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

No, they weren't personally in attendance, however the world-famous stars were conspicuously included in a slide presentation on social and sweepstakes gambling establishments - the questionable sites providing both totally free casino-style games and lucrative prizes, such as cash, present cards or cryptocurrency. In one ad, 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 sites are simply two cogs in the multibillion-dollar market that now discovers itself besieged by suits. In the eyes of many gaming corporations, not to point out claim complainants and state regulators, sweepstakes casinos serve as conventional gambling establishments, just without the oversight, customer defenses and tax laws. So not just can they prevent the high 24-percent federal sports betting levy, however sweepstakes operators aren't based on regulative hurdles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the company deals with allegations of unlawful gaming in a New York suit that claims VGW utilizes celeb endorsers to 'create a veneer of legitimacy' around its product. (See VGW's declaration below)

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

Sweepstakes endorsers consist of a series of celebrities from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions in between traditional gaming and sweepstakes play.

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

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

Drake has an offer with social sweeps casino, Stake, that he regularly touts on social networks

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Instead, advertisements typically focus around the social element of the casinos, while omitting the capacity for actual sports betting losses.

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

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

Another caption described: 'Because I never quit.'

The disparity in between sports betting websites 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 an industry 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 free.

'Most social sweeps clients never buy,' the SPGA representative informed DailyMail.com. 'The minority of consumers who make purchases do so in quantities far smaller sized than the common deposit or wager size at real-money online gambling sites.'

Social casinos use consumers an opportunity to play casino-style video games with pals. Players have the alternative to purchase worthless currency frequently described as 'gold coins,' which can not be exchanged genuine money, but can be used to open different features within the games.

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

And therein lies the potential for monetary losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York City. One player informed 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 value.

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

Social sweeps gambling establishment Stake ran an advertisement displaying Drake's cars and trucks, aircrafts and estates

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

Traditional online gambling establishments are prohibited in all but seven states, which has actually assisted to fuel the popularity of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, allow consumers to send mail-in demands for free sweeps coins, offered the players follow painfully particular directions. What's more, gamers are often rewarded with sweeps coins simply for registering, therefore providing a factor to attempt their hands at any variety of casino video games for a possibility to win - or lose - genuine money.

So why are sweepstakes sites permitted to run in 48 states, while online gambling establishments are banned in all but 7?

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

'Social sweepstakes video games are just a kind of online home entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is needed to play at social casinos with sweepstakes rewards. Consumers never have to pay for an opportunity to win rewards. That absence of a purchase requirement - or" factor to consider" - is an essential distinction in between social sweeps and traditional online gaming websites like casinos.'

Think of the way that McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and french fries that provide them the chance to win rewarding prizes, such as a $1 million prize.

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

'Sweepstakes are an enduring method for promoting all type of everyday businesses in the United States, everything from hamburgers to publication subscriptions to coffee and home improvement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are regularly used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of gambling market insiders, that argument does not cut it.

For starters, gaming attorney Daniel Wallach mentions, McDonald's Monopoly game does not run indefinitely. Rather, it has a well-defined beginning and end, thereby suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote genuine items like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [gambling establishments] possess none of the attributes typically associated with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos use" casino-like" payments, generally 80 percent or more of incomes, whereas the common payout portion for a short-term advertising sweepstakes is a trivial share of the earnings made by the business [normally less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the web coffee shops that sprang up in Florida, providing consumers the possibility to play casino-style video games for genuine rewards. A lot of those brick-and-mortar establishments have since been shuttered over accusations of illegal gambling.

DJ Khaled is amongst several celebrity spokespeople for VGW's Global Poker brand

Now, Wallach argues, social sweeps gambling establishments should deal with comparable analysis.

'These differences are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have actually repeatedly been mentioned by courts and state chief law officer as essential consider determining that a sweepstakes promo was in truth a guise for unlawful sports betting.'

Among the gambling establishment market's leading trade organizations, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, in many cases, enact new legislation on the issue.

'Consumers are being denied of protections and states are passing up significant tax and revenue opportunities as this gambling replaces that performed through controlled channels,' checked out a well-circulated AGA memo.

And after that there are the plaintiffs who have taken legal action against social gambling establishments in more than a lots states.

Sweepstakes casino operators paid a combined $14.2 million in four 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 prevent legal costs and continued litigation.

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

In the current suit, which is largely similar to its predecessors, New York state residents Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'illegal sports betting business. '

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

'We normally do not talk about matters before the courts,' a VGW spokesperson informed DailyMail.com by means of email. 'However, we note that this claim has actually only just been submitted with the court and VGW has actually not been officially served.

'We have full self-confidence in our compliance with all laws and regulations where we run, and stay confident about the future,' the spokesperson continued. 'We continue to provide our free-to-play games throughout the majority of The United States and Canada, as we have for more than a decade, producing not only fantastic games, user experiences and entertainment, but likewise ensuring this is done safely, properly and at the highest level of requirements.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are fairly typical throughout the online social video games industry (and the US more broadly), and our basic practice is that we plan to strongly defend any claim which may be brought versus us.'

The issues between traditional online gaming and sweepstakes casinos could prove bothersome 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 gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking unlawful sports betting wagering 'sweeps' websites while at the same time the leagues wish to forecast a strong position versus prohibited gambling - specifically when trying to tamp down the occasional sports betting scandal,' Glaser informed DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter received a life time restriction from the NBA over allegations he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes gambling establishments.

Along with VGW, Apple and Google are being demanded hosting supposedly illegal gambling websites

Regardless, Glaser sees sweepstakes casinos as a significant problem 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 spokesman 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 disregarded to react to DailyMail.com emails.

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

'We have full self-confidence in our influencer and ambassadorial collaborations, and our organization practices more broadly,' the spokesperson stated. 'A few of our worths are" our players 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 sites, sees things differently.

'Celebrities who lend their names to shady illegal sports betting websites are, at a minimum, putting their reputations at danger in addition to courting civil and class actions by customers who allege damage,' Glaser stated. 'There is also some risk that state regulators and state chief law officers rope celeb endorsers into enforcement efforts for assisting in prohibited gambling.'

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