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

No, they weren't personally in attendance, but the world-famous celebrities were conspicuously included in a slide discussion on social and sweepstakes gambling establishments - the controversial sites providing both free casino-style video games and lucrative prizes, such as money, gift cards or cryptocurrency. In one ad, 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 sites are simply 2 cogs in the multibillion-dollar industry that now discovers itself besieged by claims. In the eyes of lots of gaming corporations, not to mention lawsuit complainants and state regulators, sweepstakes gambling establishments function as conventional gambling establishments, only without the oversight, consumer securities and tax laws. So not just can they prevent the steep 24-percent federal gaming 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 earnings in 2015 alone. Now the company faces allegations of prohibited gaming in a New York suit that declares VGW uses celebrity endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's statement listed below)

'I'm unsure" if you do not 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 speaker, Howard Glaser of video gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a variety of stars from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions in between standard sports betting and sweepstakes play.

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

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

Drake has an offer with social sweeps casino, Stake, that he frequently promotes on social media

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Instead, ads normally center around the social aspect of the gambling establishments, while leaving out the capacity for actual sports betting losses.

Others lure clients with pledges of rewards. One such operator, Stake, ran a social networks ad flaunting Drake's cars and trucks, aircrafts and mansions before rotating to video of the rap artist playing online casino-style games.

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

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

The inconsistency between gambling websites and social or sweepstakes casinos is a bit complicated, but operators of the latter insist they're not included with the former.

A spokesperson for a market 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, the majority of the players on social-sweepstakes casinos are sports betting totally free.

'Most social sweeps customers never ever purchase,' the SPGA spokesperson told DailyMail.com. 'The minority of customers who make purchases do so in quantities far smaller than the common deposit or wager size at real-money online sports betting sites.'

Social casinos use customers an opportunity to play casino-style video games with good friends. Players have the choice to purchase valueless currency typically referred to as 'gold coins,' which can not be exchanged for genuine money, but can be used to unlock various features within the video games.

But within the world of social casinos exists sweepstakes gaming, allowing consumers 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 purchase more coins in pursuit of cash and other things of worth.

The Philadelphia 76ers' Paul George is seen promoting a Worldwide Poker event

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

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

Traditional online casinos are prohibited in all however 7 states, which has actually assisted to sustain the appeal of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes sites, which don't require normally require recognition. However, sites like Chumba will request IDs from gamers trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, permit customers to send mail-in ask for totally free sweeps coins, offered the gamers follow painfully particular directions. What's more, gamers are typically rewarded with sweeps coins just for registering, thereby providing a factor to try their hands at any variety of casino video games for a possibility to win - or lose - real money.

So why are sweepstakes sites enabled to operate in 48 states, while online casinos are prohibited in all but 7?

According to the stakeholders, their product is the free casino-style gaming, and the real-stakes competition is just a way of promoting their support.

'Social sweepstakes games are simply a type of online home entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is required to dip into social casinos with sweepstakes rewards. Consumers never have to pay for a chance to win rewards. That absence of a purchase requirement - or" consideration" - is a vital distinction between social sweeps and conventional online sports betting sites like gambling establishments.'

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

And without a purchase requirement, or 'factor to consider', the video game itself doesn't meet the meaning of gambling in the US.

'Sweepstakes are an enduring approach for promoting all kinds of everyday organizations in the United States, whatever from burgers to magazine memberships to coffee and home enhancement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are routinely used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting industry experts, that argument doesn't cut it.

For beginners, gaming lawyer Daniel Wallach explains, McDonald's Monopoly video game does not run indefinitely. Rather, it has a well-defined beginning and end, consequently suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote genuine products like french fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're usually not connected to casino-style video games of chance,' Wallach told DailyMail.com. 'They're just money giveaways.

'The sweepstakes [gambling establishments] possess none of the attributes commonly associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos use" casino-like" payouts, typically 80 percent or more of earnings, whereas the typical payout percentage for a short-term marketing sweepstakes is an unimportant share of the revenue earned by the business [usually less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the internet coffee shops that sprang up in Florida, offering clients the chance to play casino-style games for genuine rewards. Much of those brick-and-mortar facilities have actually since been shuttered over claims of prohibited gambling.

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

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

'These differences are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have consistently been cited by courts and state chief law officer as crucial consider determining that a sweepstakes promo remained in reality a guise for unlawful gambling.'

Among the casino market's leading trade companies, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, sometimes, enact new legislation on the problem.

'Consumers are being deprived of securities and states are forgoing substantial tax and revenue chances as this gambling changes that performed through managed channels,' read a well-circulated AGA memo.

And after that there are the plaintiffs who have actually sued social casinos in more than a dozen 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 consented to 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 most current claim, which is largely comparable to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'unlawful sports betting business. '

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

'We normally do not talk about matters before the courts,' a VGW representative informed DailyMail.com via e-mail. 'However, we note that this claim has actually only just been filed with the court and VGW has not been formally served.

'We have complete self-confidence in our compliance with all laws and guidelines where we run, and stay confident about the future,' the spokesperson continued. 'We continue to use our free-to-play games across the majority of North America, as we have for more than a decade, developing not just great 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 relatively typical throughout the online social games industry (and the US more broadly), and our standard practice is that we plan to vigorously safeguard any claim which might be brought against us.'

The concerns in between standard online gambling and sweepstakes gambling establishments could show bothersome for some star endorsers.

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

'It's ironic that professional athletes are hawking illegal sports betting wagering 'sweeps' websites while at the same time the leagues wish to project a strong position versus unlawful gaming - especially when trying to tamp down the occasional sports betting scandal,' Glaser told DailyMail.com.

It was simply 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 including social or sweepstakes gambling establishments.

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

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

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

Neither an NBA representative nor the gamers' representatives responded to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also overlooked to respond to DailyMail.com e-mails.

Asked if their star endorsers have an obligation to explain to clients the distinctions and similarities between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that requires to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the representative stated. 'Some of our worths are" our players come initially" 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 illegal gaming websites are, at a minimum, putting their track records at threat as well as courting civil and class actions by customers who allege damage,' Glaser stated. 'There is also some danger that state regulators and state chief law officers rope star endorsers into enforcement efforts for facilitating prohibited gambling.'

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