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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 prohibited sports betting.

No, they weren't personally in attendance, but the world-famous stars were conspicuously included in a slide discussion on social and sweepstakes casinos - the controversial sites using both free casino-style games and rewarding rewards, such as cash, gift cards or cryptocurrency. In one ad, 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 two cogs in the multibillion-dollar market that now finds itself besieged by claims. In the eyes of many gaming corporations, not to point out suit plaintiffs and state regulators, sweepstakes gambling establishments act as traditional gambling establishments, just without the oversight, customer defenses and tax laws. So not only can they avoid the high 24-percent federal gaming levy, however sweepstakes operators aren't subject to regulative obstacles 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 unlawful sports betting in a New York suit that declares VGW uses star endorsers to 'develop a veneer of legitimacy' around its item. (See VGW's declaration below)

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

Sweepstakes endorsers consist of a variety of celebs from sports betting lovers 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 gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among numerous sweepstakes gambling establishments discovered online

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

Drake has an offer with social sweeps gambling establishment, Stake, that he frequently touts on social networks

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Instead, ads generally focus around the social aspect of the casinos, while omitting the potential for real gaming losses.

Others tempt customers with promises of prizes. One such operator, Stake, ran a social networks advertisement flaunting Drake's vehicles, planes and mansions before rotating to footage of the rap artist playing online casino-style games.

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

Another caption discussed: 'Because I never provided up.'

The discrepancy between gambling websites and social or sweepstakes gambling establishments is a bit complex, however operators of the latter insist they're not included with the former.

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

'Most social sweeps customers never make a purchase,' the SPGA spokesperson told DailyMail.com. 'The minority of consumers who make purchases do so in amounts far smaller sized than the normal deposit or wager size at real-money online gambling sites.'

Social casinos offer consumers an opportunity to play casino-style video games with buddies. Players have the option to purchase worthless currency typically described as 'gold coins,' which can not be exchanged for genuine cash, however can be utilized to open various features within the games.

But within the world of social casinos exists sweepstakes gaming, permitting customers to acquire other currency called 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the capacity for monetary losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York. One player informed 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 worth.

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

Social sweeps casino Stake ran an ad showing off Drake's cars and trucks, 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 however seven states, which has actually helped to fuel the popularity of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, enable customers to submit mail-in requests for free sweeps coins, provided the gamers follow painfully specific instructions. What's more, players are often rewarded with sweeps coins merely for registering, thereby giving them a reason to attempt their hands at any number of casino video games for a chance to win - or lose - genuine money.

So why are sweepstakes sites allowed to run in 48 states, while online gambling establishments are banned in all but 7?

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

'Social sweepstakes video games are merely a kind of online entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is required to dip into social gambling establishments with sweepstakes rewards. Consumers never ever have to pay for a chance to win prizes. That absence of a purchase requirement - or" factor to consider" - is a vital distinction in between social sweeps and standard online gaming sites like gambling establishments.'

Consider the method that McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and fries that provide them the possibility to win rewarding rewards, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the game itself doesn't meet the meaning of gaming in the US.
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'Sweepstakes are a long-standing method for promoting all sort of everyday businesses in the United States, whatever from burgers to publication memberships to coffee and home enhancement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are routinely 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 market experts, that argument does not cut it.

For starters, gaming attorney Daniel Wallach points out, McDonald's Monopoly game does not run . 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 products like french fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're generally not tied to casino-style video games of chance,' Wallach informed DailyMail.com. 'They're just money giveaways.

'The sweepstakes [casinos] possess none of the characteristics typically associated with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos offer" casino-like" payouts, usually 80 percent or more of earnings, whereas the typical payment percentage for a temporary promotional sweepstakes is a trivial share of the earnings earned by the company [normally less than one percent]'

Wallach is quick to liken the online social sweeps gambling establishments to the internet coffee shops that sprang up in Florida, offering customers the chance to play casino-style games for genuine rewards. Much of those brick-and-mortar establishments have actually given that been shuttered over allegations of illegal gaming.

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

Now, Wallach argues, social sweeps gambling establishments should deal with comparable analysis.

'These differences are not arbitrary,' Wallach said of social sweeps casinos. 'They have consistently been mentioned by courts and state chief law officer as essential consider identifying that a sweepstakes promo was in fact a guise for unlawful gaming.'

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

'Consumers are being denied of securities and states are giving up significant tax and earnings chances as this gaming replaces that conducted through controlled channels,' read a well-circulated AGA memo.

And then there are the plaintiffs who have actually 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 confessing any misbehavior, 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 litigation.

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

In the most recent suit, which is mostly comparable to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'illegal gambling enterprise. '

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

'We typically don't talk about matters before the courts,' a VGW representative told DailyMail.com by means of email. 'However, we note that this claim has only just been submitted with the court and VGW has not been formally served.

'We have full self-confidence in our compliance with all laws and regulations where we operate, and remain positive about the future,' the representative continued. 'We continue to offer our free-to-play video games across the majority of The United States and Canada, as we have for more than a years, creating not just fantastic video games, user experiences and home entertainment, but also ensuring this is done securely, responsibly and at the greatest level of standards.
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'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are relatively common across the online social video games industry (and the US more broadly), and our standard practice is that we intend to vigorously safeguard any claim which might be brought against us.'

The concerns 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 endorse VGW's Global Poker brand name while the NBA is partnered with conventional 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 want to project a strong position versus unlawful sports betting - particularly when attempting to tamp down the periodic gaming scandal,' Glaser told DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter got a life time ban from the NBA over allegations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes gambling establishments.

Along with VGW, Apple and Google are being sued for hosting presumably unlawful gambling websites

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

'I 'd expect that a league crackdown on professional athletes backing sweepstakes sites refers when, not if,' Glaser included.

Neither an NBA representative nor the gamers' agents reacted to DailyMail.com's ask 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 explain to customers the distinctions 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 collaborations, and our service practices more broadly,' the spokesperson 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 sites, sees things in a different way.
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'Celebrities who provide their names to dubious illegal gambling sites are, at a minimum, putting their reputations at threat in addition to courting civil and class actions by consumers who allege harm,' Glaser stated. 'There is likewise some danger that state regulators and state lawyers general rope celebrity endorsers into enforcement efforts for assisting in prohibited gambling.'

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