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

No, they weren't personally in presence, however the world-famous celebrities were conspicuously included in a slide presentation on social and sweepstakes casinos - the controversial websites providing both free casino-style games and rewarding prizes, such as money, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for 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 industry that now finds itself besieged by lawsuits. In the eyes of many video gaming corporations, not to discuss claim plaintiffs and state regulators, sweepstakes gambling establishments serve as standard gambling establishments, only without the oversight, customer protections and tax laws. So not just can they prevent the high 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulative hurdles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the business faces accusations of prohibited sports betting in a New York claim that claims VGW uses star endorsers to 'develop a veneer of authenticity' around its product. (See VGW's declaration listed below)

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

Sweepstakes endorsers consist of a range of stars from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom offer any differences in between conventional gaming and sweepstakes play.

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

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

Drake has an offer with social sweeps gambling establishment, Stake, that he regularly promotes on social media

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Instead, advertisements generally focus around the social aspect of the gambling establishments, while leaving out the potential for actual sports betting losses.

Others lure consumers with pledges of prizes. One such operator, Stake, ran a social networks advertisement flaunting Drake's automobiles, planes and mansions before pivoting to footage of the rapper playing online casino-style games.

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

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

The discrepancy in between sports betting sites and social or sweepstakes gambling establishments is a bit complicated, but operators of the latter insist they're not involved with the previous.

A representative 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 information, the majority of the gamers on social-sweepstakes casinos are sports betting free.

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

Social gambling establishments use clients an opportunity to play casino-style games with pals. Players have the alternative to buy worthless currency typically described as 'gold coins,' which can not be exchanged for genuine cash, but can be utilized to unlock different features within the video games.

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

And therein lies the potential for monetary losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York. One gamer 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 money and other things of worth.

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

Social sweeps gambling establishment Stake ran an ad flaunting Drake's cars, 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 however seven states, which has helped to sustain the appeal of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes websites, which don't need typically require recognition. However, websites like Chumba will ask for IDs from gamers trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, allow consumers to send mail-in requests for free sweeps coins, offered the gamers follow painfully particular instructions. What's more, gamers are typically rewarded with sweeps coins just for signing up, therefore providing a reason to try their hands at any number of casino games for a possibility to win - or lose - real cash.

So why are sweepstakes websites permitted to run in 48 states, while online casinos are prohibited in all but 7?

According to the stakeholders, their product is the totally free casino-style gaming, and the real-stakes competitors is simply a way of promoting their support.

'Social sweepstakes video games are simply a form of online entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is required to dip into social casinos with sweepstakes prizes. Consumers never ever need 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 traditional online sports betting sites like casinos.'

Think about the manner in which McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and french fries that provide them the chance to win profitable rewards, such as a $1 million prize.

And without a purchase requirement, or 'factor to consider', the game itself doesn't satisfy the definition of sports betting in the US.

'Sweepstakes are an enduring technique for promoting all type of everyday organizations in the United States, whatever from hamburgers to publication subscriptions to coffee and home improvement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are routinely utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling industry insiders, that argument doesn't cut it.

For beginners, gaming lawyer Daniel Wallach mentions, McDonald's Monopoly video game does not run forever. Rather, it has a distinct start and end, consequently recommending the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being utilized to promote genuine items like fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're typically not connected to casino-style games of chance,' Wallach informed DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [casinos] possess none of the qualities commonly related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos use" casino-like" payouts, typically 80 percent or more of earnings, whereas the normal payment portion for a momentary marketing sweepstakes is a minor share of the income earned by the business [typically less than one percent]'

Wallach is quick to liken the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, providing consumers the possibility to play casino-style video games for real prizes. Much of those brick-and-mortar facilities have given that been shuttered over accusations of unlawful gambling.

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

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

'These distinctions are not approximate,' Wallach said of social sweeps casinos. 'They have consistently been mentioned by courts and state attorney general of the United States as essential aspects in figuring out that a sweepstakes promo was in fact a guise for unlawful sports betting.'

Among the gambling establishment industry's leading trade organizations, the American Gaming Association, is now pressing lawmakers to investigate sweepstakes operators and, in many cases, enact new legislation on the issue.

'Consumers are being deprived of protections and states are forgoing significant tax and profits chances as this gambling replaces that performed through regulated channels,' read 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 4 different cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action claim, saying the settlement was made to prevent legal expenses and continued litigation.

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

In the current claim, which is mostly similar to its predecessors, New York state residents Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'unlawful gambling business. '

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

'We normally don't talk about matters before the courts,' a VGW spokesperson informed DailyMail.com by means of email. 'However, we keep in mind that this claim has only simply been filed with the court and VGW has actually not been formally served.

'We have complete self-confidence in our compliance with all laws and regulations where we operate, and stay confident about the future,' the spokesperson continued. 'We continue to provide our free-to-play games throughout the majority of The United States and Canada, as we have for more than a years, producing not only terrific games, user experiences and home entertainment, but also guaranteeing this is done securely, responsibly and at the highest level of standards.

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

The concerns in between standard online gaming and sweepstakes casinos could show bothersome for some star endorsers.

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

'It's ironic that professional athletes are hawking unlawful sports betting 'sweeps' sites while at the exact same time the leagues desire to forecast a strong position versus illegal gambling - particularly when trying to tamp down the occasional gambling scandal,' Glaser informed DailyMail.com.

It was simply eight months ago that Toronto Raptors forward Jontay Porter received a lifetime ban from the NBA over allegations he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes gambling establishments.

Together with VGW, Apple and Google are being demanded hosting presumably illegal sports betting sites

Regardless, Glaser sees sweepstakes gambling establishments as a significant issue for leagues such as the NBA.

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

Neither an NBA representative nor the players' agents reacted to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise ignored to react to DailyMail.com emails.

Asked if their star endorsers have an obligation to discuss to consumers the distinctions and similarities between iGaming and sweepstakes casinos, VGW firmly insisted there is absolutely nothing more that needs to be done.

'We have full confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the representative said. 'Some of our values are" our gamers come initially" and" we do what's right", and we put our values 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 illegal gambling sites are, at a minimum, putting their reputations at danger in addition to courting civil and class actions by consumers who declare damage,' Glaser said. 'There is likewise some risk that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for assisting in illegal gambling.'

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