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

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

The websites are simply two cogs in the multibillion-dollar industry that now finds itself besieged by claims. In the eyes of numerous gaming corporations, not to point out lawsuit plaintiffs and state regulators, sweepstakes gambling establishments serve as standard gambling establishments, only without the oversight, customer securities and tax laws. So not only can they avoid the high 24-percent federal gaming levy, but 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 revenue last year alone. Now the business deals with accusations of unlawful gaming in a New York claim that declares VGW uses celeb endorsers to 'create a veneer of legitimacy' around its item. (See VGW's declaration below)

'I'm unsure" if you do not trust us, you can trust Paris Hilton" is a winning message for companies operating 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, informed DailyMail.com.

Sweepstakes endorsers include a range of celebs from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom provide any distinctions between traditional gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among many sweepstakes casinos discovered online

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

Drake has an offer with social sweeps casino, Stake, that he routinely promotes on social networks

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Instead, advertisements typically center around the social aspect of the gambling establishments, while leaving out the potential for real gambling losses.

Others lure customers with promises of prizes. One such operator, Stake, ran a social networks advertisement flaunting Drake's automobiles, planes and estates before rotating to video of the rapper 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 quit.'

The inconsistency in between gaming websites and social or sweepstakes casinos is a bit complicated, but operators of the latter insist they're not involved with the former.

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, the majority of the gamers on social-sweepstakes casinos are playing for 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 gambling sites.'

Social gambling establishments offer clients a possibility to play casino-style video games with good friends. Players have the alternative to buy worthless currency frequently referred to as 'gold coins,' which can not be exchanged genuine money, however can be used to open numerous functions within the video games.

But within the world of social casinos exists sweepstakes gaming, enabling clients 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 declared by complainants 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 an International Poker event

Social sweeps casino Stake ran an ad showing off Drake's vehicles, aircrafts 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 actually helped to sustain the appeal of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, allow consumers to submit mail-in requests for totally free sweeps coins, provided the gamers follow painfully specific directions. What's more, gamers are typically rewarded with sweeps coins merely for registering, therefore providing a reason to try their hands at any variety of casino games for an opportunity to win - or lose - real cash.

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

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

'Social sweepstakes video games are simply a type of online entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is needed to play at social gambling establishments with sweepstakes rewards. Consumers never need to spend for an opportunity to win prizes. That absence of a purchase requirement - or" consideration" - is an important difference in between social sweeps and standard online sports betting websites like gambling establishments.'

Consider the method that McDonald's utilizes its annual Monopoly game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and fries that provide them the chance to win lucrative prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the game itself does not satisfy the definition of gaming in the US.

'Sweepstakes are a long-standing method for promoting all type of everyday services in the United States, whatever from burgers to magazine subscriptions to coffee and home enhancement 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 many sports betting industry experts, that argument doesn't cut it.

For beginners, gaming lawyer Daniel Wallach mentions, McDonald's Monopoly video game does not run forever. Rather, it has a well-defined beginning and end, thus recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote real items like french fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [casinos] have none of the qualities commonly associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes casinos use" casino-like" payouts, usually 80 percent or more of earnings, whereas the common payout portion for a temporary promotional sweepstakes is a trivial share of the profits made by the company [typically less than one percent]'

Wallach is quick to liken the online social sweeps casinos to the web coffee shops that emerged in Florida, providing customers the chance to play casino-style games for real prizes. Many of those brick-and-mortar facilities have actually considering that been shuttered over claims of illegal gambling.

DJ Khaled is amongst numerous celebrity spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps casinos should face comparable scrutiny.

'These distinctions are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have repeatedly been cited by courts and state attorney general of the United States as crucial aspects in figuring out that a sweepstakes promotion was in truth a guise for illegal sports betting.'

Among the gambling establishment market's leading trade companies, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, sometimes, enact brand-new legislation on the concern.

'Consumers are being denied of defenses and states are forgoing substantial tax and earnings chances as this gaming replaces that carried out through regulated channels,' checked out a well-circulated AGA memo.

And then there are the plaintiffs who have sued social gambling establishments in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 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, saying the settlement was made to prevent legal expenses and continued litigation.

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

In the most current suit, which is largely similar to its predecessors, New york city state homeowners Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited gaming business. '

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

'We generally do not talk about matters before the courts,' a VGW representative told DailyMail.com through e-mail. 'However, we keep in mind that this claim has only simply been submitted with the court and VGW has actually not been officially served.

'We have full confidence in our compliance with all laws and policies where we run, and stay confident about the future,' the representative continued. 'We continue to provide our free-to-play games across many of The United States and Canada, as we have for more than a decade, creating not only fantastic video games, user experiences and entertainment, but also ensuring this is done safely, responsibly and at the greatest level of standards.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are fairly common across the online social video games industry (and the US more broadly), and our standard practice is that we plan to strongly safeguard any claim which may be brought versus us.'

The issues between standard online gambling and sweepstakes gambling establishments might show 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 conventional gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking unlawful sports betting 'sweeps' websites while at the same time the leagues wish to project a strong position against unlawful sports betting - specifically when trying to tamp down the periodic gambling scandal,' Glaser told 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 gamblers. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes casinos.

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

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

'I 'd anticipate that a league crackdown on professional athletes endorsing sweepstakes websites refers when, not if,' Glaser added.

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

Asked if their celebrity endorsers have a duty to discuss to clients the differences and resemblances between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is absolutely nothing more that needs to be done.

'We have full self-confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the spokesperson stated. 'Some of our values are" our gamers come first" 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 differently.

'Celebrities who lend their names to dubious prohibited sports betting sites are, at a minimum, putting their track records at risk as well as courting civil and class actions by consumers who allege harm,' Glaser said. 'There is also some risk that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for facilitating prohibited gaming.'

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