The smiling faces of Paris Hilton and Ryan Seacrest made surprise looks before the Louisiana Senate for Friday's hearing on illegal sports betting.
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No, they weren't personally in attendance, however the world-famous celebs were notably consisted of in a slide discussion on social and sweepstakes casinos - the questionable websites providing both complimentary casino-style games and rewarding prizes, such as money, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are simply two cogs in the multibillion-dollar market that now discovers itself besieged by claims. In the eyes of numerous video gaming corporations, not to mention claim plaintiffs and state regulators, sweepstakes casinos act as standard casinos, just without the oversight, customer defenses and tax laws. So not just can they avoid the steep 24-percent federal gaming levy, but sweepstakes operators aren't based on regulatory obstacles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the business deals with accusations of illegal gambling in a New york city suit that declares VGW uses celeb endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's declaration below)

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

Sweepstakes endorsers include a variety of celebs 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 provide any distinctions between traditional gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among many sweepstakes gambling establishments discovered online
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Ryan Seacrest urges fans to dip into Chumba Casino, where numerous - however not all - video games are complimentary

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

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Instead, ads typically focus around the social element of the gambling establishments, while leaving out the potential for actual gambling losses.

Others tempt clients with pledges of rewards. One such operator, Stake, ran a social media ad flaunting Drake's cars, planes and mansions before pivoting to video of the rap artist playing online casino-style games.

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

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

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

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA data, the majority of the players on social-sweepstakes gambling establishments are playing for free.

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

Social casinos offer clients an opportunity to play casino-style video games with friends. Players have the option to buy worthless currency typically referred to as 'gold coins,' which can not be exchanged genuine cash, but can be used to unlock different features within the video games.

But within the world of social gambling establishments exists sweepstakes video gaming, allowing clients to obtain other currency called '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 informed the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the past 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 casino Stake ran an ad flaunting Drake's cars, 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 banned in all but seven states, which has helped to fuel the appeal of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, permit consumers to send mail-in requests for free sweeps coins, offered the players follow painfully specific guidelines. What's more, gamers are often rewarded with sweeps coins merely for registering, consequently offering them a reason to attempt their hands at any variety of casino video games for a chance to win - or lose - real money.

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

According to the stakeholders, their item is the free casino-style video gaming, and the real-stakes competition is just a way of promoting their bread and butter.

'Social sweepstakes games are merely a kind of online home entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is needed to dip into social casinos with sweepstakes rewards. Consumers never ever have to spend for an opportunity to win prizes. That absence of a purchase requirement - or" consideration" - is an important distinction in between social sweeps and conventional online sports betting websites like casinos.'

Consider the way that McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to gamble, however rather they're buying hamburgers and fries that provide them the chance to win rewarding prizes, such as a $1 million prize.

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

'Sweepstakes are a long-standing approach for promoting all sort of daily companies in the United States, whatever from burgers to magazine subscriptions to coffee and home improvement shops,' the SPGA spokesperson informed 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.'
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But to many sports betting industry experts, that argument does not cut it.

For starters, gaming lawyer Daniel Wallach points out, McDonald's Monopoly game doesn't run forever. Rather, it has a well-defined beginning and end, therefore recommending the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being used to promote real items like french fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're typically not tied to casino-style games of opportunity,' Wallach told DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [casinos] have none of the attributes frequently related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos use" casino-like" payouts, generally 80 percent or more of earnings, whereas the common payment portion for a short-lived marketing sweepstakes is a minor share of the income earned by the company [usually less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the web cafes that emerged in Florida, using consumers the chance to play casino-style games for genuine prizes. A lot of those brick-and-mortar facilities have since been shuttered over allegations of prohibited gaming.

DJ Khaled is amongst several star spokespeople for VGW's Global Poker brand name
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Now, Wallach argues, social sweeps casinos must face similar scrutiny.

'These differences are not approximate,' Wallach said of social sweeps casinos. 'They have actually repeatedly been mentioned by courts and state chief law officer as essential aspects in identifying that a sweepstakes promotion was in reality a guise for illegal gambling.'

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

'Consumers are being deprived of securities and states are giving up significant tax and income opportunities as this gaming changes that performed through regulated channels,' checked out a well-circulated AGA memo.

And then there are the plaintiffs who have sued social casinos in more than a lots states.

Sweepstakes casino operators paid a combined $14.2 million in four different cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action suit, stating the settlement was made to prevent legal expenses and continued litigation.

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

In the most current lawsuit, which is mostly similar to its predecessors, New york city state homeowners 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 gambling enterprise. '

Apple and Google have actually also been named as accuseds in suits for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's demand for remark.

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

'We have full 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 use our free-to-play video games across the majority of North America, as we have for more than a years, creating not just great games, user experiences and home 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 lawsuits and arbitrations are reasonably typical across the online social games industry (and the US more broadly), and our standard practice is that we plan to strongly defend any claim which might be brought against us.'

The concerns between traditional online gaming and sweepstakes casinos might prove troublesome for some celeb 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 traditional gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking unlawful sports betting 'sweeps' sites while at the very same time the leagues desire to forecast a strong stance against illegal sports betting - especially when trying 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 involving social or sweepstakes casinos.

Together with VGW, Apple and Google are being taken legal action against for hosting presumably prohibited sports betting sites

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

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

Neither an NBA spokesperson nor the gamers' agents responded to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also ignored to react to DailyMail.com e-mails.

Asked if their celeb endorsers have an obligation to explain to customers the differences and resemblances between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is absolutely nothing more that needs to be done.

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the representative said. 'A few of our worths are" our gamers come first" and" we do what's right", and we put our worths at the core of everything we do.'

Glaser, an outspoken opponent of sweepstakes websites, sees things differently.
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'Celebrities who provide their names to shady prohibited sports betting sites are, at a minimum, putting their track records at danger as well as courting civil and class actions by consumers who declare harm,' 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 helping with prohibited gambling.'

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