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, however the world-famous stars were notably included in a slide discussion on social and sweepstakes casinos - the controversial sites using both free casino-style video games and lucrative rewards, such as cash, present 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 sites are simply two cogs in the multibillion-dollar market that now discovers itself besieged by suits. In the eyes of lots of video gaming corporations, not to discuss claim complainants and state regulators, sweepstakes gambling establishments serve as traditional casinos, just without the oversight, consumer protections and tax laws. So not only can they avoid the steep 24-percent federal sports betting levy, however sweepstakes operators aren't based on regulative hurdles 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 company faces allegations of unlawful gambling in a New York suit that claims VGW utilizes celebrity endorsers to 'develop a veneer of authenticity' around its product. (See VGW's statement below)

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

Sweepstakes endorsers consist of a series of celebs from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom provide any differences in between conventional gambling and sweepstakes play.

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

Ryan Seacrest urges fans to dip into Chumba Casino, where numerous - however not all - video games are totally free

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

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Instead, ads typically focus around the social element of the casinos, while leaving out the potential for real gambling losses.

Others tempt clients with pledges of rewards. One such operator, Stake, ran a social networks ad displaying Drake's vehicles, aircrafts and estates before pivoting to video of the rap artist playing online casino-style games.

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

Another caption discussed: 'Because I never quit.'

The inconsistency in between sports betting websites and social or sweepstakes casinos is a bit complex, but operators of the latter insist they're not included with the previous.

A representative for an industry trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA data, the majority of the gamers on social-sweepstakes casinos are playing for free.

'Most social sweeps consumers never make a purchase,' the SPGA spokesperson told 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 sports betting websites.'

Social casinos provide consumers an opportunity to play casino-style video games with friends. Players have the option to buy valueless currency frequently described as 'gold coins,' which can not be exchanged for real money, but can be utilized to unlock numerous features within the video games.

But within the world of social casinos exists sweepstakes video gaming, permitting consumers to acquire other currency understood as 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the capacity for monetary losses, like the ones claimed by complainants 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 worth.

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

Social sweeps casino Stake ran an ad revealing off Drake's cars, airplanes 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 however seven states, which has actually helped to sustain the appeal of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, allow consumers to send mail-in ask for totally free sweeps coins, offered the gamers follow painfully specific instructions. What's more, gamers are typically rewarded with sweeps coins merely for registering, consequently giving them a reason to try their hands at any variety of gambling establishment games for an opportunity to win - or lose - genuine cash.

So why are sweepstakes websites permitted to run in 48 states, while online casinos are prohibited in all however 7?

According to the stakeholders, their item is the complimentary casino-style gaming, and the real-stakes competitors is simply a way of promoting their bread and butter.

'Social sweepstakes games are just a form of online home entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is needed to play at social gambling establishments with sweepstakes rewards. Consumers never ever have to pay for a chance to win prizes. That lack of a purchase requirement - or" consideration" - is a crucial difference between social sweeps and conventional online gaming websites like gambling establishments.'

Think of the way that McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and fries that use them the opportunity to win profitable prizes, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the video game itself doesn't satisfy the definition of sports betting in the US.

'Sweepstakes are a long-standing technique for promoting all kinds of daily companies in the United States, everything from hamburgers to publication memberships to coffee and home enhancement stores,' the SPGA spokesperson 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 market insiders, that argument doesn't cut it.

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

'They do not last forever and they're normally not tied to casino-style games of chance,' Wallach informed DailyMail.com. 'They're simply cash giveaways.

'The sweepstakes [gambling establishments] have none of the characteristics frequently related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments provide" casino-like" payouts, usually 80 percent or more of profits, whereas the normal payment portion for a momentary advertising sweepstakes is an insignificant share of the earnings earned by the company [normally less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the internet cafes that emerged in Florida, providing consumers the chance to play casino-style games for real rewards. Many of those brick-and-mortar establishments have because been shuttered over accusations of illegal gambling.

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

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

'These differences are not approximate,' Wallach said of social sweeps casinos. 'They have actually consistently been pointed out by courts and state attorney generals as key factors in identifying that a sweepstakes promotion remained in fact a guise for illegal gaming.'

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

'Consumers are being denied of securities and states are giving up considerable tax and profits opportunities as this gambling replaces that conducted through managed channels,' read a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in four different cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action lawsuit, stating the settlement was made to avoid legal expenses and continued litigation.

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

In the most recent suit, which is mostly comparable to its predecessors, New York state citizens Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is described in the filing as an 'illegal sports betting business. '

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

'We typically do not discuss matters before the courts,' a VGW representative informed DailyMail.com by means of email. 'However, we note that this claim has actually only just been submitted with the court and VGW has actually not been officially served.

'We have complete confidence in our compliance with all laws and policies where we operate, and stay confident about the future,' the representative continued. 'We continue to provide our free-to-play games throughout most of North America, as we have for more than a decade, creating not just terrific games, user experiences and entertainment, but likewise guaranteeing this is done safely, properly and at the greatest level of standards.

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

The concerns in between standard online sports betting and sweepstakes gambling establishments might show troublesome for some star endorsers.

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

'It's paradoxical that professional athletes are hawking illegal sports betting 'sweeps' websites while at the same time the leagues want to project a strong position versus illegal gaming - particularly when trying to tamp down the periodic gambling scandal,' Glaser told 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 unassociated to anything including social or sweepstakes casinos.

Along with VGW, Apple and Google are being demanded hosting supposedly unlawful sports betting sites

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

'I 'd anticipate 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' agents reacted to DailyMail.com's demands 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 describe to consumers the differences and similarities between iGaming and sweepstakes casinos, VGW firmly insisted there is absolutely nothing more that requires to be done.

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the spokesperson stated. 'A few of our worths are" our players precede" and" we do what's right", and we put our worths at the core of whatever we do.'

Glaser, an outspoken opponent of sweepstakes websites, sees things differently.

'Celebrities who lend their names to dubious illegal gambling sites are, at a minimum, putting their track records at danger in addition to courting civil and class actions by consumers who allege harm,' Glaser said. 'There is also some danger that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for helping with illegal gaming.'

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