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 presence, however the world-famous celebrities were conspicuously consisted of in a slide discussion on social and sweepstakes gambling establishments - the questionable sites providing both complimentary casino-style video games and financially rewarding rewards, such as money, gift 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 websites are just 2 cogs in the multibillion-dollar industry that now discovers itself besieged by suits. In the eyes of many video gaming corporations, not to point out suit complainants and state regulators, sweepstakes gambling establishments function as standard casinos, just without the oversight, consumer defenses and tax laws. So not just can they avoid the high 24-percent federal gambling levy, however sweepstakes operators aren't subject to regulatory difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the business deals with allegations of unlawful gaming in a New york city claim that declares VGW uses celebrity endorsers to 'produce a veneer of authenticity' around its product. (See VGW's statement listed below)

'I'm not exactly sure" if you don't trust us, you can trust Paris Hilton" is a winning message for business running multibillion-dollar unlawful 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 celebs from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom provide any differences in between conventional gaming and sweepstakes play.

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

Ryan Seacrest urges fans to play at Chumba Casino, where many - however not all - video games are complimentary

Drake has a handle social sweeps gambling establishment, Stake, that he regularly touts on social media

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Instead, ads normally center around the social aspect of the gambling establishments, while leaving out the potential for real sports betting losses.

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

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

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

The inconsistency in between sports betting websites and social or sweepstakes gambling establishments is a bit complicated, but operators of the latter insist they're not included with the former.

A spokesperson for a market trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA information, the majority of the gamers on social-sweepstakes gambling establishments are sports betting complimentary.

'Most social sweeps consumers never make a purchase,' the SPGA spokesperson informed DailyMail.com. 'The minority of customers who make purchases do so in amounts far smaller than the common deposit or bet size at real-money online sports betting sites.'

Social casinos offer consumers a chance to play casino-style games with buddies. Players have the alternative to purchase valueless currency typically referred to as 'gold coins,' which can not be exchanged for genuine cash, however can be utilized to open numerous functions within the games.

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

And therein lies the capacity for financial 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 casinos in the previous year after continuing to purchase more coins in pursuit of money and other things of value.

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

Social sweeps casino Stake ran an advertisement flaunting Drake's vehicles, aircrafts 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 however 7 states, which has helped to sustain the popularity of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, enable clients to send mail-in ask for totally free sweeps coins, offered the players follow painfully particular instructions. What's more, gamers are frequently rewarded with sweeps coins merely for registering, thus providing a factor to try their hands at any number of gambling establishment games for an opportunity to win - or lose - genuine cash.

So why are sweepstakes sites enabled to operate in 48 states, while online gambling establishments are banned in all however 7?

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

'Social sweepstakes video games are merely a kind of online entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is required to play at social gambling establishments with sweepstakes rewards. Consumers never have to spend for an opportunity to win prizes. That absence of a purchase requirement - or" factor to consider" - is an essential difference between social sweeps and conventional online gambling websites like casinos.'

Consider the manner in which McDonald's uses its annual 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 chance to win lucrative prizes, such as a $1 million jackpot.

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

'Sweepstakes are an enduring technique for promoting all kinds of everyday companies in the United States, whatever from burgers to publication memberships to coffee and home improvement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are frequently utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting industry insiders, that argument doesn't cut it.

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

'They do not last permanently and they're usually not connected to casino-style games of chance,' Wallach informed DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [gambling establishments] have none of the characteristics frequently related to McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos offer" casino-like" payments, normally 80 percent or more of revenues, whereas the common payout portion for a short-term advertising 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 gambling establishments to the web cafes that sprang up in Florida, using customers the opportunity to play casino-style video games for real rewards. A number of those brick-and-mortar facilities have actually since been shuttered over accusations of illegal sports betting.

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

Now, Wallach argues, social sweeps gambling establishments ought to face comparable analysis.

'These differences are not arbitrary,' Wallach said of social sweeps casinos. 'They have repeatedly been mentioned by courts and state attorney general of the United States as essential aspects in identifying that a sweepstakes promo was in fact a guise for prohibited gaming.'

Among 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 deprived of protections and states are giving up substantial tax and revenue chances as this gambling changes that conducted through controlled channels,' checked out a well-circulated AGA memo.

And then there are the plaintiffs who have actually sued 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 accepted pay $11.75 million in one class-action claim, saying the settlement was made to avoid legal costs and continued lawsuits.

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

In the newest claim, which is largely comparable to its predecessors, New York state homeowners 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 'prohibited gambling enterprise. '

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

'We usually 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 actually only simply been submitted with the court and VGW has actually not been officially served.

'We have complete self-confidence in our compliance with all laws and regulations where we run, and remain positive about the future,' the representative continued. 'We continue to provide our free-to-play games throughout the majority of North America, as we have for more than a decade, producing not only terrific games, user experiences and entertainment, however also ensuring this is done securely, properly and at the highest level of requirements.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are reasonably common throughout the online social games market (and the US more broadly), and our basic practice is that we mean to intensely defend any claim which may be brought versus us.'

The issues in between standard online gaming and sweepstakes gambling establishments could prove troublesome 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 standard video gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking illegal sports betting 'sweeps' websites while at the very same time the leagues desire to forecast a strong stance against prohibited sports betting - especially when attempting to tamp down the periodic gaming scandal,' Glaser informed DailyMail.com.

It was simply eight 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 involving social or sweepstakes gambling establishments.

Together with VGW, Apple and Google are being taken legal action against for hosting allegedly unlawful sports betting sites

Regardless, Glaser sees sweepstakes casinos as a major problem 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 added.

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 ignored to react to DailyMail.com e-mails.

Asked if their celebrity endorsers have a responsibility to explain to customers the distinctions and resemblances between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that requires to be done.

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the spokesperson stated. 'Some 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 challenger of sweepstakes websites, sees things differently.

'Celebrities who lend their names to shady unlawful gambling websites are, at a minimum, putting their track records at danger in addition to courting civil and class actions by customers who allege harm,' Glaser said. 'There is also some risk that state regulators and state attorneys general rope star endorsers into enforcement efforts for facilitating illegal sports betting.'

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