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

No, they weren't personally in participation, however the world-famous celebrities were notably included in a slide presentation on social and sweepstakes gambling establishments - the questionable sites offering both free casino-style games and profitable prizes, such as money, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are simply 2 cogs in the multibillion-dollar industry that now discovers itself besieged by lawsuits. In the eyes of lots of video gaming corporations, not to point out suit complainants and state regulators, sweepstakes casinos function as standard casinos, just without the oversight, consumer protections and tax laws. So not just can they prevent the steep 24-percent federal sports betting levy, but sweepstakes operators aren't subject to regulative hurdles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the business faces accusations of prohibited sports betting in a New York suit that declares VGW uses celeb endorsers to 'create a veneer of legitimacy' around its product. (See VGW's statement 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 running multibillion-dollar unlawful operations out of places 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 variety of celebrities from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom offer any differences in between traditional sports betting and sweepstakes play.

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

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

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

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Instead, advertisements normally center around the social aspect of the casinos, while leaving out the capacity for real sports betting losses.

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

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

Another caption explained: 'Because I never ever quit.'

The discrepancy in between sports betting sites and social or sweepstakes gambling establishments 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), explained its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA information, many of the gamers on social-sweepstakes casinos are playing for free.

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

Social casinos provide customers a possibility to play casino-style video games with good friends. Players have the option to purchase worthless currency typically referred to as 'gold coins,' which can not be exchanged for genuine cash, however can be used to unlock different features within the games.

But within the world of social casinos exists sweepstakes gaming, permitting customers to acquire other currency called 'sweeps coins' that can be exchanged for cash or other rewards.

And therein lies the capacity for financial 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 gambling establishments in the past 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 displaying Drake's automobiles, airplanes and estates

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

Traditional online casinos are banned in all however 7 states, which has actually assisted to sustain the appeal of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes sites, which don't require normally require recognition. However, websites like Chumba will ask for IDs from players attempting to withdraw any funds.

Many websites, like the crypto-compatible Stake, allow consumers to send mail-in ask for complimentary sweeps coins, offered the players follow painfully particular instructions. What's more, players are frequently rewarded with sweeps coins merely for signing up, thereby providing a reason to attempt their hands at any number of casino video games for a possibility to win - or lose - real cash.

So why are sweepstakes sites permitted to run in 48 states, while online gambling establishments are banned in all but 7?

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

'Social sweepstakes 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 casinos with sweepstakes prizes. Consumers never have to pay for a chance to win prizes. That absence of a purchase requirement - or" factor to consider" - is a vital distinction in between social sweeps and traditional online gambling sites like casinos.'

Consider the manner in which McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and french fries that offer them the chance to win lucrative rewards, such as a $1 million prize.

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

'Sweepstakes are a long-standing method for promoting all type of everyday organizations in the United States, whatever from hamburgers to publication memberships to coffee and home enhancement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are routinely utilized 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 does not cut it.

For starters, gaming lawyer Daniel Wallach mentions, McDonald's Monopoly video game does not run forever. Rather, it has a distinct beginning and end, consequently recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote genuine products like 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 free gifts.

'The sweepstakes [gambling establishments] possess none of the qualities typically associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos use" casino-like" payouts, generally 80 percent or more of revenues, whereas the normal payout percentage for a momentary promotional sweepstakes is a trivial share of the profits made by the company [typically less than one percent]'

Wallach is quick to compare the online social sweeps gambling establishments to the web cafes that sprang up in Florida, using clients the opportunity to play casino-style games for genuine rewards. Much of those brick-and-mortar facilities have actually given that been shuttered over accusations of illegal gaming.

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

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

'These distinctions are not arbitrary,' Wallach stated of social sweeps casinos. 'They have actually repeatedly been cited by courts and state chief law officer as crucial elements in identifying that a sweepstakes promo was in reality a guise for illegal gaming.'

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

'Consumers are being denied of defenses and states are giving up substantial tax and earnings opportunities as this gambling changes that conducted through regulated channels,' read 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 lots states.

Sweepstakes casino operators paid a combined $14.2 million in four separate cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action claim, stating the settlement was made to avoid legal expenses and continued lawsuits.

Michael Phelps has actually signed a handle the VGW Group, which owns Global Poker

In the most recent suit, which is largely comparable to its predecessors, New York state citizens Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'unlawful gaming business. '

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

'We typically don't talk about matters before the courts,' a VGW representative told DailyMail.com via email. 'However, we keep in mind that this claim has only just been submitted 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 positive about the future,' the spokesperson continued. 'We continue to offer our free-to-play games across the majority of North America, as we have for more than a decade, producing not only great games, user experiences and entertainment, however likewise ensuring this is done safely, responsibly and at the greatest level of requirements.

'More broadly, we 'd restate that class actions and other lawsuits 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 intensely defend any claim which might be brought against us.'

The issues between standard online gaming and sweepstakes casinos might show troublesome for some celebrity endorsers.

Towns, a star center with the Knicks, and the 76ers' George both endorse VGW's Global Poker brand name while the NBA is partnered with traditional 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 desire to project a strong position against prohibited gambling - particularly when trying to tamp down the periodic gambling scandal,' Glaser told DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter got a lifetime ban from the NBA over claims he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes casinos.

Along with VGW, Apple and Google are being demanded hosting presumably prohibited gambling websites

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

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

Neither an NBA spokesman nor the players' agents responded to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also disregarded to react to DailyMail.com e-mails.

Asked if their star endorsers have an obligation to discuss to clients the distinctions and resemblances between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is absolutely nothing more that needs to be done.

'We have full self-confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the representative said. 'A few of our values 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 sites, sees things differently.

'Celebrities who lend their names to dubious illegal gaming sites are, at a minimum, putting their credibilities at risk as well as courting civil and class actions by consumers who declare damage,' Glaser stated. 'There is also some danger that state regulators and state lawyers general rope star endorsers into enforcement efforts for helping with illegal gaming.'

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