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 participation, but the world-famous stars were conspicuously included in a slide discussion on social and sweepstakes casinos - the questionable sites providing both complimentary casino-style video games and financially rewarding prizes, such as cash, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are simply two cogs in the multibillion-dollar industry that now discovers itself besieged by lawsuits. In the eyes of lots of video gaming corporations, not to point out lawsuit complainants and state regulators, sweepstakes gambling establishments act as standard gambling establishments, just without the oversight, customer defenses and tax laws. So not just can they prevent the high 24-percent federal sports betting levy, but sweepstakes operators aren't subject to regulative obstacles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the business faces allegations of prohibited gaming in a New york city lawsuit that declares VGW utilizes celebrity endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's declaration listed below)

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

Sweepstakes endorsers include a series of stars from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions between traditional gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of numerous sweepstakes gambling establishments found online

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

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

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Instead, ads generally focus around the social element of the gambling establishments, while omitting the potential for actual gambling losses.

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

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

Another caption explained: 'Because I never offered up.'

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

A spokesperson for a market 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 data, the majority of the gamers on social-sweepstakes gambling establishments are playing for totally free.

'Most social sweeps consumers never make a purchase,' the SPGA representative informed 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 gambling sites.'

Social casinos use clients an opportunity to play casino-style video games with pals. Players have the choice to buy worthless currency frequently described as 'gold coins,' which can not be exchanged genuine money, however can be used to unlock numerous functions within the video games.

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

And therein lies the capacity for financial losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York City. One gamer told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the previous year after continuing to buy 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 revealing off Drake's vehicles, 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 assisted to sustain the appeal of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, allow clients to submit mail-in demands for free sweeps coins, provided the gamers follow painfully particular guidelines. What's more, players are typically rewarded with sweeps coins merely for registering, therefore providing them a factor to attempt their hands at any variety of casino games for an opportunity to win - or lose - genuine cash.

So why are sweepstakes websites enabled to run in 48 states, while online casinos are banned in all however 7?

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

'Social sweepstakes video games are merely a kind of online entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is needed to play at social casinos with sweepstakes prizes. Consumers never ever have to spend for an opportunity to win rewards. That lack of a purchase requirement - or" consideration" - is an important difference between social sweeps and conventional online gambling sites like gambling establishments.'

Think about the manner in which McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and fries that provide them the possibility to win rewarding prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the game itself does not meet the meaning of sports betting in the US.

'Sweepstakes are an enduring method for promoting all type of daily services in the United States, everything from burgers to publication subscriptions to coffee and home improvement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are regularly utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of gambling market insiders, that argument does not cut it.

For starters, video gaming attorney Daniel Wallach mentions, McDonald's Monopoly video game does not run forever. Rather, it has a well-defined start and end, thus recommending the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being utilized to promote genuine products like french fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're usually not connected to casino-style games of opportunity,' Wallach told DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [casinos] have none of the qualities typically associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments offer" casino-like" payments, generally 80 percent or more of incomes, whereas the normal payment portion for a short-term advertising sweepstakes is an insignificant share of the income earned by the business [usually less than one percent]'

Wallach is quick to liken the online social sweeps gambling establishments to the web coffee shops that emerged in Florida, providing consumers the opportunity to play casino-style video games for genuine prizes. A number of those brick-and-mortar establishments have actually since been shuttered over claims of prohibited gambling.

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

Now, Wallach argues, social sweeps casinos should deal with similar examination.

'These distinctions are not approximate,' Wallach said of social sweeps gambling establishments. 'They have consistently been cited by courts and state chief law officer as essential consider identifying that a sweepstakes promo was in truth a guise for unlawful gaming.'

Among the gambling establishment market'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 concern.

'Consumers are being deprived of securities and states are forgoing significant tax and earnings opportunities as this sports betting replaces that performed 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 lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in four different cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action claim, stating the settlement was made to prevent legal costs and continued litigation.

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

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

Apple and Google have likewise been named as offenders in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com's ask for comment.

'We typically do not comment on matters before the courts,' a VGW representative told DailyMail.com by means of e-mail. 'However, we keep in mind that this claim has actually only just been filed with the court and VGW has actually not been officially served.

'We have full self-confidence in our compliance with all laws and policies where we run, and remain positive about the future,' the representative continued. 'We continue to use our free-to-play video games across most of North America, as we have for more than a years, producing not just terrific video games, user experiences and entertainment, however also guaranteeing this is done securely, properly and at the greatest level of requirements.

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

The problems between standard online gambling and sweepstakes gambling establishments might show troublesome for some celeb endorsers.

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

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

It was simply eight months ago that Toronto Raptors forward Jontay Porter received a lifetime restriction 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 demanded hosting supposedly prohibited gambling websites

Regardless, Glaser sees sweepstakes gambling establishments as a significant problem 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' representatives reacted to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise ignored to react to DailyMail.com e-mails.

Asked if their celebrity endorsers have a responsibility to describe to clients the differences and resemblances between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that needs to be done.

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the representative stated. 'A few of our worths are" our players precede" 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 differently.

'Celebrities who lend their names to dubious prohibited gaming websites are, at a minimum, putting their track records at danger along with courting civil and class actions by consumers who allege damage,' Glaser stated. 'There is also some risk that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for helping with illegal gambling.'

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