents reacted to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also disregarded to react to DailyMail.com emails.

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

'We have full confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the spokesperson stated. 'A few of our worths are" our gamers precede" and" we do what's right", and we put our worths at the core of whatever we do.'

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

'Celebrities who provide their names to dubious unlawful sports betting websites are, at a minimum, putting their reputations at threat in addition to courting civil and class actions by consumers who allege damage,' Glaser stated. 'There is likewise some risk that state regulators and state attorneys general rope celebrity endorsers into enforcement efforts for assisting in illegal gambling.'

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