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

No, they weren't personally in participation, but the world-famous celebrities were conspicuously consisted of in a slide discussion on social and sweepstakes casinos - the controversial sites providing both totally free casino-style games and financially rewarding rewards, such as money, gift cards or cryptocurrency. In one advertisement, 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 2 cogs in the multibillion-dollar industry that now discovers itself besieged by suits. In the eyes of numerous gaming corporations, not to discuss suit complainants and state regulators, sweepstakes gambling establishments function as traditional casinos, only without the oversight, customer securities and tax laws. So not just can they prevent the high 24-percent federal sports betting levy, however sweepstakes operators aren't subject to regulative hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the company faces accusations of unlawful gaming in a New York lawsuit that declares VGW utilizes star endorsers to 'develop a veneer of authenticity' around its item. (See VGW's declaration listed below)

'I'm not exactly sure" if you do not trust us, you can rely on Paris Hilton" is a winning message for business operating 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 consist of a variety of celebs 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 between traditional gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of numerous sweepstakes casinos discovered online

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

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

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Instead, ads normally focus around the social element of the casinos, while omitting the capacity for actual sports betting losses.

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

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

Another caption explained: 'Because I never quit.'

The discrepancy between gambling sites and social or sweepstakes casinos is a bit complicated, 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 competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, the majority of the players on social-sweepstakes casinos are playing for complimentary.

'Most social sweeps consumers never make a purchase,' the SPGA spokesperson informed DailyMail.com. 'The minority of consumers who make purchases do so in amounts far smaller sized than the typical deposit or bet size at real-money online gambling sites.'

Social casinos use consumers an opportunity to play casino-style video games with friends. Players have the choice to purchase valueless currency frequently described as 'gold coins,' which can not be exchanged genuine cash, but can be used to open different functions within the games.

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

And therein lies the potential for monetary losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York. One player informed 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 casino Stake ran an advertisement displaying 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 casinos are prohibited in all but seven states, which has helped to fuel the appeal of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, permit customers to send mail-in requests for totally free sweeps coins, provided the players follow painfully particular instructions. What's more, players are often rewarded with sweeps coins simply for registering, thus providing 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 sites allowed to operate in 48 states, while online gambling establishments are prohibited in all but 7?

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

'Social sweepstakes video games are simply a type of online entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is required to play at social casinos with sweepstakes rewards. Consumers never need to spend for a chance to win rewards. 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 manner in which McDonald's utilizes its annual Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're buying hamburgers and french fries that offer them the chance to win financially rewarding rewards, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the game itself does not meet the definition of gaming in the US.

'Sweepstakes are a long-standing approach for promoting all sort of daily organizations in the United States, whatever from hamburgers to magazine subscriptions to coffee and home enhancement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are routinely used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many sports betting industry insiders, that argument doesn't cut it.

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

'They do not last forever and they're generally not connected to casino-style video games of opportunity,' Wallach informed DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [casinos] have none of the qualities commonly connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments offer" casino-like" payments, usually 80 percent or more of earnings, whereas the common payout percentage for a short-term promotional sweepstakes is a trivial share of the income earned by the business [generally less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the web cafes that sprang up in Florida, offering customers the opportunity to play casino-style games for genuine rewards. A number of those brick-and-mortar facilities have since been shuttered over claims of illegal gaming.

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

Now, Wallach argues, social sweeps casinos should deal with comparable scrutiny.

'These differences are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have repeatedly been cited by courts and state attorney general of the United States as key elements in identifying that a sweepstakes promo remained in fact a guise for unlawful sports betting.'

Among the gambling establishment market's leading trade organizations, the American Gaming Association, is now pushing lawmakers to examine sweepstakes operators and, in many cases, enact brand-new legislation on the problem.

'Consumers are being denied of protections and states are passing up considerable tax and income opportunities as this gambling changes that conducted through regulated channels,' checked out a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in four separate cases in Kentucky without admitting 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 costs and continued litigation.

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

In the current suit, which is mostly 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 explained in the filing as an 'illegal gambling business. '

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

'We normally do not discuss matters before the courts,' a VGW spokesperson told DailyMail.com through email. '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 complete self-confidence in our compliance with all laws and regulations where we run, and remain confident about the future,' the representative continued. 'We continue to provide our free-to-play games across many of North America, as we have for more than a decade, creating not only excellent games, user experiences and home entertainment, but also ensuring this is done safely, properly and at the greatest level of standards.

'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are reasonably common across the online social video games market (and the US more broadly), and our basic practice is that we plan to vigorously protect any claim which may be brought versus us.'

The problems in between standard online gambling and sweepstakes gambling establishments might show 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 gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking prohibited sports betting wagering 'sweeps' sites while at the very same time the leagues want to predict a strong stance versus illegal gambling - specifically when trying to tamp down the occasional gaming scandal,' Glaser informed DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter received a life time restriction from the NBA over claims 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 demanded hosting allegedly prohibited sports betting sites

Regardless, Glaser sees sweepstakes casinos as a major concern 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 representative nor the gamers' agents reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise disregarded to react to DailyMail.com emails.

Asked if their star endorsers have a responsibility to explain 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 complete confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the spokesperson stated. 'A few of our worths are" our gamers come first" and" we do what's right", and we put our values at the core of whatever 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 credibilities at danger along with courting civil and class actions by customers who declare harm,' Glaser said. 'There is also some danger that state regulators and state attorneys general rope celebrity endorsers into enforcement efforts for helping with prohibited gambling.'

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