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

No, they weren't personally in participation, but the world-famous celebs were conspicuously consisted of in a slide discussion on social and sweepstakes casinos - the questionable websites offering both free casino-style video games and financially rewarding prizes, such as cash, gift cards or cryptocurrency. In one advertisement, 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 simply 2 cogs in the multibillion-dollar industry that now discovers itself besieged by claims. In the eyes of many video gaming corporations, not to mention claim plaintiffs and state regulators, sweepstakes casinos function as traditional gambling establishments, only without the oversight, customer securities and tax laws. So not only can they prevent the high 24-percent federal sports betting levy, but sweepstakes operators aren't subject to regulative hurdles 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 unlawful gaming in a New York lawsuit that claims VGW uses celeb endorsers to 'develop a veneer of legitimacy' around its item. (See VGW's declaration listed 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 places like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a range of celebrities from gambling 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 distinctions between conventional gaming and sweepstakes play.

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

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

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

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Instead, advertisements generally center around the social aspect of the casinos, while leaving out the capacity for actual gaming losses.

Others tempt consumers with guarantees of rewards. One such operator, Stake, ran a social networks ad showing off Drake's automobiles, airplanes and mansions before pivoting to footage of the rapper playing online casino-style video games.

'Daddy, why do we have so much money?' read the very first caption on the screen.

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

The discrepancy in between sports betting sites and social or sweepstakes casinos is a bit intricate, 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), discussed its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, many of the players on social-sweepstakes gambling establishments are playing for totally free.

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

Social casinos offer customers an opportunity to play casino-style games with buddies. Players have the option to purchase valueless currency frequently referred to as 'gold coins,' which can not be exchanged genuine cash, however can be used to unlock different features within the video games.

But within the world of social casinos exists sweepstakes video gaming, enabling customers to get other currency understood 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. One player informed the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the past year after continuing to purchase more coins in pursuit of money and other things of worth.

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

Social sweeps gambling establishment Stake ran an advertisement displaying Drake's cars, airplanes and estates

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

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

Anyone over the age of 18 can access the sweepstakes websites, which do not need normally 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 customers to submit mail-in ask for totally free sweeps coins, offered the gamers follow painfully particular guidelines. What's more, gamers are frequently rewarded with sweeps coins merely for registering, consequently providing a factor to try their hands at any number of gambling establishment games for a possibility to win - or lose - genuine cash.

So why are sweepstakes sites enabled to run 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 video gaming, and the real-stakes competition is just a means of promoting their bread and butter.

'Social sweepstakes video games are merely a type of online home entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is needed to play at social casinos with sweepstakes rewards. Consumers never ever need to pay for an opportunity to win rewards. That absence of a purchase requirement - or" factor to consider" - is a vital difference between social sweeps and conventional online gaming sites like casinos.'

Consider the manner in which McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and fries that provide them the opportunity to win lucrative prizes, such as a $1 million prize.

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

'Sweepstakes are an enduring technique for promoting all type of daily businesses in the United States, everything from hamburgers to publication memberships to coffee and home improvement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are routinely 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 market insiders, that argument does not cut it.

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

'They do not last forever and they're typically not connected to casino-style video games of opportunity,' Wallach told DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [casinos] have none of the attributes typically associated with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes casinos provide" casino-like" payments, generally 80 percent or more of revenues, whereas the common payout portion for a short-lived marketing sweepstakes is a minor share of the revenue earned by the business [typically less than one percent]'

Wallach is fast to liken the online social sweeps casinos to the web cafes that sprang up in Florida, offering consumers the possibility to play casino-style games for real prizes. A lot of those brick-and-mortar establishments have actually considering that been shuttered over accusations of illegal gambling.

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

Now, Wallach argues, social sweeps casinos need to deal with comparable examination.

'These differences are not approximate,' Wallach said of social sweeps casinos. 'They have repeatedly been cited by courts and state attorney general of the United States as crucial elements in identifying that a sweepstakes promotion was in truth a guise for illegal gambling.'

One of the casino industry's leading trade organizations, the American Gaming Association, is now pressing legislators to examine sweepstakes operators and, in many cases, enact new legislation on the problem.

'Consumers are being deprived of protections and states are passing up substantial tax and profits opportunities as this gambling changes that conducted through managed channels,' read a well-circulated AGA memo.

And then there are the complainants who have taken legal action against 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 admitting any wrongdoing, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, saying the settlement was made to prevent legal expenses and continued lawsuits.

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

In the current suit, which is largely 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 'prohibited gambling business. '

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

'We usually don't discuss matters before the courts,' a VGW spokesperson told DailyMail.com via email. 'However, we note that this claim has 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 regulations where we run, and remain positive about the future,' the representative continued. 'We continue to use our free-to-play games throughout the majority of The United States and Canada, as we have for more than a years, producing not just fantastic video games, user experiences and entertainment, however also ensuring this is done securely, properly and at the highest level of requirements.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are fairly typical throughout the online social games market (and the US more broadly), and our basic practice is that we intend to strongly protect any claim which may be brought versus us.'

The issues between conventional online gambling and sweepstakes gambling establishments might 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 ironic that professional athletes are hawking illegal sports betting wagering 'sweeps' websites while at the exact same time the leagues wish to project a strong stance versus illegal sports betting - especially when trying to tamp down the periodic sports betting scandal,' Glaser told DailyMail.com.

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

In addition to VGW, Apple and Google are being sued for hosting supposedly prohibited gambling websites

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

'I 'd expect that a league crackdown on professional athletes endorsing sweepstakes websites is a matter of when, not if,' Glaser added.

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

Asked if their star endorsers have an obligation to explain to consumers the distinctions and resemblances in between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the spokesperson stated. 'Some of our values are" our players 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 websites, sees things differently.

'Celebrities who lend their names to dubious unlawful gambling sites are, at a minimum, putting their credibilities at danger along with courting civil and class actions by customers who allege damage,' Glaser stated. 'There is also some risk that state regulators and state chief law officers rope celeb endorsers into enforcement efforts for assisting in illegal gaming.'

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