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 participation, however the world-famous celebrities were notably included in a slide discussion on social and sweepstakes casinos - the controversial sites providing both free casino-style games and lucrative prizes, such as money, gift cards or cryptocurrency. In one advertisement, 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 just two cogs in the multibillion-dollar market that now discovers itself besieged by lawsuits. In the eyes of many gaming corporations, not to point out claim plaintiffs and state regulators, sweepstakes gambling establishments act as traditional casinos, just without the oversight, customer defenses and tax laws. So not just can they prevent the high 24-percent federal gaming levy, however 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 last year alone. Now the business deals with allegations of unlawful gambling in a New york city lawsuit that claims VGW uses celeb endorsers to 'develop a veneer of authenticity' around its item. (See VGW's declaration below)

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

Sweepstakes endorsers consist of a range of celebrities from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as 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 urges fans to dip into Chumba Casino, where many - however not all - video games are complimentary

Drake has a deal with social sweeps gambling establishment, Stake, that he regularly promotes on social networks

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Instead, ads generally center around the social element of the gambling establishments, while leaving out the capacity for real sports betting losses.

Others lure clients with promises 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 games.

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

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

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

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

'Most social sweeps customers never ever make a purchase,' the SPGA spokesperson 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 gaming sites.'

Social casinos use customers a chance to play casino-style video games with friends. Players have the choice to buy valueless currency often described as 'gold coins,' which can not be exchanged genuine cash, however can be used to unlock numerous functions within the games.

But within the world of social casinos exists sweepstakes gaming, allowing customers to obtain other currency known as 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the potential for monetary losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York City. One gamer informed the Washington Post he lost more than $100,000 on sweepstakes casinos in the previous year after continuing to purchase more coins in pursuit of cash 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 showing off Drake's cars and trucks, aircrafts and mansions

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

Traditional online casinos are banned in all but 7 states, which has actually helped to sustain the appeal of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, allow clients to send mail-in ask for free sweeps coins, provided the players follow painfully specific directions. What's more, players are typically rewarded with sweeps coins merely for registering, thereby providing a factor to try their hands at any number of gambling establishment video games for a chance to win - or lose - genuine cash.

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

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

'Social sweepstakes video games are simply a type of online entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is required to play at social gambling establishments with sweepstakes prizes. Consumers never need to spend for a chance to win prizes. That lack of a purchase requirement - or" factor to consider" - is a crucial difference between social sweeps and standard online gambling sites like casinos.'

Think of the manner in which McDonald's utilizes its annual Monopoly game to promote its food: Customers aren't paying to bet, but rather they're buying hamburgers and fries that offer them the chance to win profitable prizes, 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 sports betting in the US.

'Sweepstakes are an enduring method for promoting all type of daily businesses in the United States, everything from hamburgers to publication subscriptions to coffee and home improvement shops,' the SPGA spokesperson told 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 lots of sports betting industry insiders, that argument doesn't cut it.

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

'They don't last forever and they're generally not tied to casino-style video games of possibility,' Wallach informed DailyMail.com. 'They're just money giveaways.

'The sweepstakes [gambling establishments] have none of the qualities typically related to McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments provide" casino-like" payouts, generally 80 percent or more of profits, whereas the typical payout portion for a short-lived advertising sweepstakes is a trivial share of the profits made 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 possibility to play casino-style games for genuine rewards. Many of those brick-and-mortar establishments have actually given that been shuttered over claims of prohibited sports betting.

DJ Khaled is amongst several celebrity spokespeople for VGW's Global Poker brand

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

'These differences are not arbitrary,' Wallach said of social sweeps casinos. 'They have repeatedly been pointed out by courts and state lawyer generals as key consider determining that a sweepstakes promotion remained in truth a guise for prohibited sports betting.'

Among the casino industry's leading trade organizations, the American Gaming Association, is now pressing legislators to examine sweepstakes operators and, sometimes, enact new legislation on the concern.

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

And then 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 confessing any misdeed, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action lawsuit, saying the settlement was made to avoid legal expenses and continued litigation.

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

In the most recent suit, which is mostly comparable to its predecessors, New york city state locals 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 sports betting enterprise. '

Apple and Google have likewise been called as accuseds in suits for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for comment.

'We typically don't comment on matters before the courts,' a VGW representative informed DailyMail.com through email. 'However, we keep in mind that this claim has only just been submitted with the court and VGW has actually not been officially served.

'We have complete self-confidence in our compliance with all laws and regulations where we run, and stay positive about the future,' the representative continued. 'We continue to offer our free-to-play video games across many 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 also ensuring this is done safely, responsibly and at the greatest level of standards.

'More broadly, we 'd restate that class actions and other litigations and arbitrations are fairly common throughout the online social games market (and the US more broadly), and our basic practice is that we mean to intensely safeguard any claim which might be brought against us.'

The concerns in between standard online gambling and sweepstakes casinos could prove problematic for some celeb 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 paradoxical that professional athletes are hawking illegal sports betting wagering 'sweeps' sites while at the exact same time the leagues wish to project a strong position versus prohibited gambling - especially when trying to tamp down the periodic sports betting scandal,' Glaser informed DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter got a lifetime restriction from the NBA over allegations he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes casinos.

In addition to VGW, Apple and Google are being taken legal action against for hosting supposedly unlawful sports betting sites

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 sites refers when, not if,' Glaser added.

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

Asked if their celebrity endorsers have an obligation to describe to customers the distinctions and resemblances 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 worths are" our gamers come first" and" we do what's right", and we put our worths at the core of whatever we do.'

Glaser, an outspoken challenger of sweepstakes sites, sees things in a different way.

'Celebrities who lend their names to shady unlawful gambling websites are, at a minimum, putting their credibilities at risk as well as courting civil and class actions by customers who allege harm,' Glaser said. 'There is likewise some threat that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for facilitating illegal sports betting.'

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