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

No, they weren't personally in presence, however the world-famous celebrities were notably included in a slide presentation on social and sweepstakes gambling establishments - the questionable sites providing both complimentary casino-style games and profitable rewards, such as cash, gift cards or cryptocurrency. In one advertisement, 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 sites are simply two cogs in the multibillion-dollar market that now discovers itself besieged by suits. In the eyes of lots of gaming corporations, not to point out lawsuit plaintiffs and state regulators, sweepstakes casinos function as conventional gambling establishments, only without the oversight, consumer 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 regulatory obstacles like anti-money laundering and responsible-gaming securities.

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

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

Sweepstakes endorsers include a range 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 distinctions in between standard gaming and sweepstakes play.

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

Ryan Seacrest urges fans to play at Chumba Casino, where many - however not all - video games are free

Drake has a handle social sweeps casino, Stake, that he regularly promotes on social networks

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Instead, advertisements generally focus around the social aspect of the gambling establishments, while leaving out the capacity for real gaming losses.

Others tempt consumers with guarantees of prizes. One such operator, Stake, ran a social networks ad flaunting Drake's cars, airplanes and mansions before pivoting to video footage of the rapper playing online casino-style games.

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

Another caption discussed: 'Because I never quit.'

The disparity between sports betting websites and social or sweepstakes gambling establishments is a bit complicated, however operators of the latter insist they're not included with the former.

A representative for an industry 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, the majority of the gamers on social-sweepstakes casinos are playing for complimentary.

'Most social sweeps clients never purchase,' the SPGA representative informed DailyMail.com. 'The minority of clients who make purchases do so in quantities far smaller than the normal deposit or wager size at real-money online sports betting sites.'

Social gambling establishments use customers an opportunity to play casino-style games with pals. Players have the alternative to buy valueless currency often described as 'gold coins,' which can not be exchanged genuine money, but can be used to open various functions within the games.

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

And therein lies the potential for financial losses, like the ones declared by complainants 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 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 event

Social sweeps casino Stake ran an ad revealing off Drake's cars and trucks, aircrafts and estates

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

Traditional online gambling establishments are banned in all but seven states, which has actually helped to fuel the appeal of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes websites, which do not require generally need recognition. However, websites like Chumba will request IDs from players trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, enable clients to submit mail-in ask for totally free sweeps coins, provided the players follow painfully specific guidelines. What's more, gamers are typically rewarded with sweeps coins merely for signing up, therefore offering them a factor to try their hands at any number of casino games for a possibility to win - or lose - real cash.

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

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

'Social sweepstakes video games are just a form of online home entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is required to play at social casinos with sweepstakes prizes. Consumers never ever need to spend for an opportunity to win rewards. That absence of a purchase requirement - or" factor to consider" - is a crucial difference between social sweeps and conventional online gambling websites like casinos.'

Consider the method that McDonald's uses its annual 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 financially rewarding rewards, such as a $1 million jackpot.

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

'Sweepstakes are an enduring method for promoting all sort of daily organizations in the United States, everything from burgers to publication subscriptions to coffee and home enhancement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are routinely used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For starters, gaming lawyer Daniel Wallach explains, McDonald's Monopoly video game doesn't run forever. Rather, it has a well-defined start and end, thus suggesting the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being utilized to promote real items like french fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're normally not tied to casino-style games of opportunity,' Wallach told DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [casinos] possess none of the attributes frequently associated with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments use" casino-like" payments, usually 80 percent or more of earnings, whereas the typical payout percentage for a short-lived marketing sweepstakes is a trivial share of the profits earned by the business [usually less than one percent]'

Wallach is fast to compare the online social sweeps casinos to the web coffee shops that emerged in Florida, using customers the chance to play casino-style games for genuine prizes. A lot of those brick-and-mortar establishments have actually because been shuttered over accusations of illegal gaming.

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

Now, Wallach argues, social sweeps casinos ought to deal with similar analysis.

'These differences are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have repeatedly been pointed out by courts and state attorney generals as essential consider determining that a sweepstakes promo remained in fact a guise for unlawful sports betting.'

Among the casino industry's leading trade companies, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, sometimes, enact brand-new legislation on the concern.

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

And then there are the plaintiffs who have actually sued social gambling establishments in more than a lots states.

Sweepstakes casino operators paid a combined $14.2 million in four separate cases in Kentucky without admitting any misbehavior, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, saying the settlement was made to prevent legal expenses and continued litigation.

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

In the current lawsuit, which is largely 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 explained in the filing as an 'prohibited sports betting enterprise. '

Apple and Google have actually likewise been called as offenders in claims for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for remark.

'We typically do not talk about matters before the courts,' a VGW spokesperson informed DailyMail.com by means of e-mail. 'However, we note that this claim has only just been filed 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 run, and stay positive about the future,' the spokesperson continued. 'We continue to use our free-to-play video games throughout many of North America, as we have for more than a years, creating not only terrific video games, user experiences and home entertainment, but likewise guaranteeing this is done safely, responsibly and at the highest level of standards.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are relatively typical throughout the online social games industry (and the US more broadly), and our basic practice is that we mean to vigorously protect any claim which may be brought versus us.'

The concerns in between conventional online gambling and sweepstakes gambling establishments could show bothersome for some celebrity endorsers.

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

'It's ironic that expert athletes are hawking prohibited sports betting wagering 'sweeps' sites while at the exact same time the leagues want to forecast a strong position versus illegal gambling - especially when attempting to tamp down the occasional gaming scandal,' Glaser informed DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter got a life time ban from the NBA over accusations he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes gambling establishments.

In addition to VGW, Apple and Google are being sued for hosting apparently prohibited gambling sites

Regardless, Glaser sees sweepstakes casinos as a significant problem for leagues such as the NBA.

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

Neither an NBA spokesperson nor the players' representatives responded 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 star endorsers have a duty to describe to consumers the distinctions and resemblances between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial collaborations, and our service practices more broadly,' the representative said. 'Some of our values are" our gamers come first" 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 differently.

'Celebrities who provide their names to dubious illegal gambling sites are, at a minimum, putting their reputations at threat as well as courting civil and class actions by consumers who declare harm,' Glaser stated. 'There is also some danger that state regulators and state chief law officers rope celebrity endorsers into enforcement efforts for facilitating prohibited gambling.'

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