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

No, they weren't personally in participation, however the world-famous celebs were conspicuously consisted of in a slide presentation on social and sweepstakes casinos - the controversial sites providing both totally free casino-style video games and financially rewarding prizes, such as money, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet totally 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 industry that now discovers itself besieged by lawsuits. In the eyes of numerous gaming corporations, not to mention suit complainants and state regulators, sweepstakes gambling establishments function as traditional casinos, just without the oversight, consumer protections and tax laws. So not just can they avoid the high 24-percent federal gambling levy, but sweepstakes operators aren't subject to regulative difficulties 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 company deals with allegations of unlawful sports betting in a New york city suit that declares VGW uses star endorsers to 'produce a veneer of authenticity' around its item. (See VGW's declaration listed below)

'I'm uncertain" if you don't trust us, you can trust Paris Hilton" is a winning message for business operating multibillion-dollar prohibited operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers include a variety of stars from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions in between standard gambling and sweepstakes play.

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

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

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

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Instead, advertisements typically center around the social aspect of the gambling establishments, while omitting the potential for actual gaming losses.

Others tempt customers with guarantees of prizes. One such operator, Stake, ran a social media ad flaunting Drake's cars and trucks, airplanes and estates before pivoting to video footage of the rap artist playing online casino-style games.

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

Another caption explained: 'Because I never quit.'

The discrepancy between gaming sites and social or sweepstakes casinos is a bit intricate, however operators of the latter insist they're not included with the former.

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 data, the majority of the players on social-sweepstakes gambling establishments are sports betting free.

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

Social gambling establishments use clients an opportunity to play casino-style games with friends. Players have the alternative to buy valueless currency often described as 'gold coins,' which can not be exchanged for real cash, however can be used to unlock numerous features within the video games.

But within the world of social gambling establishments exists sweepstakes gaming, enabling customers to get other currency called 'sweeps coins' that can be exchanged for cash or other rewards.

And therein lies the capacity for monetary losses, like the ones declared by plaintiffs 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 cash and other things of worth.

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

Social sweeps gambling establishment Stake ran an advertisement revealing off Drake's vehicles, airplanes and estates

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

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

Anyone over the age of 18 can access the sweepstakes websites, which do not need normally require identification. However, websites like Chumba will ask for IDs from players attempting to withdraw any funds.

Many websites, like the crypto-compatible Stake, enable customers to submit mail-in requests for free sweeps coins, offered the players follow painfully specific guidelines. What's more, gamers are typically rewarded with sweeps coins just for signing up, thereby providing a reason to attempt their hands at any variety of gambling establishment video games for an opportunity to win - or lose - genuine money.

So why are sweepstakes sites permitted to run in 48 states, while online gambling establishments are banned in all however 7?

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

'Social sweepstakes games are merely a type of online home entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is needed to dip into social casinos with sweepstakes prizes. Consumers never ever need to spend for an opportunity to win prizes. That lack of a purchase requirement - or" consideration" - is a crucial difference between social sweeps and traditional online sports betting websites like gambling establishments.'

Think about the manner in which McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're buying hamburgers and fries that offer them the opportunity to win financially rewarding rewards, such as a $1 million jackpot.

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

'Sweepstakes are a long-standing technique for promoting all sort of everyday organizations in the United States, everything from hamburgers to publication memberships to coffee and home improvement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are regularly utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous sports betting market insiders, that argument does not cut it.

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

'They don't last permanently and they're normally not connected to casino-style video games of chance,' Wallach informed DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [gambling establishments] possess none of the qualities frequently related to McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos offer" casino-like" payments, usually 80 percent or more of earnings, whereas the normal payment portion for a short-term marketing sweepstakes is an insignificant share of the profits earned by the company [typically less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the internet cafes that sprang up in Florida, providing clients the possibility to play casino-style games for genuine prizes. A lot of those brick-and-mortar facilities have actually because been shuttered over allegations of illegal gaming.

DJ Khaled is among numerous celebrity spokespeople for VGW's Global Poker brand

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

'These distinctions are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have actually repeatedly been pointed out by courts and state chief law officer as key consider determining that a sweepstakes promotion remained in fact a guise for unlawful gambling.'

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

'Consumers are being deprived of protections and states are giving up considerable tax and profits chances as this sports betting changes that performed through regulated channels,' read a well-circulated AGA memo.

And then there are the complainants who have taken legal action against social casinos in more than a lots states.

Sweepstakes casino operators paid a combined $14.2 million in four separate cases in Kentucky without admitting any misdeed, 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 actually signed an offer with the VGW Group, which owns Global Poker

In the current claim, which is largely comparable to its predecessors, New york city state locals Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is described in the filing as an 'illegal sports betting enterprise. '

Apple and Google have also been called as defendants in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's demand for remark.

'We generally do not talk about matters before the courts,' a VGW representative informed DailyMail.com through email. 'However, we keep in mind that this claim has only just been filed with the court and VGW has not been officially served.

'We have full self-confidence in our compliance with all laws and policies where we operate, and remain positive about the future,' the representative continued. 'We continue to use our free-to-play video games throughout many of The United States and Canada, as we have for more than a years, producing not just great games, user experiences and home entertainment, but likewise ensuring this is done safely, properly and at the greatest level of requirements.

'More broadly, we 'd reiterate 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 standard practice is that we plan to vigorously safeguard any claim which might be brought versus us.'

The problems in between traditional online gaming and sweepstakes casinos could prove troublesome for some star 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 expert athletes are hawking unlawful sports betting wagering 'sweeps' sites while at the exact same time the leagues wish to predict a strong position versus prohibited gaming - particularly when trying to tamp down the occasional gambling scandal,' Glaser told DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter received a lifetime restriction from the NBA over accusations he conspired with bettors. 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 gambling sites

Regardless, Glaser sees sweepstakes gambling establishments as a major concern for leagues such as the NBA.

'I 'd expect that a league crackdown on professional athletes backing 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 also neglected to react to DailyMail.com emails.

Asked if their celeb endorsers have a duty to describe to clients the distinctions and similarities between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that needs to be done.

'We have full confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the representative stated. 'A few of our values are" our players 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 provide their names to dubious prohibited sports betting sites are, at a minimum, putting their reputations at threat as well as courting civil and class actions by customers who declare harm,' Glaser said. 'There is also some threat that state regulators and state chief law officers rope star endorsers into enforcement efforts for assisting in unlawful sports betting.'

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