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 celebs were notably consisted of in a slide discussion on social and sweepstakes casinos - the controversial sites using both complimentary casino-style games and profitable rewards, 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 sites are simply 2 cogs in the multibillion-dollar market that now finds itself besieged by lawsuits. In the eyes of numerous video gaming corporations, not to mention lawsuit complainants and state regulators, sweepstakes casinos function as traditional casinos, just without the oversight, customer defenses and tax laws. So not just can they avoid the high 24-percent federal gambling levy, however sweepstakes operators aren't based on regulative 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 company deals with allegations of illegal sports betting in a New York lawsuit that claims VGW uses celeb endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's statement 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 presenter, Howard Glaser of video gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a variety of stars 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 in between standard sports betting and sweepstakes play.

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

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

Drake has a handle social sweeps gambling establishment, Stake, that he routinely touts on social media

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Instead, ads normally focus around the social aspect of the gambling establishments, while omitting the potential for actual gaming losses.

Others tempt consumers with guarantees of prizes. One such operator, Stake, ran a social networks ad revealing off Drake's automobiles, planes and estates before rotating to video footage of the rapper playing online casino-style video games.

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

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

The disparity in between gaming websites and social or sweepstakes gambling establishments is a bit complex, 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), described its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA data, most of the players on social-sweepstakes casinos are playing for totally free.

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

Social casinos offer customers a possibility to play casino-style games with good friends. Players have the option to buy worthless currency frequently referred to as 'gold coins,' which can not be exchanged genuine cash, however can be utilized to unlock various features within the video games.

But within the world of social casinos exists sweepstakes gaming, enabling consumers to acquire other currency understood as 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the capacity for monetary losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York City. One gamer informed the Washington Post he lost more than $100,000 on sweepstakes casinos in the past year after continuing to purchase more coins in pursuit of money and other things of value.

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

Social sweeps gambling establishment Stake ran an advertisement displaying Drake's automobiles, aircrafts and mansions

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

Traditional online casinos are prohibited in all but 7 states, which has assisted to fuel the popularity of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, permit consumers to send mail-in ask for totally free sweeps coins, supplied the gamers follow painfully specific instructions. What's more, players are often rewarded with sweeps coins just for signing up, thus offering them a reason to attempt their hands at any number of gambling establishment games for an opportunity to win - or lose - genuine cash.

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

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

'Social sweepstakes video games are simply a type of online home entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is needed to play at social gambling establishments with sweepstakes rewards. Consumers never ever need to spend for a chance to win prizes. That absence of a purchase requirement - or" consideration" - is a vital difference in between social sweeps and conventional online sports betting sites like gambling establishments.'

Think of the method that McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and fries that provide them the opportunity to win rewarding prizes, such as a $1 million jackpot.

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

'Sweepstakes are a long-standing method for promoting all sort of everyday companies in the United States, everything from hamburgers to publication subscriptions to coffee and home enhancement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are routinely utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many gambling industry experts, that argument does not cut it.

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

'They don't last forever and they're generally not connected to casino-style games of chance,' Wallach told DailyMail.com. 'They're simply cash giveaways.

'The sweepstakes [casinos] have none of the attributes commonly connected with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments provide" casino-like" payouts, usually 80 percent or more of incomes, whereas the typical payment percentage for a short-term marketing sweepstakes is a minor share of the revenue made by the business [usually less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the web cafes that emerged in Florida, using consumers the opportunity to play casino-style games for real prizes. A number of those brick-and-mortar facilities have because been shuttered over allegations of illegal gaming.

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

Now, Wallach argues, social sweeps casinos need to face comparable analysis.

'These differences are not approximate,' Wallach said of social sweeps casinos. 'They have consistently been pointed out by courts and state lawyer generals as crucial factors in identifying that a sweepstakes promo was in fact a guise for unlawful sports betting.'

Among the casino industry's leading trade organizations, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, sometimes, enact new legislation on the problem.

'Consumers are being denied of protections and states are forgoing significant tax and revenue opportunities as this gaming replaces that performed through controlled channels,' read a well-circulated AGA memo.

And after that there are the plaintiffs who have actually taken legal action against social casinos in more than a dozen states.

Sweepstakes casino operators paid a combined $14.2 million in 4 separate cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action suit, stating the settlement was made to avoid legal expenses and continued litigation.

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

In the newest claim, which is mainly similar to its predecessors, New york city state homeowners Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'illegal gaming enterprise. '

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

'We typically don't talk about matters before the courts,' a VGW spokesperson told DailyMail.com through email. 'However, we note that this claim has only just been submitted with the court and VGW has actually not been formally served.

'We have full confidence in our compliance with all laws and regulations where we run, and stay positive about the future,' the spokesperson continued. 'We continue to provide our free-to-play video games throughout the majority of North America, as we have for more than a decade, creating not just excellent games, user experiences and home entertainment, however also ensuring this is done safely, properly and at the greatest level of standards.

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

The issues in between standard online sports betting and sweepstakes casinos could prove problematic 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 standard gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking prohibited sports betting wagering 'sweeps' sites while at the same time the leagues wish to project a strong stance against illegal gambling - particularly when attempting to tamp down the periodic gaming scandal,' Glaser informed DailyMail.com.

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

Along with VGW, Apple and Google are being sued for hosting presumably prohibited sports betting sites

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

'I 'd expect that a league crackdown on athletes backing sweepstakes sites refers when, not if,' Glaser added.

Neither an NBA spokesman nor the players' representatives reacted to DailyMail.com's requests for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise neglected to respond to DailyMail.com e-mails.

Asked if their celebrity endorsers have a responsibility to discuss to clients the distinctions and resemblances between iGaming and sweepstakes casinos, VGW firmly 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 said. 'Some of our values are" our gamers precede" and" we do what's right", and we put our values at the core of whatever we do.'

Glaser, an outspoken opponent of sweepstakes sites, sees things in a different way.

'Celebrities who lend their names to shady illegal gaming websites are, at a minimum, putting their reputations at threat in addition to courting civil and class actions by customers who declare harm,' Glaser stated. 'There is also some risk that state regulators and state chief law officers rope celeb endorsers into enforcement efforts for helping with illegal sports betting.'

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