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

No, they weren't personally in participation, but the world-famous stars were conspicuously consisted of in a slide discussion on social and sweepstakes casinos - the questionable sites offering both free casino-style video games and financially rewarding rewards, such as money, present cards or cryptocurrency. In one advertisement, 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 discovers itself besieged by claims. In the eyes of numerous video gaming corporations, not to discuss lawsuit complainants and state regulators, sweepstakes gambling establishments function as standard gambling establishments, just without the oversight, consumer protections and tax laws. So not just can they avoid the high 24-percent federal sports betting levy, but sweepstakes operators aren't based on regulatory hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the company faces allegations of prohibited gaming in a New york city claim that declares VGW uses celeb endorsers to 'create a veneer of legitimacy' around its item. (See VGW's declaration below)

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

Sweepstakes endorsers consist of a range 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 distinctions in between traditional sports betting and sweepstakes play.

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

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

Drake has a handle social sweeps casino, Stake, that he routinely promotes on social networks

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Instead, advertisements normally focus around the social element of the gambling establishments, while omitting the potential for actual gambling losses.

Others tempt customers with promises of rewards. One such operator, Stake, ran a social media ad flaunting Drake's cars and trucks, planes and estates before pivoting to 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 explained: 'Because I never gave up.'

The inconsistency in between gaming sites and social or sweepstakes gambling establishments is a bit complex, 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), explained its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA data, the majority of the players on social-sweepstakes gambling establishments are sports betting totally free.

'Most social sweeps customers never ever buy,' the SPGA representative informed DailyMail.com. 'The minority of customers who make purchases do so in quantities far smaller than the common deposit or bet size at real-money online sports betting websites.'

Social casinos offer consumers an opportunity to play casino-style video games with friends. Players have the alternative to buy worthless currency often referred to as 'gold coins,' which can not be exchanged for real money, however can be utilized to open numerous features within the games.

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

And therein lies the capacity for financial losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York City. One player told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the previous year after continuing to purchase 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 gambling establishment Stake ran an advertisement flaunting Drake's cars, planes and estates

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

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

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

Many websites, like the crypto-compatible Stake, enable consumers to send mail-in demands for totally free sweeps coins, provided the gamers follow painfully specific instructions. What's more, gamers are frequently rewarded with sweeps coins merely for registering, thereby providing a factor to attempt their hands at any number of gambling establishment video games for a chance to win - or lose - real cash.

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

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

'Social sweepstakes video games are just a form of online entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is required to play at social gambling establishments with sweepstakes rewards. Consumers never need to spend for a chance to win prizes. That lack of a purchase requirement - or" factor to consider" - is an important distinction in between social sweeps and standard online gaming websites like gambling establishments.'

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

And without a purchase requirement, or 'factor to consider', the video game itself doesn't fulfill the definition of gambling in the US.

'Sweepstakes are a long-standing method for promoting all sort of everyday businesses in the United States, everything from hamburgers to publication subscriptions to coffee and home improvement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are routinely used 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 experts, that argument doesn't cut it.

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

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

'The sweepstakes [casinos] have none of the qualities frequently associated with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos provide" casino-like" payouts, generally 80 percent or more of revenues, whereas the typical payment percentage for a short-term advertising sweepstakes is a minor share of the profits earned by the business [typically less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, using consumers the possibility to play casino-style video games for real prizes. Many of those brick-and-mortar facilities have actually given that been shuttered over claims of unlawful gaming.

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

Now, Wallach argues, social sweeps casinos ought to face similar scrutiny.

'These distinctions are not approximate,' Wallach said of social sweeps gambling establishments. 'They have repeatedly been mentioned by courts and state lawyer generals as crucial consider identifying that a sweepstakes promo was in fact a guise for illegal sports betting.'

One of the gambling establishment market's leading trade companies, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, in many cases, enact brand-new legislation on the issue.

'Consumers are being denied of defenses and states are giving up substantial tax and income opportunities as this sports betting changes that conducted through controlled channels,' read 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 gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action suit, stating the settlement was made to prevent legal expenses and continued litigation.

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

In the most recent lawsuit, which is mostly similar to its predecessors, New york city state homeowners Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is described in the filing as an 'prohibited gaming enterprise. '

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

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

'We have complete self-confidence in our compliance with all laws and policies where we run, and stay positive about the future,' the spokesperson continued. 'We continue to use our free-to-play games across many of The United States and Canada, as we have for more than a decade, creating not just excellent games, user experiences and entertainment, but likewise ensuring this is done securely, properly and at the highest level of standards.

'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are reasonably typical across the online social games industry (and the US more broadly), and our standard practice is that we intend to intensely defend any claim which may be brought against us.'

The issues in between standard online sports betting and sweepstakes casinos might prove bothersome for some star 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 ironic that expert athletes are hawking illegal sports betting wagering 'sweeps' websites while at the same time the leagues desire to project a strong stance versus illegal sports betting - specifically when trying to tamp down the periodic sports betting scandal,' Glaser told DailyMail.com.

It was simply eight months ago that Toronto Raptors forward Jontay Porter got a life time ban from the NBA over accusations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes casinos.

Along with VGW, Apple and Google are being taken legal action against for hosting presumably prohibited gambling websites

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

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

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

Asked if their star endorsers have a duty to explain to consumers the distinctions and resemblances in between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that needs 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 whatever we do.'

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

'Celebrities who provide their names to shady illegal sports betting websites are, at a minimum, putting their credibilities at threat along with courting civil and class actions by customers who allege harm,' Glaser said. 'There is likewise some threat that state regulators and state chief law officers rope celebrity endorsers into enforcement efforts for helping with illegal gambling.'

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