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

No, they weren't personally in participation, however the world-famous stars were conspicuously consisted of in a slide discussion on social and sweepstakes gambling establishments - the questionable sites offering both free casino-style games and financially rewarding prizes, such as money, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are simply two cogs in the multibillion-dollar industry that now discovers itself besieged by claims. In the eyes of many gaming corporations, not to point out claim complainants and state regulators, sweepstakes casinos act as conventional casinos, just without the oversight, customer defenses and tax laws. So not just can they prevent the steep 24-percent federal gambling levy, but sweepstakes operators aren't based on regulative 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 faces allegations of prohibited gambling in a New york city claim that declares VGW uses celebrity endorsers to 'create a veneer of legitimacy' around its product. (See VGW's declaration below)

'I'm unsure" if you don't trust us, you can trust Paris Hilton" is a winning message for companies 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 series of celebs from sports betting enthusiasts 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 standard gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of numerous sweepstakes gambling establishments discovered online

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

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

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Instead, advertisements typically focus around the social element of the gambling establishments, while omitting the capacity for actual sports betting losses.

Others tempt clients with promises of prizes. One such operator, Stake, ran a social media ad flaunting Drake's vehicles, airplanes and mansions before rotating to footage of the rapper playing online casino-style video games.

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

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

The discrepancy in between gaming sites 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 competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, many of the gamers on social-sweepstakes gambling establishments are sports betting complimentary.

'Most social sweeps clients never make a purchase,' the SPGA spokesperson told DailyMail.com. 'The minority of clients who make purchases do so in amounts far smaller sized than the normal deposit or bet size at real-money online gambling websites.'

Social casinos use consumers a chance to play casino-style video games with pals. Players have the alternative to buy valueless currency frequently referred to as 'gold coins,' which can not be exchanged genuine cash, but can be used to unlock various functions within the video games.

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

And therein lies the capacity for financial losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York. One gamer 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 cash and other things of worth.

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

Social sweeps casino Stake ran an ad flaunting Drake's automobiles, planes and estates

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

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

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

Many websites, like the crypto-compatible Stake, enable consumers to submit mail-in ask for free sweeps coins, offered the gamers follow painfully particular guidelines. What's more, gamers are typically rewarded with sweeps coins simply for registering, therefore giving them a reason to try their hands at any variety of gambling establishment video games for an opportunity to win - or lose - real cash.

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

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

'Social sweepstakes video games are simply a kind of online entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is needed to dip into social gambling establishments with sweepstakes prizes. Consumers never have to pay for a chance to win prizes. That absence of a purchase requirement - or" consideration" - is an important distinction in between social sweeps and conventional online sports betting websites like casinos.'

Think about the method that McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're buying hamburgers and fries that use them the possibility to win profitable rewards, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the game itself doesn't fulfill the meaning of sports betting in the US.

'Sweepstakes are an enduring method for promoting all kinds of everyday businesses in the United States, everything from hamburgers to publication memberships to coffee and home enhancement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are regularly utilized by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

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

'They do not last forever and they're usually not tied to casino-style games of chance,' Wallach informed DailyMail.com. 'They're simply money free gifts.

'The sweepstakes [gambling establishments] possess none of the qualities typically associated with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments provide" casino-like" payments, generally 80 percent or more of incomes, whereas the typical payout percentage for a momentary promotional sweepstakes is a trivial share of the income earned by the company [usually less than one percent]'

Wallach is quick to compare the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, using clients the opportunity to play casino-style games for genuine rewards. A number of those brick-and-mortar establishments have since been shuttered over allegations of unlawful sports betting.

DJ Khaled is among several celeb spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps casinos should deal with comparable scrutiny.

'These differences are not approximate,' Wallach said of social sweeps casinos. 'They have repeatedly been pointed out by courts and state lawyer generals as crucial consider determining that a sweepstakes promotion was in fact a guise for illegal sports betting.'

One of the casino industry's leading trade organizations, the American Gaming Association, is now pushing legislators to examine sweepstakes operators and, sometimes, enact new legislation on the concern.

'Consumers are being deprived of securities and states are giving up substantial tax and revenue chances as this sports betting changes that performed through regulated channels,' read a well-circulated AGA memo.

And then there are the complainants who have actually sued social casinos in more than a dozen states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in four different cases in Kentucky without admitting any misbehavior, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action claim, stating the settlement was made to prevent legal costs and continued lawsuits.

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

In the most recent claim, which is mostly 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 described in the filing as an 'prohibited gambling business. '

Apple and Google have actually also been called as defendants in claims for hosting the sweepstakes sites. But unlike VGW, neither tech business responded to DailyMail.com's request for comment.

'We normally do not talk about matters before the courts,' a VGW spokesperson told DailyMail.com via e-mail. 'However, we keep in mind that this claim has actually only simply been filed with the court and VGW has actually not been formally served.

'We have complete confidence in our compliance with all laws and regulations where we operate, and stay confident about the future,' the spokesperson 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 fantastic games, user experiences and entertainment, but likewise guaranteeing this is done securely, properly and at the greatest level of requirements.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are fairly common across the online social video games market (and the US more broadly), and our standard practice is that we plan to intensely protect any claim which might be brought against us.'

The concerns between standard online gaming and sweepstakes gambling establishments might show troublesome for some star endorsers.

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

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

It was just eight months ago that Toronto Raptors forward Jontay Porter got a lifetime ban from the NBA over allegations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes gambling establishments.

In addition to VGW, Apple and Google are being demanded hosting supposedly unlawful sports betting sites

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

'I 'd expect that a league crackdown on professional athletes backing sweepstakes websites refers when, not if,' Glaser included.

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

Asked if their celebrity endorsers have a responsibility to discuss to clients the differences and resemblances in between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that requires to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the representative said. 'Some of our values are" our gamers precede" and" we do what's right", and we put our values at the core of whatever we do.'

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

'Celebrities who lend their names to shady unlawful sports betting sites are, at a minimum, putting their reputations at danger in addition to courting civil and class actions by customers who declare harm,' Glaser said. 'There is likewise some danger that state regulators and state chief law officers rope celeb endorsers into enforcement efforts for assisting in unlawful sports betting.'

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