The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances before the Louisiana Senate for Friday's hearing on prohibited gaming.
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No, they weren't personally in attendance, but the world-famous celebrities were conspicuously included in a slide discussion on social and sweepstakes casinos - the controversial websites providing both free casino-style games and rewarding prizes, such as cash, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

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

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the business faces allegations of prohibited 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 unsure" if you don't trust us, you can trust 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 series of celebs 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 between traditional gaming and sweepstakes play.

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

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

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

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Instead, ads generally focus around the social element of the gambling establishments, while omitting the potential for real gaming losses.

Others lure clients with pledges of rewards. One such operator, Stake, ran a social networks ad flaunting Drake's vehicles, planes and mansions before pivoting to video of the rapper playing online casino-style games.

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

Another caption described: 'Because I never quit.'

The inconsistency in between gambling sites and social or sweepstakes casinos is a bit complex, but operators of the latter insist they're not involved with the former.

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, the majority of the players on social-sweepstakes casinos are sports betting complimentary.

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

Social casinos use consumers an opportunity to play casino-style games with good friends. Players have the alternative to purchase valueless currency typically described as 'gold coins,' which can not be exchanged genuine money, but can be used to open various functions within the games.

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

And therein lies the potential for monetary losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York. One player told 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 money and other things of value.

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

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

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

Traditional online gambling establishments are prohibited 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 sites, which do not 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 customers to send mail-in requests for totally free sweeps coins, provided the gamers follow painfully particular directions. What's more, gamers are frequently rewarded with sweeps coins just for registering, therefore providing a reason to try their hands at any variety of casino games for an opportunity to win - or lose - real money.

So why are sweepstakes websites permitted to operate in 48 states, while online casinos are banned in all but 7?
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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 bread and butter.

'Social sweepstakes video games are simply a form of online entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is needed to dip into social casinos with sweepstakes prizes. Consumers never need to pay for an opportunity to win prizes. That absence of a purchase requirement - or" consideration" - is a crucial distinction in between social sweeps and conventional online gaming websites like casinos.'

Think about the manner in which McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and french fries that offer them the possibility to win lucrative rewards, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the video game itself doesn't meet the definition of gaming in the US.

'Sweepstakes are an enduring technique for promoting all kinds of everyday businesses in the United States, everything from burgers to publication memberships to coffee and home improvement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are regularly utilized by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many gambling market insiders, that argument doesn't cut it.

For beginners, gaming attorney Daniel Wallach points out, McDonald's Monopoly video game doesn't run forever. Rather, it has a distinct beginning and end, thereby suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote real items 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 chance,' Wallach told DailyMail.com. 'They're just money free gifts.

'The sweepstakes [gambling establishments] have none of the attributes commonly related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments offer" casino-like" payments, normally 80 percent or more of revenues, whereas the normal payout portion for a short-lived advertising sweepstakes is a minor share of the profits made by the company [typically less than one percent]'

Wallach is quick to liken the online social sweeps casinos to the internet coffee shops that emerged in Florida, offering clients the chance to play casino-style video games for real prizes. Much of those brick-and-mortar facilities have given that been shuttered over claims of unlawful gaming.

DJ Khaled is among a number of celebrity spokespeople for VGW's Global name

Now, Wallach argues, social sweeps gambling establishments ought to face similar examination.

'These distinctions are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have actually repeatedly been cited by courts and state attorney generals as essential elements in determining that a sweepstakes promo was in fact a guise for illegal sports betting.'

One of the gambling establishment market's leading trade companies, the American Gaming Association, is now pushing legislators to examine sweepstakes operators and, sometimes, enact new legislation on the concern.

'Consumers are being deprived of defenses and states are passing up considerable tax and profits chances as this gambling changes that carried out through regulated channels,' checked out a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action suit, saying the settlement was made to prevent legal costs and continued lawsuits.

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

In the most recent claim, which is largely comparable to its predecessors, New York state homeowners Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is explained in the filing as an 'unlawful sports betting enterprise. '

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

'We usually don't discuss matters before the courts,' a VGW representative informed DailyMail.com via email. 'However, we keep in mind that this claim has actually only simply been submitted 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 positive about the future,' the spokesperson continued. 'We continue to offer our free-to-play games throughout most of The United States and Canada, as we have for more than a years, developing not only terrific video games, user experiences and home entertainment, but likewise ensuring this is done safely, properly and at the greatest level of standards.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are reasonably typical throughout the online social games industry (and the US more broadly), and our basic practice is that we mean to vigorously defend any claim which might be brought versus us.'

The issues between conventional online gambling and sweepstakes gambling establishments might show bothersome for some celebrity endorsers.

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

'It's paradoxical that professional athletes are hawking prohibited sports betting wagering 'sweeps' websites while at the exact same time the leagues wish to predict a strong stance against prohibited gaming - particularly when trying to tamp down the periodic sports betting scandal,' Glaser told DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter received a life time ban 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.

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

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

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

Neither an NBA spokesman nor the gamers' representatives reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise neglected to react to DailyMail.com emails.

Asked if their celeb endorsers have a duty to discuss to customers the distinctions and similarities between iGaming and sweepstakes casinos, 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 values are" our players come initially" and" we do what's right", and we put our values at the core of everything we do.'

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

'Celebrities who lend their names to shady prohibited gambling websites are, at a minimum, putting their credibilities at danger along with courting civil and class actions by consumers who declare harm,' Glaser said. 'There is also some risk that state regulators and state attorneys basic rope star endorsers into enforcement efforts for facilitating illegal gambling.'

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