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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 presence, however the world-famous celebrities were conspicuously consisted of in a slide presentation on social and sweepstakes casinos - the questionable sites providing both totally free casino-style video games and profitable rewards, such as cash, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are simply 2 cogs in the multibillion-dollar market that now finds itself besieged by suits. In the eyes of many gaming corporations, not to mention suit plaintiffs and state regulators, sweepstakes casinos serve as standard gambling establishments, only without the oversight, customer protections and tax laws. So not only can they avoid the high 24-percent federal sports betting levy, but sweepstakes operators aren't subject to regulatory obstacles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the company faces accusations of unlawful gambling in a New york city suit that declares VGW uses celebrity endorsers to 'produce a veneer of authenticity' around its product. (See VGW's statement below)

'I'm not sure" if you don't trust us, you can trust Paris Hilton" is a winning message for companies 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 variety of stars from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom use any differences in between standard sports betting and sweepstakes play.

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

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

Drake has a deal with social sweeps casino, Stake, that he regularly touts on social media

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Instead, ads normally focus around the social aspect of the casinos, while omitting the capacity for actual gambling losses.

Others tempt consumers with guarantees of prizes. One such operator, Stake, ran a social networks advertisement flaunting Drake's vehicles, aircrafts and mansions before pivoting to video footage of the rapper playing online casino-style video games.

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

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

The disparity between sports betting websites and social or sweepstakes gambling establishments is a bit complex, however operators of the latter insist they're not involved 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 information, many of the gamers on social-sweepstakes gambling establishments are playing for complimentary.

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

Social casinos offer consumers an opportunity to play casino-style games with friends. Players have the option to purchase worthless currency typically described as 'gold coins,' which can not be exchanged for genuine cash, however can be used to unlock numerous functions within the video games.

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

And therein lies the capacity for financial losses, like the ones declared by plaintiffs 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 past year after continuing to buy more coins in pursuit of cash and other things of worth.

The Philadelphia 76ers' Paul George is seen promoting an International Poker occasion

Social sweeps casino Stake ran an advertisement flaunting Drake's automobiles, aircrafts and mansions

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

Traditional online casinos are prohibited in all however seven states, which has actually helped to sustain the popularity of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, allow customers to send mail-in requests for free sweeps coins, provided the players follow painfully specific directions. What's more, gamers are frequently rewarded with sweeps coins just for signing up, thus providing a reason to attempt their hands at any variety of casino games for an opportunity to win - or lose - genuine money.

So why are sweepstakes websites 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 gaming, and the real-stakes competitors is merely a means of promoting their bread and butter.

'Social sweepstakes video games are just a type of online entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is needed to play at social casinos with sweepstakes rewards. Consumers never need to pay for an opportunity to win prizes. That lack of a purchase requirement - or" consideration" - is an important distinction in between social sweeps and standard online gaming sites like gambling establishments.'

Think of the manner in which McDonald's uses its game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and fries that offer them the chance to win lucrative rewards, such as a $1 million jackpot.

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

'Sweepstakes are a long-standing approach for promoting all sort of daily companies in the United States, everything from hamburgers to publication memberships to coffee and home improvement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are frequently utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling industry insiders, 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 beginning and end, consequently suggesting the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being used to promote real items like french fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're usually not connected to casino-style video games of opportunity,' Wallach told DailyMail.com. 'They're just money free gifts.

'The sweepstakes [casinos] possess none of the qualities frequently connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes casinos use" casino-like" payments, normally 80 percent or more of earnings, whereas the typical payment portion for a short-lived promotional sweepstakes is a trivial share of the revenue earned by the company [generally less than one percent]'

Wallach is quick to compare the online social sweeps casinos to the web coffee shops that emerged in Florida, providing consumers the possibility to play casino-style video games for genuine prizes. Many of those brick-and-mortar establishments have actually considering that been shuttered over claims of prohibited gaming.

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

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

'These differences are not approximate,' Wallach said of social sweeps gambling establishments. 'They have consistently been mentioned by courts and state attorney generals as essential consider figuring out that a sweepstakes promo remained in truth a guise for unlawful sports betting.'

One of the casino market's leading trade companies, the American Gaming Association, is now pressing legislators to investigate sweepstakes operators and, in many cases, enact new legislation on the problem.

'Consumers are being deprived of defenses and states are forgoing significant tax and revenue opportunities as this gambling replaces that conducted through controlled 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 gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action suit, saying the settlement was made to prevent legal costs and continued litigation.

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

In the latest suit, which is mainly comparable to its predecessors, New York state residents Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is described in the filing as an 'prohibited sports betting enterprise. '

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

'We usually do not comment on matters before the courts,' a VGW spokesperson told DailyMail.com via e-mail. 'However, we keep in mind that this claim has actually only simply been submitted with the court and VGW has not been formally served.

'We have complete confidence in our compliance with all laws and policies where we operate, and remain positive about the future,' the spokesperson continued. 'We continue to provide our free-to-play games throughout many of The United States and Canada, as we have for more than a years, producing not just excellent games, user experiences and entertainment, however also guaranteeing this is done safely, responsibly and at the greatest level of requirements.

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

The problems between conventional online sports betting and sweepstakes casinos could prove troublesome for some celeb 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 gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking unlawful sports betting wagering 'sweeps' websites while at the exact same time the leagues desire to predict a strong position versus prohibited gambling - especially when attempting 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 allegations he conspired with bettors. 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 allegedly unlawful gambling websites

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

'I 'd anticipate that a league crackdown on professional athletes backing sweepstakes sites refers when, not if,' Glaser added.

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

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

'We have complete confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the representative said. 'A few of our worths are" our players come first" and" we do what's right", and we put our worths at the core of everything we do.'

Glaser, an outspoken challenger of sweepstakes websites, sees things in a different way.

'Celebrities who provide their names to shady illegal gambling websites are, at a minimum, putting their reputations at risk in addition to courting civil and class actions by consumers who declare damage,' Glaser stated. 'There is likewise some danger that state regulators and state lawyers general rope celeb endorsers into enforcement efforts for helping with prohibited gaming.'

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