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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 attendance, however the world-famous celebs were notably consisted of in a slide discussion on social and sweepstakes gambling establishments - the questionable sites providing both free casino-style video games and financially rewarding rewards, such as cash, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for 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 finds itself besieged by lawsuits. In the eyes of many video gaming corporations, not to point out lawsuit plaintiffs and state regulators, sweepstakes casinos function as standard gambling establishments, only without the oversight, customer securities and tax laws. So not only can they avoid the steep 24-percent federal gambling levy, however sweepstakes operators aren't based on regulatory difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the business faces accusations of illegal gaming in a New York lawsuit that claims VGW utilizes celeb endorsers to 'develop a veneer of authenticity' around its item. (See VGW's declaration below)

'I'm uncertain" if you don't 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 presenter, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers include a range of stars from sports betting lovers 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 conventional sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among lots of sweepstakes casinos discovered online

Ryan Seacrest advises fans to dip into Chumba Casino, where lots of - however not all - video games are complimentary

Drake has a handle social sweeps casino, Stake, that he routinely touts on social networks

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Instead, advertisements usually focus around the social element of the casinos, while leaving out the potential for real gaming losses.

Others tempt customers with promises of rewards. One such operator, Stake, ran a social media ad flaunting Drake's cars and trucks, airplanes and mansions before rotating to video of the rapper playing online casino-style video games.

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

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

The inconsistency in between sports betting websites and social or sweepstakes casinos is a bit complicated, however operators of the latter insist they're not involved with the former.

A representative for an industry trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA information, many of the players on social-sweepstakes gambling establishments are sports betting totally free.

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

Social casinos offer consumers a chance to play casino-style video games with pals. Players have the option to buy valueless currency often described as 'gold coins,' which can not be exchanged genuine cash, but can be utilized to unlock numerous functions within the games.

But within the world of social gambling establishments exists sweepstakes gaming, permitting consumers to acquire other currency referred to 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 gamer 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 a Global Poker event

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake's cars and trucks, 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 seven states, which has helped to sustain the appeal of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes sites, which don't need typically require identification. However, sites like Chumba will ask for IDs from players trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, allow customers to send mail-in ask for totally free sweeps coins, provided the players follow painfully specific directions. What's more, players are frequently rewarded with sweeps coins simply for signing up, thus providing them a reason to try their hands at any number of casino video games for a possibility to win - or lose - genuine money.

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

According to the stakeholders, their item is the totally free casino-style video gaming, and the real-stakes competitors is just a method of promoting their support.

'Social sweepstakes video games are simply a kind of online home entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is needed to dip into social casinos with sweepstakes prizes. Consumers never ever have to spend for an opportunity to win rewards. That absence of a purchase requirement - or" factor to consider" - is a vital difference in between social sweeps and standard online gambling websites like casinos.'

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

And without a purchase requirement, or 'consideration', the game itself doesn't fulfill the meaning of gaming in the US.

'Sweepstakes are an enduring approach for promoting all type of daily organizations in the United States, whatever from burgers to magazine subscriptions to coffee and home enhancement shops,' the SPGA spokesperson told 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 numerous gambling industry experts, that argument does not cut it.

For starters, video gaming lawyer Daniel Wallach explains, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a distinct beginning and end, therefore suggesting the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being used to promote real products like french fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're generally not tied to casino-style video games of possibility,' Wallach told DailyMail.com. 'They're simply cash giveaways.

'The sweepstakes [casinos] have none of the qualities frequently related to McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments use" casino-like" payouts, normally 80 percent or more of revenues, whereas the normal payout portion for a momentary promotional sweepstakes is an unimportant share of the earnings made by the company [normally less than one percent]'

Wallach is quick to liken the online social sweeps gambling establishments to the web coffee shops that sprang up in Florida, providing consumers the chance to play casino-style video games for real prizes. Much of those brick-and-mortar establishments have because been shuttered over accusations of unlawful gaming.

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

Now, Wallach argues, social sweeps casinos ought to deal with comparable scrutiny.

'These distinctions are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have repeatedly been mentioned by courts and state attorney general of the United States as crucial elements in determining that a sweepstakes promotion was in reality a guise for prohibited gambling.'

Among the gambling establishment industry's leading trade companies, the American Gaming Association, is now pressing lawmakers to investigate sweepstakes operators and, sometimes, enact new legislation on the issue.

'Consumers are being deprived of protections and states are forgoing considerable tax and revenue chances as this sports betting replaces that performed through controlled channels,' checked out a well-circulated AGA memo.

And after that there are the complainants who have actually sued social gambling establishments in more than a lots states.

Sweepstakes paid a combined $14.2 million in four different 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 prevent legal expenses and continued litigation.

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

In the most current 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 'prohibited gambling enterprise. '

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

'We generally don't talk about matters before the courts,' a VGW representative informed DailyMail.com through e-mail. 'However, we keep in mind that this claim has actually only just been filed with the court and VGW has not been officially served.

'We have full self-confidence in our compliance with all laws and guidelines where we run, and remain confident about the future,' the spokesperson continued. 'We continue to use our free-to-play games throughout the majority of The United States and Canada, as we have for more than a years, creating not just excellent video games, user experiences and home entertainment, but also ensuring this is done securely, responsibly and at the highest level of requirements.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are relatively common throughout the online social games market (and the US more broadly), and our standard practice is that we plan to vigorously protect any claim which might be brought against us.'

The issues between traditional online gaming and sweepstakes casinos could prove bothersome for some star endorsers.

Towns, a star center with the Knicks, and the 76ers' George both back VGW's Global Poker brand name while the NBA is partnered with traditional video gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking unlawful sports betting 'sweeps' websites while at the very same time the leagues want to forecast a strong position versus prohibited sports betting - particularly when attempting to tamp down the periodic sports betting scandal,' Glaser told DailyMail.com.

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

In addition to VGW, Apple and Google are being demanded hosting supposedly unlawful sports betting sites

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

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

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

Asked if their celeb endorsers have a responsibility to explain to clients the distinctions and similarities between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that needs to be done.

'We have full self-confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the spokesperson said. 'A few of our worths are" our gamers precede" and" we do what's right", and we put our values at the core of whatever we do.'

Glaser, an outspoken opponent of sweepstakes sites, sees things differently.

'Celebrities who provide their names to shady prohibited gaming websites are, at a minimum, putting their credibilities at risk in addition to courting civil and class actions by customers who allege harm,' Glaser stated. 'There is likewise some danger that state regulators and state lawyers basic rope star endorsers into enforcement efforts for assisting in prohibited sports betting.'

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