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

No, they weren't personally in presence, but the world-famous celebs were notably included in a slide presentation on social and sweepstakes casinos - the questionable sites providing both complimentary casino-style games and lucrative prizes, such as cash, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for 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 industry that now finds itself besieged by claims. In the eyes of numerous gaming corporations, not to discuss suit complainants and state regulators, sweepstakes casinos function as conventional gambling establishments, only without the oversight, customer defenses and tax laws. So not only can they prevent the steep 24-percent federal gaming levy, but sweepstakes operators aren't based on regulative difficulties like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the company faces allegations of prohibited gaming in a New york city lawsuit that claims VGW uses celeb endorsers to 'develop 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 business operating multibillion-dollar unlawful operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of video gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a series of celebrities 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 differences between standard gaming and sweepstakes play.

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

Ryan Seacrest prompts fans to dip into Chumba Casino, where numerous - but not all - games are complimentary

Drake has an offer with social sweeps gambling establishment, Stake, that he frequently promotes on social networks

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Instead, advertisements normally center around the social element of the gambling establishments, while leaving out the capacity for real gambling losses.

Others tempt consumers with pledges of rewards. One such operator, Stake, ran a social networks ad flaunting Drake's automobiles, airplanes and estates before rotating to video of the rapper playing online casino-style games.

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

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

The inconsistency between gaming websites and social or sweepstakes casinos is a bit intricate, however operators of the latter insist they're not involved with the previous.

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, most of the players on social-sweepstakes gambling establishments are playing for totally free.

'Most social sweeps consumers never ever buy,' the SPGA representative told DailyMail.com. 'The minority of consumers who make purchases do so in amounts far smaller than the typical deposit or bet size at real-money online gaming sites.'

Social casinos offer customers a possibility to play casino-style video games with pals. Players have the option to purchase valueless currency frequently referred to as 'gold coins,' which can not be exchanged genuine money, however can be utilized to open numerous functions within the video games.

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

And therein lies the capacity for financial losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York. One player told 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 gambling establishment Stake ran an ad revealing off Drake's automobiles, 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 prohibited in all but seven states, which has helped to sustain the popularity of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, enable customers to send mail-in demands for free sweeps coins, supplied the players follow painfully particular directions. What's more, gamers are often rewarded with sweeps coins simply for registering, consequently providing a reason to attempt their hands at any variety of casino games for a possibility to win - or lose - real cash.

So why are sweepstakes websites allowed to operate in 48 states, while online gambling establishments are banned in all but 7?

According to the stakeholders, their product is the totally free casino-style gaming, and the real-stakes competition is just a means of promoting their support.

'Social sweepstakes video games are simply a form of online home entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is required to dip into social gambling establishments with sweepstakes rewards. Consumers never ever have to spend for a chance to win rewards. That lack of a purchase requirement - or" factor to consider" - is a vital distinction in between social sweeps and standard online gambling sites like casinos.'

Consider the manner in which 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 french fries that offer them the possibility to win profitable prizes, such as a $1 million prize.

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

'Sweepstakes are a long-standing approach for promoting all type of everyday businesses in the United States, everything from burgers to magazine subscriptions to coffee and home enhancement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are regularly used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting market experts, that argument doesn't cut it.

For beginners, gaming attorney Daniel Wallach mentions, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a distinct start and end, thereby recommending the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being used to promote genuine items like french fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [gambling establishments] have none of the attributes commonly associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos use" casino-like" payouts, typically 80 percent or more of incomes, whereas the typical payout percentage for a momentary advertising sweepstakes is a minor share of the profits earned by the company [generally less than one percent]'

Wallach is fast to compare the online social sweeps casinos to the internet cafes that emerged in Florida, using consumers the possibility to play casino-style video games for real rewards. A number of those brick-and-mortar facilities have actually given that been shuttered over claims of illegal gaming.

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

Now, Wallach argues, social sweeps gambling establishments ought to deal with similar scrutiny.

'These distinctions are not arbitrary,' Wallach said of social sweeps casinos. 'They have consistently been mentioned by courts and state attorney generals as crucial consider figuring out that a sweepstakes promotion remained in reality a guise for prohibited gambling.'

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

'Consumers are being denied of protections and states are giving up substantial tax and profits opportunities as this gaming replaces that carried out through regulated channels,' checked out a well-circulated AGA memo.

And then there are the plaintiffs who have actually taken legal action against social gambling establishments in more than a dozen states.

Sweepstakes casino operators paid a combined $14.2 million in four separate cases in Kentucky without confessing any wrongdoing, 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 lawsuits.

Michael Phelps has signed a deal with the VGW Group, which owns Global Poker

In the current suit, which is largely similar to its predecessors, New York 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 gambling enterprise. '

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

'We typically do not discuss matters before the courts,' a VGW spokesperson informed DailyMail.com via e-mail. 'However, we note that this claim has only simply been submitted with the court and VGW has actually not been formally served.

'We have full confidence in our compliance with all laws and guidelines where we run, and remain confident about the future,' the spokesperson continued. 'We continue to offer our free-to-play games throughout the majority of North America, as we have for more than a decade, creating not only fantastic video games, user experiences and home entertainment, however also ensuring this is done securely, properly and at the highest level of standards.

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

The problems in between conventional online gaming and sweepstakes gambling establishments 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 while the NBA is partnered with standard gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking illegal sports betting 'sweeps' websites while at the very same time the leagues wish to forecast a strong position versus prohibited sports betting - especially when attempting to tamp down the periodic gambling scandal,' Glaser informed DailyMail.com.

It was simply eight months ago that Toronto Raptors forward Jontay Porter received a lifetime restriction from the NBA over accusations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes casinos.

Together with VGW, Apple and Google are being demanded hosting allegedly illegal sports betting sites

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

'I 'd anticipate that a league crackdown on professional athletes endorsing sweepstakes websites refers when, not if,' Glaser included.

Neither an NBA spokesman nor the players' agents reacted to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise neglected to react to DailyMail.com emails.

Asked if their celebrity endorsers have an obligation to discuss to clients the differences and similarities in between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that needs to be done.

'We have full self-confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the representative said. 'A few of our worths are" our gamers come initially" 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 in a different way.

'Celebrities who lend their names to shady prohibited sports betting sites are, at a minimum, putting their credibilities at danger in addition to courting civil and class actions by consumers who declare harm,' Glaser stated. 'There is likewise some threat that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for facilitating illegal gaming.'

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