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

No, they weren't personally in attendance, but the world-famous celebs were notably included in a slide presentation on social and sweepstakes gambling establishments - the questionable websites providing both free casino-style games and financially rewarding prizes, such as cash, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are simply two cogs in the multibillion-dollar market that now discovers itself besieged by claims. In the eyes of numerous video gaming corporations, not to mention suit plaintiffs and state regulators, sweepstakes gambling establishments function as conventional casinos, just without the oversight, consumer protections 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 defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the business deals with allegations of illegal sports betting in a New York lawsuit that declares VGW uses star endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's declaration listed 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 places like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers include a variety of celebs from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions in between standard gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among lots of sweepstakes gambling establishments discovered online

Ryan Seacrest prompts fans to dip into Chumba Casino, where lots of - however not all - games are free

Drake has a handle social sweeps gambling establishment, Stake, that he regularly touts on social networks

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Instead, advertisements generally center around the social aspect of the gambling establishments, while omitting the capacity for real gaming losses.

Others tempt consumers with promises of rewards. One such operator, Stake, ran a social media advertisement flaunting Drake's automobiles, planes and mansions before pivoting to video footage of the rap artist playing online casino-style games.

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

Another caption explained: 'Because I never gave up.'

The discrepancy between sports betting sites and social or sweepstakes casinos is a bit intricate, but operators of the latter insist they're not involved with the former.

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA data, the majority of the players on social-sweepstakes gambling establishments are sports betting free.

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

Social casinos use consumers a chance 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 money, however can be used to open numerous features within the video games.

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

And therein lies the potential for monetary losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York. One gamer 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 value.

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

Social sweeps gambling establishment Stake ran an ad revealing off Drake's cars, planes and estates

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

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

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

Many websites, like the crypto-compatible Stake, enable consumers to send mail-in ask for complimentary sweeps coins, provided the players follow painfully specific instructions. What's more, players are typically rewarded with sweeps coins merely for registering, thereby providing a reason to attempt 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 run in 48 states, while online casinos are prohibited in all but 7?

According to the stakeholders, their product is the totally free casino-style video gaming, and the real-stakes competitors is simply a method of promoting their bread and butter.

'Social sweepstakes games are simply a form of online entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is needed to dip into social gambling establishments with sweepstakes prizes. Consumers never ever need to pay for a chance to win rewards. That absence of a purchase requirement - or" consideration" - is a crucial distinction in between social sweeps and conventional online sports betting sites like gambling establishments.'

Think of the way that McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and french fries that offer them the opportunity to win rewarding rewards, such as a $1 million jackpot.

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

'Sweepstakes are a long-standing method for promoting all type of daily services in the United States, whatever from burgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are regularly utilized by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For beginners, gaming attorney Daniel Wallach points out, McDonald's Monopoly video game does not run indefinitely. Rather, it has a distinct beginning and end, consequently recommending the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being utilized to promote genuine items like french fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're generally not tied to casino-style video games of possibility,' Wallach informed DailyMail.com. 'They're just cash free gifts.

'The sweepstakes [gambling establishments] have none of the characteristics frequently associated with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos use" casino-like" payments, usually 80 percent or more of incomes, whereas the common payment portion for a momentary promotional sweepstakes is a minor share of the earnings earned by the business [generally less than one percent]'

Wallach is quick to liken the online social sweeps casinos to the internet coffee shops that emerged in Florida, using consumers the possibility to play casino-style games for genuine rewards. A lot of those brick-and-mortar establishments have because been shuttered over allegations of illegal gaming.

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

Now, Wallach argues, social sweeps casinos must face comparable examination.

'These distinctions are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have consistently been cited by courts and state chief law officer as key elements in figuring out that a sweepstakes promotion was in truth a guise for illegal gambling.'

One of the gambling establishment market's leading trade companies, 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 deprived of defenses and states are forgoing considerable tax and revenue chances as this gaming replaces that performed through regulated channels,' checked out a well-circulated AGA memo.

And after that there are the complainants who have actually sued social gambling establishments in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in four separate cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action claim, saying the 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 most current suit, which is mainly similar to its predecessors, New york city state homeowners Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is described in the filing as an 'illegal gambling enterprise. '

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

'We usually don't comment on matters before the courts,' a VGW representative informed DailyMail.com through 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 guidelines where we run, and stay confident about the future,' the spokesperson continued. 'We continue to use our free-to-play video games across many of North America, as we have for more than a years, producing not just excellent video games, user experiences and home entertainment, but also ensuring this is done safely, responsibly and at the greatest level of requirements.

'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are fairly typical across the online social games industry (and the US more broadly), and our basic practice is that we intend to intensely protect any claim which might be brought versus us.'

The problems in between traditional online gaming and sweepstakes casinos could prove bothersome for some celeb 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 'sweeps' websites while at the same time the leagues desire to predict a strong stance against prohibited gambling - particularly when trying to tamp down the occasional gaming scandal,' Glaser informed DailyMail.com.

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

In addition to VGW, Apple and Google are being taken legal action against for hosting supposedly illegal gambling websites

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

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

Neither an NBA spokesman nor the players' agents responded to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise overlooked to respond to DailyMail.com e-mails.

Asked if their celeb endorsers have a duty to describe to consumers the differences and similarities between iGaming and sweepstakes casinos, VGW firmly insisted there is absolutely nothing more that needs to be done.

'We have full confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the spokesperson stated. 'Some 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 differently.

'Celebrities who lend their names to shady illegal gaming websites are, at a minimum, putting their track records at threat along with courting civil and class actions by customers who allege damage,' Glaser said. 'There is also some risk that state regulators and state attorneys general rope celeb endorsers into enforcement efforts for helping with illegal gambling.'

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