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

No, they weren't personally in attendance, but the world-famous celebrities were notably included in a slide presentation on social and sweepstakes casinos - the controversial websites using both complimentary casino-style video games and financially rewarding prizes, such as money, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are just two cogs in the multibillion-dollar industry that now finds itself besieged by lawsuits. In the eyes of lots of video gaming corporations, not to point out suit complainants and state regulators, sweepstakes casinos act as conventional gambling establishments, just without the oversight, customer protections and tax laws. So not just can they avoid the high 24-percent federal gambling levy, however sweepstakes operators aren't subject to regulative hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income last year alone. Now the business deals with accusations of unlawful gaming in a New York lawsuit that claims VGW utilizes celeb endorsers to 'create a veneer of legitimacy' around its product. (See VGW's statement listed below)

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

Sweepstakes endorsers consist of a variety of stars from gambling lovers 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 between conventional gaming and sweepstakes play.

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

Ryan Seacrest urges fans to play at Chumba Casino, where many - but not all - games are totally free

Drake has a deal with social sweeps gambling establishment, Stake, that he regularly touts on social networks

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Instead, ads generally center around the social element of the gambling establishments, while leaving out the capacity for actual gaming losses.

Others tempt consumers with promises of rewards. One such operator, Stake, ran a social networks ad flaunting Drake's automobiles, airplanes and mansions before pivoting to footage of the rap artist playing online casino-style video games.

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

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

The disparity in between gaming sites and social or sweepstakes gambling establishments is a bit complicated, but operators of the latter insist they're not included with the previous.

A spokesperson 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, the majority of the gamers on social-sweepstakes gambling establishments are sports betting totally free.

'Most social sweeps clients never ever buy,' the SPGA spokesperson told DailyMail.com. 'The minority of consumers who make purchases do so in amounts far smaller than the normal deposit or wager size at real-money online sports betting websites.'

Social gambling establishments use consumers a possibility to play casino-style games with pals. Players have the option to buy worthless currency often referred to as 'gold coins,' which can not be exchanged for genuine cash, however can be used to open different functions within the video games.

But within the world of social casinos exists sweepstakes video gaming, permitting clients to get 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 complainants in Florida, Georgia, New Jersey and New York. One player informed 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 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 advertisement revealing off Drake's vehicles, planes 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 but seven states, which has actually assisted to fuel the popularity of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, allow customers to submit mail-in ask for complimentary sweeps coins, supplied the players follow painfully particular guidelines. What's more, players are typically rewarded with sweeps coins merely for signing up, therefore providing a factor to try their hands at any variety of gambling establishment video games for a possibility to win - or lose - genuine cash.

So why are sweepstakes websites enabled to operate in 48 states, while online gambling establishments are prohibited in all however 7?

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

'Social sweepstakes video games are just a kind of online home entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is required to play at social gambling establishments with sweepstakes rewards. Consumers never ever need to pay for a chance to win prizes. That lack of a purchase requirement - or" factor to consider" - is an essential distinction between social sweeps and traditional online sports betting sites like casinos.'

Think of the manner in which McDonald's utilizes its annual Monopoly game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and french fries that provide them the possibility to win profitable prizes, such as a $1 million jackpot.

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

'Sweepstakes are an enduring method for promoting all kinds of everyday services in the United States, everything from hamburgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions 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 experts, that argument does not cut it.

For starters, gaming lawyer Daniel Wallach mentions, McDonald's Monopoly video game doesn't run forever. Rather, it has a well-defined beginning and end, thereby 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 don't last forever and they're generally not tied to casino-style games of opportunity,' Wallach informed DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [casinos] possess none of the qualities commonly related to McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos use" casino-like" payments, typically 80 percent or more of revenues, whereas the typical payment percentage for a momentary marketing sweepstakes is an unimportant share of the income made by the business [typically less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the internet cafes that sprang up in Florida, providing clients the chance to play casino-style video games for real rewards. A lot of those brick-and-mortar establishments have considering that been shuttered over claims of unlawful sports betting.

DJ Khaled is amongst a number of celebrity spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps gambling establishments need to face comparable analysis.

'These differences are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have actually repeatedly been cited by courts and state attorney general of the United States as essential aspects in identifying that a sweepstakes promo remained in reality a guise for illegal gaming.'

One of the gambling establishment industry's leading trade organizations, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, sometimes, enact brand-new legislation on the problem.

'Consumers are being deprived of securities and states are passing up significant tax and income opportunities as this gambling replaces that performed through controlled channels,' read a well-circulated AGA memo.

And after that there are the plaintiffs who have actually sued social casinos in more than a lots states.

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

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

In the most recent claim, which is mainly 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 'prohibited sports betting business. '

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

'We normally don't comment on matters before the courts,' a VGW spokesperson told DailyMail.com by means of 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 confidence in our compliance with all laws and guidelines where we operate, and stay positive about the future,' the spokesperson continued. 'We continue to use our free-to-play games across many of North America, as we have for more than a decade, producing not just great games, user experiences and home entertainment, but likewise ensuring this is done safely, responsibly and at the highest level of requirements.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are reasonably typical across the online social games industry (and the US more broadly), and our basic practice is that we intend to vigorously defend any claim which may be brought versus us.'

The concerns between standard online gambling and sweepstakes casinos could prove bothersome 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 'sweeps' websites while at the exact same time the leagues wish to predict a strong position versus illegal gaming - especially when trying to tamp down the occasional 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 unassociated to anything involving social or sweepstakes casinos.

Along with VGW, Apple and Google are being sued for hosting supposedly illegal gambling sites

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

'I 'd expect that a league crackdown on athletes backing sweepstakes websites is a matter of when, not if,' Glaser included.

Neither an NBA spokesperson nor the players' agents reacted to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also disregarded to respond to DailyMail.com emails.

Asked if their star endorsers have a duty to describe to consumers 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 confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the spokesperson said. 'Some of our values are" our players precede" and" we do what's right", and we put our values at the core of everything we do.'

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

'Celebrities who provide their names to shady illegal gambling websites are, at a minimum, putting their track records at threat along with courting civil and class actions by consumers who declare harm,' Glaser stated. 'There is also some risk that state regulators and state chief law officers rope star endorsers into enforcement efforts for assisting in unlawful gambling.'

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