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

No, they weren't personally in presence, however the world-famous stars were conspicuously consisted of in a slide presentation on social and sweepstakes gambling establishments - the controversial sites providing both totally free casino-style video games and rewarding prizes, such as cash, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody 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 discovers itself besieged by suits. In the eyes of many video gaming corporations, not to point out suit plaintiffs and state regulators, sweepstakes gambling establishments act as standard gambling establishments, just without the oversight, customer protections and tax laws. So not only can they avoid the steep 24-percent federal gaming levy, but sweepstakes operators aren't based on regulatory hurdles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the business faces accusations of unlawful sports betting in a New York suit that declares VGW utilizes star endorsers to 'create a veneer of legitimacy' around its product. (See VGW's statement below)

'I'm not sure" if you don't trust us, you can rely on 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 speaker, Howard Glaser of video gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers consist of a series of celebrities from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions between traditional sports betting and sweepstakes play.

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

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

Drake has an offer with social sweeps casino, Stake, that he routinely touts on social media

Learn more

Donald Trump 'set to call NBA team owner as US ambassador to Italy'

Instead, advertisements generally center around the social aspect of the casinos, while leaving out the capacity for real sports betting losses.

Others lure customers with promises of rewards. One such operator, Stake, ran a social media ad displaying Drake's cars and trucks, aircrafts and estates before rotating to video of the rapper playing online casino-style games.

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

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

The inconsistency between gambling sites and social or sweepstakes gambling establishments is a bit intricate, however operators of the latter insist they're not involved with the previous.

A spokesperson 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 information, the majority of the gamers on social-sweepstakes gambling establishments are sports betting totally free.

'Most social sweeps clients never ever buy,' the SPGA spokesperson informed DailyMail.com. 'The minority of clients who make purchases do so in amounts far smaller sized than the normal deposit or bet size at real-money online gaming websites.'

Social gambling establishments use customers a chance to play casino-style video games with pals. Players have the option to purchase valueless currency frequently described as 'gold coins,' which can not be exchanged genuine money, but can be used to unlock numerous features within the games.

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

And therein lies the capacity for financial losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York City. One player told 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 a Worldwide Poker occasion

Social sweeps gambling establishment Stake ran an ad flaunting Drake's automobiles, planes and mansions

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

Traditional online casinos are prohibited in all however 7 states, which has actually assisted to fuel the appeal of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, permit consumers to send mail-in demands for totally free sweeps coins, supplied the gamers follow painfully specific guidelines. What's more, players are frequently rewarded with sweeps coins simply for signing up, therefore providing a reason to try their hands at any number of gambling establishment games for an opportunity to win - or lose - real cash.

So why are sweepstakes sites permitted to operate in 48 states, while online casinos are banned in all however 7?

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

'Social sweepstakes video games are just a kind of online entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is needed to play at social casinos with sweepstakes prizes. Consumers never need to spend for a chance to win rewards. That lack of a purchase requirement - or" consideration" - is a crucial difference between social sweeps and traditional online sports betting sites like gambling establishments.'

Think of the way 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 chance to win profitable prizes, such as a $1 million prize.

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

'Sweepstakes are an enduring technique for promoting all kinds of daily companies in the United States, whatever from burgers to publication subscriptions to coffee and home enhancement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are routinely utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting market experts, that argument does not cut it.

For beginners, gaming lawyer Daniel Wallach mentions, McDonald's Monopoly video game doesn't run forever. Rather, it has a distinct start and end, thus suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote real products like french fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [gambling establishments] possess none of the characteristics commonly related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos provide" casino-like" payments, usually 80 percent or more of earnings, whereas the typical payout portion for a short-term promotional sweepstakes is a trivial share of the earnings made by the business [typically less than one percent]'

Wallach is quick to liken the online social sweeps gambling establishments to the internet coffee shops that sprang up in Florida, providing customers the possibility to play casino-style video games for genuine rewards. A number of those brick-and-mortar facilities have considering that been shuttered over allegations of prohibited gambling.

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

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

'These differences are not approximate,' Wallach said of social sweeps casinos. 'They have repeatedly been pointed out by courts and state attorney general of the United States as essential aspects in identifying that a sweepstakes promotion remained in fact a guise for illegal sports betting.'

Among the gambling establishment 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 issue.

'Consumers are being deprived of securities and states are passing up considerable tax and earnings opportunities as this gambling changes that carried out through regulated channels,' checked out a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in 4 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 suit, saying 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 latest suit, which is mainly comparable to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is described in the filing as an 'prohibited sports betting business. '

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

'We typically don't comment on 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 filed with the court and VGW has actually not been officially served.

'We have full confidence in our compliance with all laws and guidelines where we operate, and stay positive about the future,' the spokesperson continued. 'We continue to offer our free-to-play games across most of The United States and Canada, as we have for more than a decade, producing not just great video games, user experiences and entertainment, however likewise ensuring this is done securely, properly and at the greatest level of standards.

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

The issues in between standard online gambling and sweepstakes gambling establishments could show 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 traditional gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking prohibited sports betting wagering 'sweeps' sites while at the very same time the leagues wish to predict a strong position against prohibited gambling - specifically when trying to tamp down the periodic 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 allegations he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes casinos.

Together with VGW, Apple and Google are being sued for hosting supposedly prohibited gambling websites

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

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

Neither an NBA spokesman nor the gamers' representatives reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to react to DailyMail.com emails.

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

'We have full confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the spokesperson said. 'A few of our values are" our players come initially" and" we do what's right", and we put our values at the core of everything we do.'

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

'Celebrities who provide their names to dubious prohibited sports betting websites are, at a minimum, putting their credibilities at risk along with courting civil and class actions by consumers who declare harm,' Glaser said. 'There is also some risk that state regulators and state lawyers basic rope star endorsers into enforcement efforts for assisting in illegal sports betting.'

New YorkNBADrakeParis Hilton