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

No, they weren't personally in participation, but the world-famous celebs were conspicuously included in a slide discussion on social and sweepstakes casinos - the questionable sites offering both totally free casino-style games and lucrative prizes, such as cash, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone 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 finds itself besieged by claims. In the eyes of lots of video gaming corporations, not to point out claim plaintiffs and state regulators, sweepstakes gambling establishments serve as conventional casinos, just without the oversight, consumer defenses and tax laws. So not just can they avoid the steep 24-percent federal gambling levy, but sweepstakes operators aren't subject to regulatory obstacles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the business faces allegations of illegal gambling in a New york city claim that claims VGW utilizes celebrity endorsers to 'create a veneer of authenticity' around its item. (See VGW's declaration listed below)

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

Sweepstakes endorsers consist of a variety of celebs 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 use any distinctions in between conventional sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of lots of sweepstakes casinos found online

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

Drake has an offer with social sweeps casino, Stake, that he regularly touts on social networks

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Instead, advertisements typically center around the social element of the casinos, while omitting the capacity for actual gambling losses.

Others tempt consumers with guarantees of prizes. One such operator, Stake, ran a social networks advertisement flaunting Drake's cars, aircrafts and estates before pivoting to video of the rap artist 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 inconsistency between gaming sites and social or sweepstakes gambling establishments is a bit complicated, but operators of the latter insist they're not involved with the former.

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), described 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 clients never make a purchase,' the SPGA spokesperson told DailyMail.com. 'The minority of clients who make purchases do so in quantities far smaller than the typical deposit or wager size at real-money online gambling sites.'

Social casinos provide customers a possibility to play casino-style games with buddies. Players have the alternative to buy worthless currency typically described as 'gold coins,' which can not be exchanged genuine money, but can be used to unlock various features within the video games.

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

And therein lies the potential for financial losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York. One gamer informed the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the previous year after continuing to purchase more coins in pursuit of money and other things of value.

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

Social sweeps gambling establishment Stake ran an ad displaying Drake's vehicles, aircrafts and estates

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

Traditional online gambling establishments are prohibited in all but 7 states, which has actually helped to sustain the popularity of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes sites, which don't need typically need identification. However, websites like Chumba will request for IDs from players attempting to withdraw any funds.

Many websites, like the crypto-compatible Stake, enable customers to send mail-in ask for free sweeps coins, provided the players follow painfully specific guidelines. What's more, players are often rewarded with sweeps coins simply for registering, thus providing a reason to try their hands at any number of casino video games for an opportunity to win - or lose - genuine 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 video gaming, and the real-stakes competition is simply a way of promoting their support.

'Social sweepstakes games are simply a kind of online entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is needed to play at social casinos with sweepstakes prizes. Consumers never have to spend for a chance to win rewards. That absence of a purchase requirement - or" factor to consider" - is a vital difference between social sweeps and traditional online sports betting sites like casinos.'

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

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

'Sweepstakes are an enduring method for promoting all kinds of everyday organizations in the United States, everything from hamburgers to magazine subscriptions to coffee and home improvement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are routinely utilized by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous sports betting industry experts, that argument doesn't cut it.

For starters, video gaming lawyer Daniel Wallach points out, McDonald's Monopoly game does not run indefinitely. Rather, it has a well-defined beginning and end, consequently 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 permanently and they're normally not connected to casino-style video games of possibility,' Wallach informed DailyMail.com. 'They're just cash free gifts.

'The sweepstakes [casinos] have none of the characteristics frequently associated with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments use" casino-like" payouts, normally 80 percent or more of incomes, whereas the normal payment portion for a momentary promotional sweepstakes is an unimportant share of the income earned by the business [typically less than one percent]'

Wallach is fast to compare the online social sweeps casinos to the web cafes that sprang up in Florida, offering clients the possibility to play casino-style games for real prizes. Much of those brick-and-mortar establishments have actually given that been shuttered over claims of unlawful gaming.

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

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

'These distinctions are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have consistently been pointed out by courts and state lawyer generals as crucial consider figuring out that a sweepstakes promo remained in reality a guise for prohibited gambling.'

One of the gambling establishment industry's leading trade organizations, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, sometimes, enact brand-new legislation on the problem.

'Consumers are being deprived of defenses and states are giving up significant tax and income opportunities as this gambling changes that conducted through managed channels,' checked out a well-circulated AGA memo.

And then there are the plaintiffs who have actually taken legal action against social gambling establishments in more than a dozen 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, stating the settlement was made to avoid legal costs and continued lawsuits.

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

In the most recent claim, which is mainly comparable to its predecessors, New York state homeowners 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 actually also been called as accuseds in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's request for remark.

'We normally don't talk about matters before the courts,' a VGW spokesperson told 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 actually not been formally served.

'We have full self-confidence in our compliance with all laws and guidelines where we operate, and remain confident about the future,' the representative continued. 'We continue to offer our free-to-play video games throughout most of The United States and Canada, as we have for more than a years, producing not only terrific video games, user experiences and entertainment, however also ensuring this is done safely, responsibly and at the greatest level of standards.

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

The issues in between conventional online gambling and sweepstakes gambling establishments might prove problematic for some celebrity 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 conventional gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking unlawful sports betting wagering 'sweeps' websites while at the same time the leagues want to predict a strong position against unlawful gambling - especially when trying to tamp down the periodic gambling scandal,' Glaser told DailyMail.com.

It was simply eight months ago that Toronto Raptors forward Jontay Porter received a lifetime ban from the NBA over accusations 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 allegedly prohibited sports betting 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 sites refers when, not if,' Glaser added.

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

Asked if their celebrity endorsers have a responsibility to explain to customers the distinctions and resemblances between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that requires to be done.

'We have full self-confidence in our influencer and ambassadorial collaborations, and our service practices more broadly,' the spokesperson stated. 'Some of our values are" our players precede" 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 differently.

'Celebrities who provide their names to shady illegal gambling sites are, at a minimum, putting their credibilities at threat along with courting civil and class actions by customers who declare damage,' Glaser stated. 'There is likewise some threat that state regulators and state chief law officers rope star endorsers into enforcement efforts for assisting in illegal sports betting.'

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