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

No, they weren't personally in participation, but the world-famous celebs were notably consisted of in a slide discussion on social and sweepstakes gambling establishments - the questionable sites offering both complimentary casino-style video games and lucrative rewards, such as cash, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone 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 market that now finds itself besieged by suits. In the eyes of numerous video gaming corporations, not to mention suit complainants and state regulators, sweepstakes casinos serve as conventional casinos, only without the oversight, consumer defenses and tax laws. So not only can they avoid the steep 24-percent federal gambling levy, however sweepstakes operators aren't based on regulatory obstacles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the business deals with accusations of prohibited gambling in a New york city lawsuit that claims VGW utilizes star endorsers to 'develop a veneer of authenticity' around its product. (See VGW's declaration below)

'I'm not exactly sure" if you don't trust us, you can trust Paris Hilton" is a winning message for business running multibillion-dollar prohibited operations out of places 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 include a series of celebrities from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom provide any differences between standard gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among many sweepstakes casinos discovered online

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

Drake has a handle social sweeps gambling establishment, Stake, that he routinely promotes on social networks

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Instead, ads usually center around the social element of the gambling establishments, while omitting the potential for real gambling losses.

Others tempt consumers with pledges of rewards. One such operator, Stake, ran a social networks advertisement flaunting Drake's automobiles, aircrafts and mansions before pivoting to video footage of the rapper playing online casino-style games.

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

Another caption explained: 'Because I never quit.'

The discrepancy between gambling websites and social or sweepstakes gambling establishments is a bit intricate, however 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), explained its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA data, many of the players on social-sweepstakes gambling establishments are sports betting complimentary.

'Most social sweeps consumers never buy,' the SPGA representative 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 sports betting sites.'

Social gambling establishments use customers an opportunity to play casino-style video games with friends. Players have the alternative to buy worthless currency typically described as 'gold coins,' which can not be exchanged genuine cash, but can be used to open various features within the games.

But within the world of social casinos exists sweepstakes gaming, permitting consumers 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 player told 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 cash and other things of worth.

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

Social sweeps casino Stake ran an ad displaying Drake's cars, aircrafts and estates

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

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

Anyone over the age of 18 can access the sweepstakes websites, which don't require usually need identification. However, sites like Chumba will ask for IDs from gamers trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, enable clients to send mail-in demands for complimentary sweeps coins, supplied the gamers follow painfully specific directions. What's more, gamers are typically rewarded with sweeps coins merely for signing up, thereby providing a factor to attempt their hands at any variety of casino games for a possibility to win - or lose - real cash.

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 product is the totally free casino-style video gaming, and the real-stakes competitors is just a means of promoting their bread and butter.

'Social sweepstakes games are merely a kind of online home 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 prizes. That absence of a purchase requirement - or" consideration" - is an essential difference in between social sweeps and traditional online gaming websites like gambling establishments.'

Consider the manner in which McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and fries that use them the possibility to win profitable rewards, such as a $1 million jackpot.

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

'Sweepstakes are a long-standing method for promoting all sort of everyday organizations in the United States, everything from burgers to publication subscriptions to coffee and home enhancement shops,' the SPGA spokesperson told 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 many sports betting industry insiders, that argument does not cut it.

For starters, gaming attorney Daniel Wallach explains, McDonald's Monopoly game doesn't run forever. Rather, it has a distinct beginning and end, therefore suggesting the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being utilized to promote real products like french fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're normally not tied to casino-style video games of opportunity,' Wallach informed DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [casinos] have none of the qualities frequently connected with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments offer" casino-like" payouts, usually 80 percent or more of earnings, whereas the typical payment portion for a short-lived promotional sweepstakes is an insignificant share of the earnings earned by the business [typically less than one percent]'

Wallach is quick to liken the online social sweeps casinos to the web coffee shops that sprang up in Florida, providing customers the chance to play casino-style video games for real prizes. Much of those brick-and-mortar establishments have because been shuttered over accusations of unlawful gaming.

DJ Khaled is amongst numerous celeb spokespeople for VGW's Global Poker brand name

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

'These differences are not approximate,' Wallach said of social sweeps casinos. 'They have actually consistently been mentioned by courts and state attorney general of the United States as crucial elements in figuring out that a sweepstakes promotion was in fact a guise for prohibited gaming.'

Among the gambling establishment industry's leading trade companies, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, in some cases, enact new legislation on the concern.

'Consumers are being deprived of securities and states are forgoing considerable tax and revenue chances as this gambling changes that performed through controlled channels,' read a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action claim, stating the settlement was made to avoid legal expenses and continued lawsuits.

Michael Phelps has actually signed an offer with the VGW Group, which owns Global Poker

In the current lawsuit, which is largely similar to its predecessors, New york city state locals Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'prohibited gaming business. '

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

'We typically do not discuss 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 not been formally served.

'We have complete confidence in our compliance with all laws and regulations where we run, and remain confident about the future,' the representative continued. 'We continue to offer our free-to-play games across many of North America, as we have for more than a decade, producing not only fantastic video games, user experiences and entertainment, but also ensuring this is done safely, responsibly and at the highest level of requirements.

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

The issues between traditional online gaming and sweepstakes casinos might prove problematic for some celebrity 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 traditional video gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking prohibited sports betting wagering 'sweeps' sites while at the exact same time the leagues wish to forecast a strong stance versus unlawful sports betting - especially when trying to tamp down the occasional gambling scandal,' Glaser informed DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter received a life time ban from the NBA over claims he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes casinos.

Along with VGW, Apple and Google are being demanded hosting apparently illegal gambling sites

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

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

Neither an NBA spokesperson nor the gamers' representatives responded to DailyMail.com's requests for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also ignored to react to DailyMail.com emails.

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

'We have complete confidence in our influencer and ambassadorial partnerships, and our business 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 websites, sees things in a different way.

'Celebrities who lend their names to dubious illegal sports betting websites are, at a minimum, putting their credibilities at danger in addition to courting civil and class actions by consumers who allege harm,' Glaser stated. 'There is also some threat that state regulators and state lawyers general rope celeb endorsers into enforcement efforts for helping with prohibited gambling.'

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