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

No, they weren't personally in participation, however the world-famous stars were notably included in a slide discussion on social and sweepstakes casinos - the questionable websites using both free casino-style games and profitable 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 free,' 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 finds itself besieged by lawsuits. In the eyes of numerous gaming corporations, not to mention lawsuit plaintiffs and state regulators, sweepstakes casinos serve as conventional casinos, only without the oversight, consumer defenses and tax laws. So not just can they prevent the steep 24-percent federal gambling levy, but sweepstakes operators aren't subject to regulative difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the business deals with accusations of unlawful gambling in a New York suit that declares VGW uses celebrity endorsers to 'develop a veneer of legitimacy' around its item. (See VGW's declaration listed below)

'I'm not exactly sure" if you do not trust us, you can trust Paris Hilton" is a winning message for business operating multibillion-dollar prohibited 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 include a series of stars 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 use any distinctions between conventional gaming and sweepstakes play.

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

Ryan Seacrest prompts fans to dip into Chumba Casino, where numerous - however not all - video games are totally free

Drake has an offer with social sweeps gambling establishment, Stake, that he frequently promotes on social networks

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Instead, advertisements usually center around the social aspect of the casinos, while omitting the potential for actual gambling losses.

Others tempt customers with promises of prizes. One such operator, Stake, ran a social networks ad displaying Drake's cars and trucks, aircrafts and mansions before pivoting to video of the rap artist playing online casino-style video games.

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

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

The disparity between gaming websites and social or sweepstakes gambling establishments is a bit complicated, however 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), discussed its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, many of the players on social-sweepstakes casinos are sports betting complimentary.

'Most social sweeps consumers never purchase,' the SPGA representative told DailyMail.com. 'The minority of consumers who make purchases do so in quantities far smaller than the normal deposit or bet size at real-money online gambling sites.'

Social casinos offer clients a chance to play casino-style games with friends. Players have the choice to buy valueless currency frequently described as 'gold coins,' which can not be exchanged for genuine money, but can be used to open various features within the video games.

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

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

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

Social sweeps casino Stake ran an advertisement flaunting Drake's cars and trucks, airplanes and estates

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

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

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

Many websites, like the crypto-compatible Stake, enable clients to submit mail-in ask for free sweeps coins, supplied the players follow painfully particular directions. What's more, players are typically rewarded with sweeps coins simply for signing up, therefore providing a reason to try their hands at any number of casino video games for an opportunity to win - or lose - genuine money.

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

According to the stakeholders, their item is the complimentary casino-style gaming, and the real-stakes competitors is just a means of promoting their bread and butter.

'Social sweepstakes games are simply a kind of online entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is needed to dip into social casinos with sweepstakes prizes. Consumers never ever need to spend for a chance to win prizes. That lack of a purchase requirement - or" consideration" - is a crucial difference in between social sweeps and traditional online sports betting sites like gambling establishments.'

Think of the way that McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and fries that offer them the chance to win lucrative prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the video game itself does not fulfill the definition of gambling in the US.

'Sweepstakes are an enduring technique for promoting all sort of daily organizations in the United States, whatever from hamburgers to magazine memberships to coffee and home enhancement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are frequently 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 experts, that argument does not cut it.

For starters, video gaming attorney Daniel Wallach points out, McDonald's Monopoly video game does not run forever. Rather, it has a distinct start and end, therefore recommending the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being utilized to promote real items like french fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're usually not tied to casino-style games of opportunity,' Wallach told DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [gambling establishments] possess none of the attributes frequently associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments offer" casino-like" payouts, normally 80 percent or more of revenues, whereas the normal payment portion for a momentary marketing sweepstakes is an unimportant share of the earnings made by the company [generally less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the web cafes that sprang up in Florida, providing customers the chance to play casino-style games for genuine prizes. Much of those brick-and-mortar facilities have actually because been shuttered over claims of unlawful sports betting.

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

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

'These distinctions are not arbitrary,' Wallach stated of social sweeps casinos. 'They have consistently been pointed out by courts and state chief law officer as essential factors in figuring out that a sweepstakes promo remained in reality a guise for unlawful gambling.'

Among the casino industry's leading trade organizations, the American Gaming Association, is now pressing legislators to examine sweepstakes operators and, sometimes, enact brand-new legislation on the issue.

'Consumers are being deprived of defenses and states are forgoing substantial tax and income opportunities as this sports betting replaces that conducted through managed channels,' checked out a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 different cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action lawsuit, saying the settlement was made to avoid legal costs and continued litigation.

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

In the latest lawsuit, which is mainly comparable to its predecessors, New york city state residents 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 likewise been called as offenders in suits for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com's demand for remark.

'We normally don't discuss matters before the courts,' a VGW spokesperson informed DailyMail.com by means of e-mail. 'However, we keep in mind that this claim has only just been filed with the court and VGW has not been officially served.

'We have full confidence in our compliance with all laws and guidelines where we operate, and remain positive about the future,' the representative continued. 'We continue to provide our free-to-play games throughout many of North America, as we have for more than a years, producing not only terrific video games, user experiences and home entertainment, but also guaranteeing this is done securely, properly and at the greatest level of requirements.

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

The issues in between standard online gaming and sweepstakes casinos might show bothersome for some celeb 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 video gaming titans like FanDuel and DraftKings.

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

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

Together with VGW, Apple and Google are being sued for hosting supposedly illegal sports betting sites

Regardless, Glaser sees sweepstakes casinos as a significant concern for leagues such as the NBA.

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

Neither an NBA representative nor the players' representatives reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise disregarded to react to DailyMail.com e-mails.

Asked if their star endorsers have an obligation to describe to consumers the differences and resemblances 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 service practices more broadly,' the representative said. 'A few of our worths are" our gamers come first" and" we do what's right", and we put our worths at the core of everything we do.'

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

'Celebrities who lend their names to shady prohibited gaming websites are, at a minimum, putting their credibilities at threat as well as courting civil and class actions by customers who allege harm,' Glaser said. 'There is likewise some danger that state regulators and state chief law officers rope celeb endorsers into enforcement efforts for helping with unlawful sports betting.'

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