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 participation, but the world-famous stars were conspicuously consisted of in a slide presentation on social and sweepstakes gambling establishments - the controversial websites using both complimentary casino-style video games and rewarding prizes, such as money, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are just 2 cogs in the multibillion-dollar market that now discovers itself besieged by suits. In the eyes of many video gaming corporations, not to point out lawsuit complainants and state regulators, sweepstakes casinos serve as standard casinos, only without the oversight, customer protections and tax laws. So not only can they prevent the high 24-percent federal sports betting levy, but sweepstakes operators aren't based on regulatory hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the business deals with allegations of illegal gaming in a New York lawsuit that declares VGW uses celebrity endorsers to 'create a veneer of authenticity' around its product. (See VGW's statement listed below)

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

Sweepstakes endorsers consist of a series of celebrities 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 between standard gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among many sweepstakes casinos discovered online

Ryan Seacrest prompts fans to play at Chumba Casino, where numerous - but not all - games are complimentary

Drake has a deal with social sweeps gambling establishment, Stake, that he frequently touts on social media

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Instead, advertisements typically focus around the social aspect of the gambling establishments, while leaving out the potential for real gambling losses.

Others tempt consumers with guarantees of rewards. One such operator, Stake, ran a social networks advertisement flaunting Drake's vehicles, airplanes and estates before rotating to video footage of the rap artist playing online casino-style video games.

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

Another caption explained: 'Because I never ever quit.'

The inconsistency between gaming websites and social or sweepstakes casinos is a bit intricate, however operators of the latter insist they're not involved with the previous.

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

'Most social sweeps consumers never buy,' the SPGA spokesperson informed 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 sports betting sites.'

Social casinos use customers an opportunity to play casino-style games with pals. Players have the option to buy worthless currency typically described as 'gold coins,' which can not be exchanged genuine money, but can be utilized to open various features within the video games.

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

And therein lies the capacity for financial losses, like the ones declared 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 past year after continuing to buy more coins in pursuit of cash and other things of value.

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

Social sweeps casino Stake ran an ad flaunting Drake's vehicles, aircrafts 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 but seven states, which has actually assisted to fuel the popularity of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, permit consumers to submit mail-in requests for free sweeps coins, provided the players follow painfully particular directions. What's more, players are frequently rewarded with sweeps coins simply for signing up, consequently giving them 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 enabled to operate in 48 states, while online gambling establishments are prohibited in all but 7?

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

'Social sweepstakes games are merely a form of online entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is required to dip into social casinos with sweepstakes rewards. Consumers never need to pay for a chance to win prizes. That lack of a purchase requirement - or" factor to consider" - is a vital difference between social sweeps and conventional online gambling sites like casinos.'

Consider the way that McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and french fries that provide them the possibility to win profitable prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the video game itself does not meet the definition of gambling in the US.

'Sweepstakes are a long-standing method for promoting all type of everyday companies in the United States, whatever from burgers to magazine subscriptions to coffee and home improvement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are routinely used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting industry experts, that argument does not cut it.

For beginners, video gaming lawyer Daniel Wallach points out, McDonald's Monopoly video game does not run forever. Rather, it has a well-defined start and end, thereby suggesting the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being utilized to promote real items like french fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're normally not tied to casino-style video games of chance,' Wallach informed DailyMail.com. 'They're just cash free gifts.

'The sweepstakes [gambling establishments] possess none of the qualities frequently related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments offer" casino-like" payouts, normally 80 percent or more of earnings, whereas the normal payment percentage for a momentary marketing sweepstakes is a trivial share of the profits earned by the company [normally less than one percent]'

Wallach is fast to liken the online social sweeps casinos to the web coffee shops that emerged in Florida, using customers the opportunity to play casino-style video games for real prizes. Much of those brick-and-mortar establishments have since been shuttered over allegations of prohibited sports betting.

DJ Khaled is among a number of star spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps casinos should face similar scrutiny.

'These distinctions are not arbitrary,' Wallach stated of social sweeps casinos. 'They have actually consistently been cited by courts and state chief law officer as crucial consider determining that a sweepstakes promotion was in fact a guise for unlawful sports betting.'

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

'Consumers are being deprived of securities and states are passing up considerable tax and revenue chances as this gambling replaces that performed through regulated channels,' checked out a well-circulated AGA memo.

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

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

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

In the current lawsuit, which is mainly similar to its predecessors, New York state locals Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'illegal gambling enterprise. '

Apple and Google have also been named as defendants in suits for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's request for comment.

'We usually do not discuss matters before the courts,' a VGW representative informed DailyMail.com by means of e-mail. 'However, we note that this claim has actually only just been submitted with the court and VGW has not been officially served.

'We have complete confidence in our compliance with all laws and guidelines where we run, and remain confident about the future,' the spokesperson continued. 'We continue to use our free-to-play games throughout the majority of North America, as we have for more than a years, developing not just terrific video games, user experiences and home entertainment, but also ensuring this is done safely, properly and at the highest level of standards.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are reasonably typical throughout the online social video games industry (and the US more broadly), and our standard practice is that we intend to strongly protect any claim which may be brought against us.'

The concerns in between conventional online sports betting and sweepstakes casinos could prove problematic 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 traditional video gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking unlawful sports betting wagering 'sweeps' websites while at the exact same time the leagues wish to predict a strong position versus unlawful gaming - particularly when attempting to tamp down the periodic sports betting scandal,' Glaser informed DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter got a lifetime 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.

In addition to VGW, Apple and Google are being demanded hosting supposedly illegal sports betting sites

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

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

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

Asked if their star endorsers have an obligation to explain to customers the distinctions and resemblances between iGaming and sweepstakes casinos, VGW firmly insisted there is absolutely nothing more that requires to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the spokesperson stated. 'A few of our worths are" our players come initially" 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.

'Celebrities who provide their names to dubious unlawful sports betting sites are, at a minimum, putting their reputations at risk in addition to courting civil and class actions by consumers who declare harm,' Glaser stated. 'There is likewise some threat that state regulators and state chief law officers rope celebrity endorsers into enforcement efforts for assisting in prohibited sports betting.'

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