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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 sports betting.

No, they weren't personally in participation, but the world-famous stars were conspicuously consisted of in a slide presentation on social and sweepstakes gambling establishments - the questionable sites using both totally free casino-style games and lucrative prizes, such as money, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are just 2 cogs in the multibillion-dollar industry that now discovers itself besieged by claims. In the eyes of many gaming corporations, not to mention claim plaintiffs and state regulators, sweepstakes gambling establishments act 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 protections.

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

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

Sweepstakes endorsers include a variety of celebs 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 provide any differences in between conventional gaming and sweepstakes play.

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

Ryan Seacrest advises fans to play at Chumba Casino, where lots of - but not all - video games are totally free

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

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Instead, ads generally focus around the social element of the casinos, while leaving out the potential for actual sports betting losses.

Others tempt customers with promises of prizes. One such operator, Stake, ran a social networks advertisement flaunting Drake's cars and trucks, airplanes and mansions before rotating to footage of the rap artist playing online casino-style games.

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

Another caption explained: 'Because I never ever provided up.'

The discrepancy in between gaming websites and social or sweepstakes gambling establishments is a bit complicated, however operators of the latter insist they're not involved with the former.

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

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

Social gambling establishments provide customers a chance to play casino-style video games with good friends. Players have the choice to purchase valueless currency often referred to as 'gold coins,' which can not be exchanged for real cash, but can be used to unlock different features within the video games.

But within the world of social casinos exists sweepstakes gaming, allowing customers to acquire other currency known as 'sweeps coins' that can be exchanged for cash or other prizes.

And therein lies the capacity for financial losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York City. One gamer informed the Washington Post he lost more than $100,000 on sweepstakes casinos in the previous year after continuing to buy 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 casino Stake ran an ad revealing off Drake's vehicles, 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 but 7 states, which has helped to fuel the popularity of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, permit customers to submit mail-in ask for totally free sweeps coins, provided the players follow painfully particular guidelines. What's more, gamers are often rewarded with sweeps coins merely for signing up, therefore offering them a reason to attempt their hands at any number of casino games for a possibility to win - or lose - genuine 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 item is the free casino-style gaming, and the real-stakes competitors is just a method of promoting their bread and butter.

'Social sweepstakes games are merely a form of online entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is required to play at social gambling establishments with sweepstakes rewards. Consumers never ever have to pay for an opportunity to win prizes. That absence of a purchase requirement - or" factor to consider" - is an essential difference between social sweeps and conventional online gambling sites like gambling establishments.'

Think about the manner in which McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're buying hamburgers and french fries that offer them the chance to win financially rewarding rewards, such as a $1 million jackpot.

And without a purchase requirement, or 'factor to consider', the video game itself does not fulfill the definition of sports betting in the US.

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

But to many gambling market insiders, that argument doesn't cut it.

For beginners, gaming attorney Daniel Wallach points out, McDonald's Monopoly game does not run forever. Rather, it has a distinct beginning and end, thereby recommending the sweepstakes is not the fast-food giant's primary product. 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 typically not tied to casino-style video games of opportunity,' Wallach informed DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [casinos] possess none of the qualities frequently associated with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments offer" casino-like" payments, generally 80 percent or more of revenues, whereas the typical payment percentage for a temporary advertising sweepstakes is an insignificant share of the income made by the company [normally less than one percent]'

Wallach is fast to liken the online social sweeps gambling establishments to the web cafes that emerged in Florida, using clients 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 allegations of illegal sports betting.

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

Now, Wallach argues, social sweeps casinos must deal with similar analysis.

'These differences are not approximate,' Wallach said of social sweeps casinos. 'They have been cited by courts and state lawyer generals as key aspects in figuring out that a sweepstakes promo was in fact a guise for prohibited sports betting.'

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

'Consumers are being denied of protections and states are giving up substantial tax and profits chances as this gaming changes that conducted through regulated channels,' read a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in 4 different cases in Kentucky without admitting any misbehavior, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action claim, saying the settlement was made to avoid legal expenses and continued litigation.

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

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

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

'We typically don't talk about matters before the courts,' a VGW spokesperson told DailyMail.com via email. 'However, we note that this claim has only just been filed with the court and VGW has actually not been formally 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 video games across most of North America, as we have for more than a years, producing not just terrific games, user experiences and home entertainment, but likewise guaranteeing this is done securely, properly and at the greatest level of standards.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are reasonably common throughout the online social games industry (and the US more broadly), and our standard practice is that we mean to vigorously safeguard any claim which might be brought versus us.'

The concerns between traditional online sports betting and sweepstakes gambling establishments could prove problematic for some celebrity 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 standard 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 against illegal gambling - specifically when attempting to tamp down the occasional gaming scandal,' Glaser told DailyMail.com.

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

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

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

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

Neither an NBA spokesperson nor the gamers' representatives reacted to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise neglected to respond to DailyMail.com emails.

Asked if their celeb endorsers have a responsibility 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 complete self-confidence in our influencer and ambassadorial collaborations, and our service practices more broadly,' the spokesperson stated. 'A few of our worths are" our players come first" 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 in a different way.

'Celebrities who provide their names to dubious prohibited gaming websites are, at a minimum, putting their reputations at danger along with courting civil and class actions by consumers who declare harm,' Glaser stated. 'There is likewise some danger that state regulators and state chief law officers rope star endorsers into enforcement efforts for facilitating unlawful gambling.'

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