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

No, they weren't personally in presence, however the world-famous celebs were notably consisted of in a slide presentation on social and sweepstakes casinos - the questionable sites using both free casino-style games and rewarding prizes, such as cash, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet 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 suits. In the eyes of many gaming corporations, not to discuss lawsuit plaintiffs and state regulators, sweepstakes casinos function as traditional casinos, just without the oversight, customer defenses and tax laws. So not only can they prevent the steep 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulative hurdles 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 allegations of prohibited gaming in a New York claim that declares VGW utilizes star endorsers to 'produce a veneer of authenticity' around its item. (See VGW's statement 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 places 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 variety of celebrities 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 use any differences in between standard gambling and sweepstakes play.

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

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

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

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Instead, advertisements usually focus around the social aspect of the gambling establishments, while leaving out the capacity for real gambling losses.

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

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

Another caption discussed: 'Because I never ever quit.'

The disparity in between sports betting websites and social or sweepstakes casinos is a bit intricate, however operators of the latter insist they're not included with the former.

A representative 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, most of the players on social-sweepstakes casinos are sports betting complimentary.

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

Social gambling establishments use consumers an opportunity to play casino-style games with buddies. Players have the option to purchase valueless currency frequently referred to as 'gold coins,' which can not be exchanged for real money, however can be used to open various functions within the video games.

But within the world of social gambling establishments exists sweepstakes video gaming, allowing customers to get other currency called 'sweeps coins' that can be exchanged for cash or other rewards.

And therein lies the capacity for financial losses, like the ones claimed 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 gambling establishments in the past year after continuing to buy 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 casino Stake ran an ad displaying Drake's automobiles, 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 casinos.

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

Many websites, like the crypto-compatible Stake, allow clients to send mail-in ask for totally free sweeps coins, provided the players follow painfully particular guidelines. What's more, gamers are often rewarded with sweeps coins just for signing up, thereby providing a factor to try their hands at any number of casino video games for a chance to win - or lose - real cash.

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

According to the stakeholders, their product is the free casino-style video gaming, and the real-stakes competitors is merely a means of promoting their support.

'Social sweepstakes video games are merely a form of online entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is required to play at social gambling establishments with sweepstakes rewards. Consumers never have to spend for an opportunity to win rewards. That lack of a purchase requirement - or" consideration" - is an important difference in between social sweeps and standard online sports betting sites like gambling establishments.'

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

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

'Sweepstakes are a long-standing approach for promoting all sort of everyday organizations in the United States, whatever from hamburgers to publication subscriptions to coffee and home improvement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are frequently used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling market insiders, that argument does not cut it.

For beginners, gaming attorney Daniel Wallach explains, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a distinct start and end, thereby recommending the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being used to promote real items like french fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're normally not tied to casino-style games of opportunity,' Wallach told DailyMail.com. 'They're just cash free gifts.

'The sweepstakes [casinos] have none of the characteristics frequently related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes casinos provide" casino-like" payouts, typically 80 percent or more of revenues, whereas the normal payment portion for a short-lived promotional 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 casinos to the internet cafes that sprang up in Florida, using consumers the possibility to play casino-style games for real prizes. A number of those brick-and-mortar establishments have considering that been shuttered over allegations of prohibited gaming.

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

Now, Wallach argues, social sweeps casinos ought to 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 chief law officer as key aspects in figuring out that a sweepstakes promo remained in fact a guise for illegal gambling.'

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

'Consumers are being deprived of securities and states are giving up significant tax and earnings opportunities as this gaming replaces that performed through controlled channels,' read a well-circulated AGA memo.

And after that there are the plaintiffs who have actually taken legal action against social casinos in more than a lots states.

Sweepstakes casino operators paid a combined $14.2 million in four separate cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action lawsuit, stating the settlement was made to avoid legal expenses and continued lawsuits.

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

In the most recent claim, which is mainly comparable to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'unlawful gaming enterprise. '

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

'We generally don't talk about matters before the courts,' a VGW representative told DailyMail.com by means of e-mail. 'However, we note that this claim has actually only simply been submitted with the court and VGW has not been officially served.

'We have complete self-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 video games across the majority of The United States and Canada, as we have for more than a years, developing not just excellent video games, user experiences and entertainment, but also guaranteeing this is done securely, responsibly and at the greatest level of standards.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are fairly typical across the online social games industry (and the US more broadly), and our basic practice is that we plan to intensely defend any claim which might be brought versus us.'

The problems in between conventional online gaming and sweepstakes gambling establishments could prove problematic for some celeb endorsers.

Towns, a star center with the Knicks, and the 76ers' George both endorse VGW's Global Poker brand name while the NBA is partnered with traditional gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking illegal sports betting 'sweeps' sites while at the very same time the leagues want to project a strong stance versus prohibited gambling - particularly when trying to tamp down the periodic sports betting scandal,' Glaser told DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter got a life time restriction from the NBA over allegations he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes gambling establishments.

Together with VGW, Apple and Google are being demanded hosting supposedly prohibited gambling sites

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 endorsing sweepstakes sites refers 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 also neglected to react to DailyMail.com e-mails.

Asked if their celebrity endorsers have a duty to explain to consumers the distinctions and resemblances between iGaming and sweepstakes casinos, VGW insisted there is absolutely 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 said. 'A few of our worths are" our players precede" and" we do what's right", and we put our values at the core of everything we do.'

Glaser, an outspoken opponent of sweepstakes sites, sees things differently.

'Celebrities who provide their names to shady prohibited gambling websites are, at a minimum, putting their track records at danger as well as 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 helping with illegal gambling.'

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