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

No, they weren't personally in attendance, however the world-famous celebs were conspicuously included in a slide discussion on social and sweepstakes gambling establishments - the questionable websites using both free casino-style games and lucrative rewards, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet totally free,' 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 discuss suit plaintiffs and state regulators, sweepstakes casinos act as conventional casinos, only without the oversight, consumer protections and tax laws. So not only can they avoid the steep 24-percent federal gaming levy, however sweepstakes operators aren't based on regulatory obstacles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the business deals with allegations of unlawful gambling in a New york city lawsuit that declares VGW uses celebrity endorsers to 'develop a veneer of legitimacy' around its product. (See VGW's declaration below)

'I'm not sure" 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, told DailyMail.com.

Sweepstakes endorsers include a series of stars from gambling enthusiasts 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 traditional gaming and sweepstakes play.

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

Ryan Seacrest urges fans to dip into Chumba Casino, where lots of - but not all - video games are totally free

Drake has an offer with social sweeps gambling establishment, Stake, that he routinely touts on social media

Learn more

Donald Trump 'set to name NBA team owner as US ambassador to Italy'

Instead, advertisements usually center around the social element of the casinos, while leaving out the capacity for real gambling losses.

Others tempt customers with promises of prizes. One such operator, Stake, ran a social media ad revealing off Drake's cars, aircrafts and mansions before rotating to video of the rapper playing online casino-style video games.

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

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

The inconsistency between gaming sites and social or sweepstakes casinos is a bit complicated, but operators of the latter insist they're not included with the previous.

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

'Most social sweeps consumers never ever buy,' the SPGA spokesperson told DailyMail.com. 'The minority of consumers who make purchases do so in quantities far smaller than the typical deposit or wager size at real-money online gambling sites.'

Social gambling establishments offer consumers a chance to play casino-style video games with good friends. Players have the option to purchase worthless currency often referred to as 'gold coins,' which can not be exchanged genuine cash, but can be used to unlock various features within the video games.

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

And therein lies the potential for monetary losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York City. One gamer informed the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the previous year after continuing to buy more coins in pursuit of money and other things of value.

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

Social sweeps gambling establishment Stake ran an advertisement showing off Drake's cars and trucks, airplanes and mansions

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

Traditional online gambling establishments are banned in all however 7 states, which has helped to sustain the appeal of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, allow customers to submit mail-in demands for free sweeps coins, offered the gamers follow painfully specific guidelines. What's more, players are often rewarded with sweeps coins merely for signing up, thus providing a factor to try their hands at any variety of gambling establishment games for a chance to win - or lose - real cash.

So why are sweepstakes websites allowed to run in 48 states, while online casinos are banned in all however 7?

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

'Social sweepstakes video games are merely a form of online entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is required to play at social gambling establishments with sweepstakes prizes. Consumers never ever have to spend for an opportunity to win rewards. That absence of a purchase requirement - or" factor to consider" - is a vital distinction in between social sweeps and standard online sports betting websites like casinos.'

Consider the method that McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and fries that use them the chance to win financially rewarding prizes, such as a $1 million prize.

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

'Sweepstakes are an enduring approach for promoting all type of everyday businesses in the United States, everything from burgers to magazine subscriptions to coffee and home improvement stores,' 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 numerous gambling market experts, that argument doesn't cut it.

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

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

'The sweepstakes [casinos] have none of the qualities typically connected with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments offer" casino-like" payments, usually 80 percent or more of profits, whereas the common payout percentage for a momentary advertising sweepstakes is an insignificant share of the profits made by the company [usually less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the internet cafes that emerged in Florida, providing customers the opportunity to play casino-style video games for real rewards. Much of those brick-and-mortar facilities have since been shuttered over claims of illegal gambling.

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

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

'These differences are not approximate,' Wallach stated of social sweeps casinos. 'They have actually consistently been mentioned by courts and state chief law officer as key elements in identifying that a sweepstakes promotion was in truth a guise for prohibited gaming.'

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

'Consumers are being denied of protections and states are giving up substantial tax and profits chances as this gaming replaces that conducted through controlled channels,' read 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 gambling establishment operators paid a combined $14.2 million in 4 different cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action claim, stating the settlement was made to avoid legal costs and continued litigation.

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

In the most current claim, which is largely comparable to its predecessors, New York state locals Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited sports betting business. '

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

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

'We have full self-confidence in our compliance with all laws and regulations where we operate, and stay positive about the future,' the spokesperson continued. 'We continue to provide our free-to-play video games throughout the majority of The United States and Canada, as we have for more than a years, producing not only terrific games, user experiences and entertainment, but likewise guaranteeing this is done securely, responsibly and at the highest level of requirements.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are relatively typical across the online social video games industry (and the US more broadly), and our basic practice is that we intend to vigorously safeguard any claim which may be brought versus us.'

The problems in between traditional online gambling and sweepstakes casinos might prove problematic for some star endorsers.

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

'It's ironic that expert athletes are hawking prohibited sports betting 'sweeps' websites while at the very same time the leagues wish to project a strong stance versus unlawful gaming - especially when attempting to tamp down the occasional sports betting scandal,' Glaser told DailyMail.com.

It was just eight 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 unassociated to anything including social or sweepstakes casinos.

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

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

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

Neither an NBA representative nor the players' agents reacted to DailyMail.com's requests for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise neglected to react to DailyMail.com emails.

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

'We have full confidence in our influencer and ambassadorial collaborations, and our business practices more broadly,' the spokesperson stated. 'Some of our worths are" our players come first" and" we do what's right", and we put our values at the core of whatever we do.'

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

'Celebrities who lend their names to shady prohibited gambling sites are, at a minimum, putting their reputations at danger as well as courting civil and class actions by customers who declare damage,' Glaser said. 'There is also some risk that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for facilitating prohibited gambling.'

New YorkNBADrakeParis Hilton