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

No, they weren't personally in participation, however the world-famous celebs were notably included in a slide discussion on social and sweepstakes gambling establishments - the controversial sites using both free casino-style video games and lucrative prizes, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are just two cogs in the multibillion-dollar market that now discovers itself besieged by claims. In the eyes of lots of video gaming corporations, not to discuss lawsuit plaintiffs and state regulators, sweepstakes gambling establishments act as standard gambling establishments, just without the oversight, customer securities and tax laws. So not only can they avoid the steep 24-percent federal gambling levy, but sweepstakes operators aren't subject to regulative obstacles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the company faces allegations of prohibited gambling in a New york city lawsuit that declares VGW utilizes star endorsers to 'develop a veneer of legitimacy' around its item. (See VGW's declaration listed below)

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

Sweepstakes endorsers consist of a variety of stars from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom use any differences between conventional sports betting and sweepstakes play.

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

Ryan Seacrest advises fans to dip into Chumba Casino, where lots of - however not all - games are totally free

Drake has a deal with social sweeps gambling establishment, Stake, that he regularly touts on social networks

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Instead, ads generally center around the social element of the gambling establishments, while omitting the potential for actual gaming losses.

Others lure consumers with pledges of rewards. One such operator, Stake, ran a social networks advertisement flaunting Drake's cars and trucks, planes and mansions before rotating to video of the rapper playing online casino-style games.

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

Another caption discussed: 'Because I never gave up.'

The disparity between sports betting sites and social or sweepstakes casinos is a bit intricate, but 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), discussed its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, the majority of the gamers on social-sweepstakes gambling establishments are sports betting totally free.

'Most social sweeps clients never buy,' the SPGA spokesperson told DailyMail.com. 'The minority of consumers who make purchases do so in amounts far smaller than the common deposit or wager size at real-money online sports betting websites.'

Social casinos provide clients an opportunity to play casino-style games with good friends. Players have the option to buy valueless currency typically described as 'gold coins,' which can not be exchanged genuine cash, however can be utilized to open numerous functions within the video games.

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

And therein lies the potential for financial losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York. One player 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 cash and other things of value.

The Philadelphia 76ers' Paul George is seen promoting an International 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 gambling establishments are banned 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 sites, which don't need generally need recognition. However, sites like Chumba will request for IDs from gamers attempting to withdraw any funds.

Many websites, like the crypto-compatible Stake, allow clients to submit mail-in ask for free sweeps coins, offered the gamers follow painfully particular directions. What's more, gamers are frequently rewarded with sweeps coins simply for registering, thus giving them a reason to attempt their hands at any variety of gambling establishment games for an opportunity 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 complimentary casino-style gaming, and the real-stakes competitors is simply a method of promoting their support.

'Social sweepstakes video games are just a form of online entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is required to dip into social casinos with sweepstakes rewards. Consumers never ever have to pay for an opportunity to win prizes. That lack of a purchase requirement - or" consideration" - is a crucial difference in between social sweeps and standard online gaming sites like gambling establishments.'

Think about the manner in which McDonald's uses its yearly 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 possibility to win lucrative prizes, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the game itself doesn't meet the definition of gambling in the US.

'Sweepstakes are a long-standing method for promoting all type of daily organizations in the United States, whatever from hamburgers to publication memberships to coffee and home improvement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are regularly used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of gambling industry experts, that argument does not cut it.

For starters, gaming lawyer Daniel Wallach points out, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a well-defined beginning and end, thereby recommending the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being used to promote real products like fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're typically not tied to casino-style video games of opportunity,' Wallach told DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [casinos] have none of the attributes typically related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes casinos provide" casino-like" payments, typically 80 percent or more of profits, whereas the normal payout percentage for a momentary promotional sweepstakes is a trivial share of the income earned by the company [usually less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the internet coffee shops that sprang up in Florida, using consumers the opportunity to play casino-style video games for genuine rewards. Much of those brick-and-mortar facilities have given that been shuttered over accusations of prohibited gaming.

DJ Khaled is among numerous star spokespeople for VGW's Global Poker brand

Now, Wallach argues, social sweeps casinos ought to deal with comparable analysis.

'These differences are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have repeatedly been cited by courts and state attorney generals as essential consider determining that a sweepstakes promotion remained in reality a guise for prohibited sports betting.'

One of the gambling establishment market's leading trade organizations, the American Gaming Association, is now pushing lawmakers to examine sweepstakes operators and, sometimes, enact brand-new legislation on the concern.

'Consumers are being denied of protections and states are passing up substantial tax and earnings opportunities as this gambling replaces that conducted through managed channels,' checked out a well-circulated AGA memo.

And after that there are the plaintiffs who have actually sued social casinos in more than a dozen states.

Sweepstakes casino operators paid a combined $14.2 million in four separate cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action suit, saying the settlement was made to avoid legal costs and continued litigation.

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

In the current lawsuit, which is mainly 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 explained in the filing as an 'unlawful sports betting business. '

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

'We typically do not comment on matters before the courts,' a VGW spokesperson informed DailyMail.com by means of email. 'However, we keep in mind that this claim has only just been filed with the court and VGW has not been formally served.

'We have full confidence in our compliance with all laws and regulations where we run, and remain confident about the future,' the representative 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, creating not only fantastic games, user experiences and home entertainment, but likewise ensuring this is done securely, properly and at the greatest level of requirements.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are fairly common across the online social games industry (and the US more broadly), and our standard practice is that we mean to intensely safeguard any claim which may be brought against us.'

The problems in between traditional online gambling and sweepstakes casinos could prove bothersome 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 professional athletes are hawking unlawful sports betting 'sweeps' sites while at the exact same time the leagues want to predict a strong position against illegal gambling - particularly when attempting to tamp down the periodic sports betting scandal,' Glaser informed DailyMail.com.

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

Together with VGW, Apple and Google are being demanded hosting presumably unlawful sports betting sites

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

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

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

Asked if their celeb endorsers have an obligation to discuss to customers the distinctions and resemblances between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that requires to be done.

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the representative stated. 'Some of our worths are" our gamers 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 websites, sees things differently.

'Celebrities who lend their names to shady prohibited gambling sites are, at a minimum, putting their track records at risk along with courting civil and class actions by customers who declare damage,' Glaser stated. 'There is likewise some risk that state regulators and state attorneys basic rope celeb endorsers into enforcement efforts for helping with unlawful sports betting.'

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