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

No, they weren't personally in presence, however the world-famous stars were notably included in a slide presentation on social and sweepstakes gambling establishments - the controversial sites providing both totally free casino-style games and lucrative rewards, such as money, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet 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 finds itself besieged by suits. In the eyes of lots of gaming corporations, not to mention claim complainants and state regulators, sweepstakes casinos serve as traditional casinos, only without the oversight, customer securities and tax laws. So not only can they avoid the high 24-percent federal gaming levy, however sweepstakes operators aren't subject to regulatory difficulties like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings last year alone. Now the business faces accusations of prohibited sports betting in a New York claim that claims VGW uses star endorsers to 'produce a veneer of authenticity' 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 running multibillion-dollar prohibited operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of video gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers include a series 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 distinctions between conventional sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of many sweepstakes casinos found online

Ryan Seacrest advises fans to play at Chumba Casino, where numerous - but not all - games are free

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

Read More

Donald Trump 'set to call NBA team owner as US ambassador to Italy'

Instead, ads generally focus around the social element of the casinos, while omitting the potential for actual gaming losses.

Others tempt consumers with promises of prizes. One such operator, Stake, ran a social networks ad flaunting Drake's automobiles, planes and estates before rotating to video of the rap artist playing online casino-style video games.

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

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

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

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

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

Social casinos use consumers a chance to play casino-style video games with buddies. Players have the choice to buy worthless currency often referred to as 'gold coins,' which can not be exchanged for genuine cash, but can be used to unlock numerous functions within the video games.

But within the world of social gambling establishments exists sweepstakes gaming, allowing consumers to acquire other currency called 'sweeps coins' that can be exchanged for cash or other rewards.

And therein lies the capacity for monetary losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York City. One player told 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 money and other things of worth.

The Philadelphia 76ers' Paul George is seen promoting a Global Poker occasion

Social sweeps casino Stake ran an ad flaunting Drake's vehicles, aircrafts and mansions

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

Traditional online gambling establishments are banned in all but 7 states, which has actually helped to fuel the appeal of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, permit customers to send mail-in demands for complimentary sweeps coins, provided the players follow painfully specific directions. What's more, players are typically rewarded with sweeps coins just for signing up, consequently providing them a reason to try their hands at any number of gambling establishment games for an opportunity to win - or lose - real cash.

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

According to the stakeholders, their product is the totally free casino-style video gaming, and the real-stakes competitors is simply a way of promoting their bread and butter.

'Social sweepstakes games are merely a form of online entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is required to play at social casinos with sweepstakes rewards. Consumers never have to spend for an opportunity to win prizes. That absence of a purchase requirement - or" consideration" - is an essential distinction in between social sweeps and traditional online gaming sites like gambling establishments.'

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 buying hamburgers and fries that provide them the opportunity to win rewarding rewards, such as a $1 million prize.

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

'Sweepstakes are an enduring approach for promoting all kinds of everyday organizations in the United States, everything from burgers to publication subscriptions to coffee and home enhancement shops,' the SPGA spokesperson 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 numerous gambling market insiders, that argument doesn't cut it.

For starters, gaming lawyer Daniel Wallach points out, McDonald's Monopoly game does not run forever. Rather, it has a well-defined start and end, thus recommending the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being used to promote genuine products like french fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're generally not connected to casino-style games of opportunity,' Wallach told DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [gambling establishments] have none of the qualities commonly related to McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments use" casino-like" payouts, typically 80 percent or more of revenues, whereas the normal payment percentage for a short-lived marketing sweepstakes is an unimportant share of the revenue earned by the business [normally less than one percent]'

Wallach is quick to liken the online social sweeps casinos to the internet coffee shops that sprang up in Florida, using consumers the opportunity to play casino-style games for real prizes. A lot of those brick-and-mortar facilities have actually because been shuttered over accusations of prohibited gambling.

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

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

'These differences are not approximate,' Wallach said of social sweeps casinos. 'They have consistently been pointed out by courts and state attorney general of the United States as crucial elements in identifying that a sweepstakes promotion remained in fact a guise for illegal gaming.'

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

'Consumers are being denied of defenses and states are giving up significant tax and profits opportunities as this sports betting replaces that carried out through regulated channels,' read a well-circulated AGA memo.

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

Sweepstakes casino operators 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 suit, stating the settlement was made to prevent legal costs and continued litigation.

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

In the current lawsuit, which is mostly comparable to its predecessors, New York state locals 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 'prohibited sports betting business. '

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

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

'We have complete self-confidence in our compliance with all laws and regulations where we operate, and remain positive about the future,' the spokesperson continued. 'We continue to offer our free-to-play video games throughout many of North America, as we have for more than a decade, developing not just fantastic video games, user experiences and home entertainment, however also ensuring this is done securely, responsibly and at the highest level of requirements.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are relatively common across the online social games industry (and the US more broadly), and our basic practice is that we intend to vigorously protect any claim which may be brought against us.'

The issues in between conventional online sports betting and sweepstakes casinos might show bothersome for some celebrity 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 paradoxical that expert athletes are hawking illegal sports betting 'sweeps' sites while at the exact same time the leagues wish to forecast a strong position against prohibited gaming - particularly when trying to tamp down the occasional sports betting scandal,' Glaser informed DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter got a life time restriction from the NBA over allegations 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 allegedly unlawful sports betting 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 athletes endorsing sweepstakes websites is a matter of when, not if,' Glaser included.

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

Asked if their celebrity endorsers have an obligation to discuss to clients the distinctions and resemblances in between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the representative said. 'Some of our worths are" our gamers come first" and" we do what's right", and we put our worths at the core of whatever we do.'

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

'Celebrities who provide their names to dubious illegal sports betting sites are, at a minimum, putting their credibilities at threat in addition to courting civil and class actions by consumers who declare damage,' Glaser said. 'There is likewise some danger that state regulators and state lawyers basic rope celeb endorsers into enforcement efforts for helping with illegal gambling.'

New YorkNBADrakeParis Hilton