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

No, they weren't personally in attendance, but the world-famous stars were conspicuously included in a slide presentation on social and sweepstakes casinos - the questionable websites providing both complimentary casino-style video games and financially rewarding prizes, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are just two cogs in the multibillion-dollar industry that now finds itself besieged by lawsuits. In the eyes of numerous gaming corporations, not to mention lawsuit plaintiffs and state regulators, sweepstakes gambling establishments serve as standard casinos, only without the oversight, customer defenses and tax laws. So not just can they avoid the high 24-percent federal gaming levy, however sweepstakes operators aren't based on regulative obstacles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the company deals with accusations of unlawful sports betting in a New york city claim that claims VGW utilizes celebrity endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's declaration below)

'I'm not sure" if you don't trust us, you can trust Paris Hilton" is a winning message for business running multibillion-dollar illegal operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a variety of celebs from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom provide any differences in between traditional gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among numerous sweepstakes gambling establishments found online

Ryan Seacrest prompts fans to play at Chumba Casino, where numerous - but not all - video games are complimentary

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

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Instead, ads generally focus around the social element of the casinos, 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 revealing off Drake's vehicles, aircrafts and mansions before pivoting to video footage of the rap artist playing online casino-style video games.

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

Another caption described: 'Because I never quit.'

The inconsistency in between gaming websites and social or sweepstakes casinos is a bit complicated, but operators of the latter insist they're not involved with the previous.

A representative for an industry trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, the majority of the players on social-sweepstakes casinos are sports betting free.

'Most social sweeps consumers never purchase,' the SPGA spokesperson informed DailyMail.com. 'The minority of customers who make purchases do so in quantities far smaller sized than the normal deposit or wager size at real-money online gaming websites.'

Social casinos use clients an opportunity to play casino-style games with pals. Players have the choice to purchase worthless currency often referred to as 'gold coins,' which can not be exchanged genuine cash, however can be utilized to unlock various features within the games.

But within the world of social gambling establishments exists sweepstakes gaming, enabling consumers to get other currency understood as 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the potential for financial losses, like the ones declared 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 casinos in the previous year after continuing to buy more coins in pursuit of money and other things of value.

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

Social sweeps casino Stake ran an advertisement displaying Drake's cars and trucks, planes and estates

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

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

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

Many sites, like the crypto-compatible Stake, permit consumers to send mail-in ask for complimentary sweeps coins, provided the players follow painfully specific instructions. What's more, players are frequently rewarded with sweeps coins simply for registering, consequently providing a reason to try their hands at any number of gambling establishment 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 prohibited in all however 7?

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

'Social sweepstakes games are merely a type of online home entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is required to play at social gambling establishments with sweepstakes prizes. Consumers never ever have to pay for a chance to win prizes. That absence of a purchase requirement - or" factor to consider" - is a crucial difference between social sweeps and traditional online gambling websites like casinos.'

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

And without a purchase requirement, or 'consideration', the video game itself does not meet the meaning of sports betting in the US.

'Sweepstakes are an enduring approach for promoting all type of everyday organizations in the United States, whatever from hamburgers to magazine subscriptions to coffee and home improvement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are routinely utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many sports betting industry insiders, that argument does not cut it.

For beginners, video gaming attorney Daniel Wallach explains, McDonald's Monopoly game doesn't run forever. 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 used to promote real items like fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're generally not tied to casino-style video games of possibility,' Wallach told DailyMail.com. 'They're just cash free gifts.

'The sweepstakes [gambling establishments] possess none of the attributes frequently related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes casinos offer" casino-like" payments, normally 80 percent or more of incomes, whereas the common payment portion for a momentary marketing sweepstakes is an unimportant share of the revenue made by the business [generally less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the internet coffee shops that emerged in Florida, providing customers the possibility to play casino-style games for genuine rewards. Much of those brick-and-mortar facilities have considering that been shuttered over allegations of illegal sports betting.

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

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

'These differences are not arbitrary,' Wallach said of social sweeps casinos. 'They have actually consistently been cited by courts and state attorney general of the United States as essential consider identifying that a sweepstakes promotion was in fact a guise for illegal gaming.'

One of the casino industry's leading trade companies, the American Gaming Association, is now pressing legislators to examine sweepstakes operators and, in some cases, enact brand-new legislation on the issue.

'Consumers are being deprived of protections and states are passing up substantial tax and income opportunities as this sports betting changes that conducted through regulated channels,' read a well-circulated AGA memo.

And after that there are the plaintiffs 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 different cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action suit, saying the settlement was made to avoid legal costs and continued lawsuits.

Michael Phelps has signed an offer with the VGW Group, which owns Global Poker

In the current claim, which is largely 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 sports betting business. '

Apple and Google have actually likewise been named as accuseds in claims for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for comment.

'We normally do not discuss matters before the courts,' a VGW spokesperson told DailyMail.com by means of e-mail. 'However, we note 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 stay confident about the future,' the spokesperson continued. 'We continue to offer our free-to-play video games across many of North America, as we have for more than a decade, creating not just terrific games, user experiences and home entertainment, but also guaranteeing this is done safely, responsibly and at the greatest level of standards.

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

The issues in between traditional online sports betting and sweepstakes gambling establishments might show troublesome 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 gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking prohibited sports betting wagering 'sweeps' websites while at the exact same time the leagues wish to predict a strong position against unlawful gaming - specifically when attempting to tamp down the periodic gaming scandal,' Glaser informed DailyMail.com.

It was just 8 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 unassociated to anything involving social or sweepstakes casinos.

Together with VGW, Apple and Google are being sued for hosting allegedly prohibited gambling websites

Regardless, Glaser sees sweepstakes gambling establishments as a major problem 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 players' representatives reacted to DailyMail.com's demands 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 a responsibility to discuss to customers the differences and similarities in between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that requires to be done.

'We have full self-confidence in our influencer and ambassadorial collaborations, and our business practices more broadly,' the representative said. 'A few of our values are" our players precede" and" we do what's right", and we put our values at the core of whatever we do.'

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

'Celebrities who provide their names to dubious unlawful gambling websites are, at a minimum, putting their reputations at danger along with courting civil and class actions by customers who declare damage,' Glaser stated. 'There is also some risk that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for assisting in prohibited gaming.'

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