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

No, they weren't personally in presence, however the world-famous celebrities were conspicuously consisted of in a slide presentation on social and sweepstakes casinos - the controversial websites using 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 anybody can 'bet 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 industry that now finds itself besieged by claims. In the eyes of many video gaming corporations, not to discuss lawsuit complainants and state regulators, sweepstakes casinos act as standard casinos, only 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 faces accusations of prohibited sports betting in a New York claim that claims VGW utilizes star endorsers to 'create a veneer of authenticity' around its product. (See VGW's statement below)

'I'm uncertain" if you do not trust us, you can trust 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 speaker, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a variety of celebs from gambling 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 in between traditional sports betting and sweepstakes play.

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

Ryan Seacrest prompts fans to dip into Chumba Casino, where numerous - however not all - video games are totally free

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

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Instead, ads typically focus around the social element of the casinos, while omitting the potential for real gambling losses.

Others tempt clients with guarantees of rewards. One such operator, Stake, ran a social networks advertisement displaying Drake's cars and trucks, planes and estates before pivoting to footage 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 offered up.'

The inconsistency in between gambling sites and social or sweepstakes gambling establishments is a bit intricate, 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), explained 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 sports betting totally free.

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

Social gambling establishments provide clients an opportunity to play casino-style video games with good friends. Players have the option to buy worthless currency often referred to as 'gold coins,' which can not be exchanged for genuine money, however can be utilized to unlock various features within the games.

But within the world of social gambling establishments exists sweepstakes gaming, enabling consumers to get other currency referred to as 'sweeps coins' that can be exchanged for cash or other rewards.

And therein lies the capacity for monetary losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York. One gamer informed 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 cash and other things of value.

The Philadelphia 76ers' Paul George is seen promoting an International Poker event

Social sweeps gambling establishment Stake ran an ad showing off Drake's cars, aircrafts and estates

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 7 states, which has actually assisted to sustain the appeal of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, allow clients to submit mail-in ask for complimentary sweeps coins, provided the players follow painfully specific guidelines. What's more, gamers are frequently rewarded with sweeps coins just for signing up, thereby providing a reason to try their hands at any variety of casino games for a chance to win - or lose - real money.

So why are sweepstakes websites permitted 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 gaming, and the real-stakes competition is just a way of promoting their support.

'Social sweepstakes games are just a type of online home entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is required to play at social casinos with sweepstakes rewards. Consumers never ever have to spend for a chance to win rewards. That absence of a purchase requirement - or" consideration" - is an important difference in between social sweeps and traditional online gaming websites like casinos.'

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

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

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

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

For starters, video gaming lawyer Daniel Wallach points out, McDonald's Monopoly game does not run forever. Rather, it has a distinct start and end, thereby suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote genuine products like french 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 simply cash free gifts.

'The sweepstakes [casinos] have none of the characteristics commonly connected with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments use" casino-like" payouts, usually 80 percent or more of revenues, whereas the typical payment portion for a short-lived advertising sweepstakes is an insignificant share of the earnings earned by the company [generally less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the web coffee shops that emerged in Florida, providing customers the opportunity to play casino-style video games for genuine prizes. Much of those brick-and-mortar establishments have since been shuttered over claims of illegal gambling.

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

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

'These distinctions are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have consistently been mentioned by courts and state chief law officer as crucial consider identifying that a sweepstakes promotion was in reality a guise for unlawful sports betting.'

Among the casino industry's leading trade companies, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, sometimes, enact brand-new legislation on the problem.

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

And then there are the complainants 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 admitting any misbehavior, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action lawsuit, saying the settlement was made to prevent legal costs and continued litigation.

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

In the most recent lawsuit, which is mainly similar to its predecessors, New york city state citizens Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is explained in the filing as an 'illegal gambling enterprise. '

Apple and Google have actually likewise been named as defendants in claims for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's request for remark.

'We generally don't comment on matters before the courts,' a VGW spokesperson told DailyMail.com by means of e-mail. 'However, we note that this claim has actually only simply been filed with the court and VGW has not been formally served.

'We have full self-confidence in our compliance with all laws and policies where we operate, and stay confident about the future,' the spokesperson continued. 'We continue to offer our free-to-play video games across most of North America, as we have for more than a years, creating not only fantastic video games, user experiences and entertainment, but also guaranteeing this is done safely, responsibly and at the highest level of standards.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are relatively common across the online social games industry (and the US more broadly), and our standard practice is that we intend to vigorously defend any claim which might be brought against us.'

The concerns between conventional online gambling 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 name while the NBA is partnered with standard gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking unlawful sports betting 'sweeps' websites while at the exact same time the leagues wish to predict a strong stance versus illegal gaming - specifically when attempting to tamp down the occasional sports betting scandal,' Glaser informed DailyMail.com.

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

Along with VGW, Apple and Google are being demanded hosting apparently illegal sports betting sites

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

'I 'd anticipate that a league crackdown on professional athletes backing sweepstakes sites is a matter of when, not if,' Glaser included.

Neither an NBA spokesman nor the players' representatives reacted to DailyMail.com's demands for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise ignored to react to DailyMail.com e-mails.

Asked if their star endorsers have a responsibility to discuss to consumers the differences and similarities between iGaming and sweepstakes casinos, VGW insisted there is nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the spokesperson said. 'Some 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 challenger of sweepstakes websites, sees things in a different way.

'Celebrities who provide their names to dubious prohibited gambling websites are, at a minimum, putting their track records at risk along with courting civil and class actions by customers who allege damage,' Glaser stated. 'There is also some risk that state regulators and state attorneys basic rope star endorsers into enforcement efforts for helping with unlawful sports betting.'

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