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 attendance, but the world-famous stars were notably included in a slide presentation on social and sweepstakes casinos - the questionable sites using 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 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 finds itself besieged by claims. In the eyes of numerous gaming corporations, not to mention suit complainants and state regulators, sweepstakes casinos function as standard casinos, only without the oversight, customer protections and tax laws. So not just can they avoid the high 24-percent federal gambling levy, however sweepstakes operators aren't subject to regulatory obstacles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the business faces accusations of illegal gaming in a New york city claim that claims VGW uses star endorsers to 'create a veneer of authenticity' around its item. (See VGW's declaration below)

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

Sweepstakes endorsers consist of a series of stars from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions in between conventional gambling and sweepstakes play.

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

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

Drake has a handle social sweeps gambling establishment, Stake, that he routinely promotes on social networks

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Instead, advertisements generally focus around the social element of the casinos, while omitting the potential for real gaming losses.

Others lure customers with promises of rewards. One such operator, Stake, ran a social networks advertisement displaying Drake's cars, planes and mansions before pivoting to 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 described: 'Because I never provided up.'

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

A spokesperson for a market trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA data, the majority of the players on social-sweepstakes gambling establishments are playing for free.

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

Social gambling establishments offer clients an opportunity to play casino-style video games with friends. Players have the alternative to purchase worthless currency frequently described as 'gold coins,' which can not be exchanged genuine cash, but can be used to unlock different features within the video games.

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

And therein lies the capacity for financial losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York City. One player informed the Washington Post he lost more than $100,000 on sweepstakes casinos in the past 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 Global Poker event

Social sweeps casino Stake ran an advertisement flaunting Drake's vehicles, airplanes and mansions

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

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

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

Many sites, like the crypto-compatible Stake, enable clients to submit mail-in ask for free sweeps coins, offered the players follow painfully particular guidelines. What's more, players are often rewarded with sweeps coins merely for registering, thus providing them a reason to attempt their hands at any number of casino games for an opportunity to win - or lose - real money.

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

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

'Social sweepstakes games are merely a type of online entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is needed to play at 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 essential distinction in between social sweeps and conventional online gaming websites like gambling establishments.'

Think of the manner in which McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and fries that use them the possibility to win profitable prizes, such as a $1 million jackpot.

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

'Sweepstakes are a long-standing approach for promoting all type of everyday companies in the United States, whatever from burgers to magazine memberships to coffee and home improvement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are frequently used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous sports betting market experts, that argument doesn't cut it.

For beginners, gaming lawyer Daniel Wallach explains, McDonald's Monopoly game does not run forever. Rather, it has a distinct beginning and end, thereby recommending the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being utilized to promote real products like french fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're normally not tied to casino-style games of chance,' Wallach told DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [gambling establishments] possess none of the characteristics typically connected with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments use" casino-like" payouts, generally 80 percent or more of profits, whereas the normal payout percentage for a short-term promotional sweepstakes is a minor share of the income made by the company [normally less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the internet coffee shops that sprang up in Florida, providing customers the possibility to play casino-style video games for genuine prizes. A number of those brick-and-mortar facilities have actually considering that been shuttered over accusations of illegal gambling.

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

Now, Wallach argues, social sweeps casinos ought to face comparable scrutiny.

'These distinctions are not approximate,' Wallach stated of social sweeps casinos. 'They have actually repeatedly been pointed out by courts and state lawyer generals as essential consider figuring out that a sweepstakes promo was in truth a guise for illegal gambling.'

One of the casino market's leading trade companies, the American Gaming Association, is now pushing legislators to examine sweepstakes operators and, in many cases, enact brand-new legislation on the concern.

'Consumers are being denied of securities and states are forgoing substantial tax and income chances as this gambling changes that carried out through regulated channels,' read a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action claim, saying the settlement was made to avoid legal expenses and continued lawsuits.

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

In the latest lawsuit, which is mostly comparable to its predecessors, New york city state locals Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is explained in the filing as an 'unlawful sports betting enterprise. '

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

'We usually don't discuss matters before the courts,' a VGW representative told DailyMail.com via email. 'However, we note that this claim has actually only just been submitted with the court and VGW has not been formally served.

'We have complete self-confidence in our compliance with all laws and regulations where we operate, and stay confident about the future,' the representative continued. 'We continue to use our free-to-play video games across most of North America, as we have for more than a decade, developing not only excellent games, user experiences and home entertainment, however likewise guaranteeing this is done securely, responsibly and at the highest level of standards.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are relatively common throughout the online social video games industry (and the US more broadly), and our basic practice is that we plan to vigorously defend any claim which might be brought against us.'

The issues between standard online gambling and sweepstakes casinos might show troublesome for some celebrity 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 conventional gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking illegal sports betting wagering 'sweeps' websites while at the same time the leagues wish to forecast a strong stance against prohibited sports betting - particularly when trying to tamp down the occasional sports betting scandal,' Glaser told DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter got a lifetime restriction from the NBA over allegations he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes casinos.

In addition to VGW, Apple and Google are being sued for hosting supposedly illegal gambling sites

Regardless, Glaser sees sweepstakes casinos as a major concern for leagues such as the NBA.

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

Neither an NBA representative nor the gamers' agents responded to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise ignored to react to DailyMail.com emails.

Asked if their celeb endorsers have a responsibility to discuss to consumers the differences and resemblances between iGaming and sweepstakes gambling establishments, 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. 'A few of our values 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 opponent of sweepstakes websites, sees things in a different way.

'Celebrities who provide their names to shady illegal sports betting sites are, at a minimum, putting their track records at danger along with courting civil and class actions by consumers who declare damage,' Glaser said. 'There is also some threat that state regulators and state attorneys basic rope celeb endorsers into enforcement efforts for assisting in prohibited sports betting.'

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