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

No, they weren't personally in participation, however the world-famous celebs were notably consisted of in a slide presentation on social and sweepstakes gambling establishments - the questionable websites providing both free casino-style video games and financially rewarding prizes, such as cash, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are just two cogs in the multibillion-dollar industry that now discovers itself besieged by suits. In the eyes of many gaming corporations, not to discuss suit plaintiffs and state regulators, sweepstakes casinos act as conventional gambling establishments, only without the oversight, consumer securities and tax laws. So not only can they avoid the steep 24-percent federal gambling levy, however sweepstakes operators aren't subject to regulative hurdles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the company faces accusations of unlawful gambling in a New York lawsuit that claims VGW uses celeb endorsers to 'create a veneer of authenticity' around its item. (See VGW's statement listed below)

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

Sweepstakes endorsers include a series of celebs from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom use any differences between conventional gaming and sweepstakes play.

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

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

Drake has a handle social sweeps gambling establishment, Stake, that he routinely promotes on social networks

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

Others lure consumers with guarantees of rewards. One such operator, Stake, ran a social media advertisement showing off Drake's cars and trucks, planes and estates before pivoting to video footage of the rap artist 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 described: 'Because I never ever provided up.'

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

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA information, most of the gamers on social-sweepstakes gambling establishments are playing for free.

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

Social casinos offer consumers a chance to play casino-style games with good friends. Players have the option to buy worthless currency frequently referred to as 'gold coins,' which can not be exchanged genuine cash, but can be utilized to unlock various functions within the games.

But within the world of social casinos exists sweepstakes gaming, enabling consumers to get other currency called 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the capacity for monetary losses, like the ones claimed by complainants 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 previous 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 occasion

Social sweeps gambling establishment Stake ran an advertisement displaying Drake's vehicles, planes and mansions

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 seven states, which has assisted to fuel the popularity of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, enable customers to submit mail-in ask for free sweeps coins, provided the players follow painfully specific guidelines. What's more, players are frequently rewarded with sweeps coins simply for signing up, thus offering them a factor to attempt their hands at any number of casino games for a possibility to win - or lose - real cash.

So why are sweepstakes websites permitted to operate in 48 states, while online casinos are banned in all however 7?

According to the stakeholders, their item is the free casino-style gaming, and the real-stakes competition is simply a method of promoting their support.

'Social sweepstakes video games are just a kind of online entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is needed to play at social gambling establishments with sweepstakes rewards. never need to pay for a chance to win prizes. That absence of a purchase requirement - or" consideration" - is a crucial difference between social sweeps and standard online gambling sites like casinos.'

Consider the manner in which McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and french fries that use them the chance to win financially rewarding prizes, such as a $1 million prize.

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

'Sweepstakes are an enduring method for promoting all type of daily services in the United States, whatever from hamburgers to publication memberships to coffee and home enhancement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are routinely used by a who's who of home 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, video gaming lawyer Daniel Wallach points out, McDonald's Monopoly video game does not run indefinitely. Rather, it has a distinct beginning and end, thus suggesting the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being used to promote genuine items like french fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're normally not connected to casino-style video games of possibility,' Wallach told DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [gambling establishments] have none of the attributes commonly related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments provide" casino-like" payouts, normally 80 percent or more of earnings, whereas the normal payment portion for a short-term promotional sweepstakes is an unimportant share of the profits earned by the business [typically less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the internet coffee shops that emerged in Florida, providing consumers the opportunity to play casino-style video games for genuine prizes. Many of those brick-and-mortar establishments have considering that been shuttered over allegations of unlawful gaming.

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

Now, Wallach argues, social sweeps casinos ought to face comparable examination.

'These distinctions are not arbitrary,' Wallach said of social sweeps casinos. 'They have actually consistently been pointed out by courts and state chief law officer as essential consider figuring out that a sweepstakes promo was in fact a guise for unlawful sports betting.'

Among the gambling establishment industry's leading trade organizations, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, sometimes, enact new legislation on the concern.

'Consumers are being denied of defenses and states are passing up substantial tax and profits chances as this gaming replaces that conducted through managed channels,' checked out a well-circulated AGA memo.

And then there are the plaintiffs who have actually sued social gambling establishments in more than a lots states.

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

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

In the newest lawsuit, which is mostly similar to its predecessors, New York state homeowners 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 'illegal gambling business. '

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

'We typically don't talk about matters before the courts,' a VGW spokesperson informed DailyMail.com via e-mail. 'However, we note that this claim has only simply been filed with the court and VGW has not been formally served.

'We have complete confidence in our compliance with all laws and guidelines where we operate, and remain positive about the future,' the spokesperson continued. 'We continue to offer our free-to-play games across the majority of The United States and Canada, as we have for more than a decade, producing not just excellent video games, user experiences and home entertainment, but likewise guaranteeing this is done securely, responsibly and at the greatest level of standards.

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

The issues between traditional online gaming and sweepstakes casinos might show troublesome for some celeb 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 conventional video gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking unlawful sports betting 'sweeps' sites while at the very same time the leagues wish to forecast a strong position against illegal sports betting - specifically when trying to tamp down the periodic gaming scandal,' Glaser informed DailyMail.com.

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

In addition to VGW, Apple and Google are being sued for hosting allegedly unlawful gambling sites

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

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

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

Asked if their celebrity endorsers have a duty to discuss to clients the distinctions and similarities between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the spokesperson said. '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 whatever we do.'

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

'Celebrities who provide their names to dubious unlawful gambling websites are, at a minimum, putting their track records at danger as well as courting civil and class actions by consumers who declare damage,' Glaser stated. 'There is likewise some risk that state regulators and state lawyers general rope celebrity endorsers into enforcement efforts for assisting in prohibited gaming.'

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