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

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

The sites are just 2 cogs in the multibillion-dollar market that now finds itself besieged by suits. In the eyes of many gaming corporations, not to point out lawsuit plaintiffs and state regulators, sweepstakes casinos act as traditional casinos, just without the oversight, consumer defenses and tax laws. So not only can they avoid the steep 24-percent federal gaming levy, however sweepstakes operators aren't based on regulatory hurdles 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 business faces accusations of unlawful gaming in a New york city suit that declares VGW uses celeb endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's statement listed below)

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

Sweepstakes endorsers consist of a series 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 provide any differences between traditional gaming and sweepstakes play.

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

Ryan Seacrest prompts fans to play at Chumba Casino, where many - but not all - 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, ads typically focus around the social aspect of the gambling establishments, while omitting the capacity for actual gambling losses.

Others tempt consumers with promises of rewards. One such operator, Stake, ran a social networks ad flaunting Drake's automobiles, aircrafts and estates before rotating to footage of the rapper playing online casino-style games.

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

Another caption discussed: 'Because I never quit.'

The inconsistency in between gaming sites and social or sweepstakes casinos is a bit complicated, but 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), described its members are not in direct competition 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 consumers never buy,' the SPGA representative informed DailyMail.com. 'The minority of consumers who make purchases do so in amounts far smaller sized than the common deposit or bet size at real-money online gaming websites.'

Social casinos provide customers a possibility to play casino-style games with buddies. Players have the option to buy worthless currency frequently described as 'gold coins,' which can not be exchanged genuine money, however can be utilized to unlock different functions within the video games.

But within the world of social casinos exists sweepstakes gaming, allowing consumers to obtain 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 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 money and other things of worth.

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

Social sweeps casino Stake ran an advertisement displaying 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 however 7 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 generally need recognition. However, sites like Chumba will ask for IDs from gamers trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, enable clients to send mail-in ask for free sweeps coins, provided the gamers follow painfully particular directions. What's more, gamers are often rewarded with sweeps coins simply for registering, thus offering them a factor to attempt their hands at any variety of casino games for a chance to win - or lose - real cash.

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

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

'Social sweepstakes video games are merely a kind of online home entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is required to dip into social gambling establishments with sweepstakes rewards. Consumers never need to pay for an opportunity to win prizes. That absence of a purchase requirement - or" factor to consider" - is a crucial distinction in between social sweeps and conventional online gambling sites like casinos.'

Consider the manner in which McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're buying hamburgers and fries that provide them the possibility to win lucrative prizes, such as a $1 million jackpot.

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

'Sweepstakes are a long-standing technique for promoting all kinds of everyday companies in the United States, whatever from hamburgers to publication subscriptions to coffee and home improvement shops,' the SPGA representative told 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 points out, McDonald's Monopoly game does not run forever. Rather, it has a distinct beginning and end, thus recommending the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being utilized to promote real products like fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're generally not tied to casino-style games of chance,' Wallach told DailyMail.com. 'They're just cash free gifts.

'The sweepstakes [casinos] possess none of the characteristics typically associated with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments offer" casino-like" payouts, typically 80 percent or more of earnings, whereas the typical payout portion for a momentary marketing sweepstakes is a trivial share of the revenue earned by the business [normally less than one percent]'

Wallach is fast to liken the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, offering customers the chance to play casino-style video games for genuine rewards. A number of those brick-and-mortar facilities have actually because been shuttered over allegations of prohibited gambling.

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

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

'These distinctions are not arbitrary,' Wallach stated of social sweeps casinos. 'They have actually consistently been mentioned by courts and state lawyer generals as key factors in determining that a sweepstakes promo remained in reality a guise for unlawful gambling.'

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

'Consumers are being denied of securities and states are forgoing substantial tax and profits chances as this gaming replaces that carried out through controlled channels,' read a well-circulated AGA memo.

And then there are the complainants who have taken legal action against social casinos in more than a lots states.

Sweepstakes casino operators paid a combined $14.2 million in 4 separate cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action lawsuit, stating the settlement was made to avoid legal expenses and continued litigation.

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

In the current suit, which is mostly similar to its predecessors, New york city state locals Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'prohibited gaming business. '

Apple and Google have actually likewise been named as accuseds in suits for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's demand for remark.

'We normally don't discuss 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 confidence in our compliance with all laws and policies where we run, and stay positive 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 years, producing not only terrific games, user experiences and home entertainment, however also guaranteeing this is done securely, responsibly and at the highest level of standards.

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

The issues between traditional online sports betting and sweepstakes gambling establishments might prove troublesome for some star endorsers.

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

'It's paradoxical that professional athletes are hawking prohibited sports betting 'sweeps' websites while at the very same time the leagues wish to forecast a strong position versus prohibited gaming - specifically when attempting to tamp down the occasional sports betting scandal,' Glaser told DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter received a life time restriction from the NBA over claims 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 taken legal action against for hosting apparently unlawful sports betting sites

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

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

Neither an NBA spokesman nor the gamers' agents reacted to DailyMail.com's demands for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise neglected to react to DailyMail.com emails.

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

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

Glaser, an outspoken challenger of sweepstakes sites, sees things in a different way.

'Celebrities who provide their names to dubious prohibited gaming websites are, at a minimum, putting their track records at threat along with courting civil and class actions by consumers who allege harm,' Glaser stated. 'There is also some danger that state regulators and state lawyers general rope star endorsers into enforcement efforts for helping with illegal gambling.'

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