The smiling faces of Paris Hilton and Ryan Seacrest made surprise looks before the Louisiana Senate for Friday's hearing on prohibited gambling.

No, they weren't personally in attendance, however the world-famous stars were conspicuously consisted of in a slide presentation on social and sweepstakes gambling establishments - the controversial websites offering both totally 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 'bet totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are just 2 cogs in the multibillion-dollar market that now finds itself besieged by claims. In the eyes of lots of video gaming corporations, not to discuss claim plaintiffs and state regulators, sweepstakes casinos act as traditional casinos, just without the oversight, customer securities and tax laws. So not just can they prevent the steep 24-percent federal gaming levy, but sweepstakes operators aren't based on regulatory obstacles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the company faces allegations of illegal gambling in a New York lawsuit that declares VGW uses celebrity endorsers to 'produce a veneer of authenticity' around its product. (See VGW's declaration listed below)

'I'm unsure" if you do not trust us, you can trust Paris Hilton" is a winning message for companies operating multibillion-dollar illegal operations out of places like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of 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, along with NBA stars Karl-Anthony Towns and Paul George - none of whom offer any differences in between standard gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among many sweepstakes gambling establishments found online

Ryan Seacrest prompts fans to play at Chumba Casino, where many - however not all - video games are free

Drake has a handle social sweeps gambling establishment, Stake, that he regularly touts on social networks

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

Others lure consumers with guarantees of prizes. One such operator, Stake, ran a social media ad displaying Drake's cars and trucks, airplanes and estates before rotating to video of the rapper playing online casino-style games.

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

Another caption explained: 'Because I never quit.'

The inconsistency between gaming websites and social or sweepstakes gambling establishments is a bit intricate, but operators of the latter insist they're not included with the previous.

A representative for an industry 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 information, most of the gamers on social-sweepstakes casinos are playing for complimentary.

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

Social gambling establishments use clients an opportunity to play casino-style games with pals. Players have the alternative to buy valueless currency often described as 'gold coins,' which can not be exchanged for genuine money, however can be used to open different functions within the games.

But within the world of social gambling establishments exists sweepstakes gaming, permitting consumers to obtain 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 declared 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 past year after continuing to purchase more coins in pursuit of money and other things of value.

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

Social sweeps casino Stake ran an ad displaying Drake's automobiles, aircrafts and mansions

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

Traditional online gambling establishments are banned in all however seven states, which has actually helped to fuel the appeal of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, allow consumers to send mail-in requests for complimentary sweeps coins, provided the gamers follow painfully specific instructions. What's more, players are frequently rewarded with sweeps coins just for signing up, consequently providing a reason to try their hands at any number of casino games for a possibility to win - or lose - genuine cash.

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

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

'Social sweepstakes games are just 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 have to spend for a chance to win rewards. That absence of a purchase requirement - or" factor to consider" - is a crucial difference in between social sweeps and traditional online gambling sites like casinos.'

Think about the manner in which McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and fries that offer them the chance to win financially rewarding rewards, such as a $1 million prize.

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

'Sweepstakes are an enduring method for promoting all kinds of daily companies in the United States, everything from burgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are routinely utilized by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For starters, video gaming lawyer Daniel Wallach explains, McDonald's Monopoly game doesn't run forever. Rather, it has a distinct beginning and end, therefore suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote genuine items like fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're typically not connected to casino-style video games of opportunity,' Wallach informed DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [casinos] have none of the qualities frequently related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments offer" casino-like" payouts, normally 80 percent or more of incomes, whereas the normal payout portion for a short-term marketing sweepstakes is an insignificant share of the income made by the company [typically less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the internet cafes that sprang up in Florida, providing consumers the possibility to play casino-style video games for genuine rewards. A lot of those brick-and-mortar facilities have actually because been shuttered over claims of prohibited gambling.

DJ Khaled is amongst a number of celeb spokespeople for VGW's Global Poker brand name

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

'These differences are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been cited by courts and state attorney generals as crucial aspects in figuring out that a sweepstakes promotion was in truth a guise for illegal gaming.'

Among the casino industry's leading trade companies, the American Gaming Association, is now pushing legislators to examine sweepstakes operators and, in some cases, enact brand-new legislation on the problem.

'Consumers are being deprived of defenses and states are giving up substantial tax and revenue opportunities as this sports betting replaces that conducted through controlled channels,' read a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in four separate cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action suit, stating the settlement was made to prevent legal costs and continued lawsuits.

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

In the current claim, which is mostly similar to its predecessors, New York state locals 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 gaming business. '

Apple and Google have actually likewise been called as defendants in suits for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's demand for remark.

'We typically don't discuss matters before the courts,' a VGW spokesperson informed DailyMail.com by means of 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 complete self-confidence in our compliance with all laws and regulations where we operate, and remain confident about the future,' the representative continued. 'We continue to offer our free-to-play video games throughout the majority of North America, as we have for more than a years, creating not just great games, user experiences and home entertainment, but likewise guaranteeing this is done securely, properly and at the greatest level of requirements.

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

The issues between traditional online gaming and sweepstakes gambling establishments could prove bothersome for some star endorsers.

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

'It's paradoxical that professional athletes are hawking illegal sports betting wagering 'sweeps' websites while at the very same time the leagues wish to predict a strong stance versus illegal sports betting - especially when trying to tamp down the occasional gaming 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 claims 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 demanded hosting apparently unlawful sports betting sites

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

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

Neither an NBA representative nor the players' agents reacted to DailyMail.com's demands for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise neglected to react to DailyMail.com emails.

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

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our service 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 whatever we do.'

Glaser, an outspoken opponent of sweepstakes sites, sees things differently.

'Celebrities who provide their names to dubious prohibited gaming sites are, at a minimum, putting their reputations at threat along with courting civil and class actions by consumers who declare damage,' Glaser stated. 'There is also some danger that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for assisting in prohibited gambling.'

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