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 presence, however the world-famous celebs were conspicuously included in a slide presentation on social and sweepstakes casinos - the controversial sites offering both totally free casino-style video games and profitable rewards, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are simply 2 cogs in the multibillion-dollar market that now discovers itself besieged by suits. In the eyes of lots of gaming corporations, not to discuss suit complainants and state regulators, sweepstakes gambling establishments act as conventional gambling establishments, only without the oversight, customer securities and tax laws. So not just can they prevent the steep 24-percent federal gambling levy, however sweepstakes operators aren't based on regulative difficulties like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the business deals with allegations of unlawful gambling in a New York suit that declares VGW uses celeb endorsers to 'develop a veneer of authenticity' around its product. (See VGW's declaration listed below)

'I'm not sure" if you do not trust us, you can rely on 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 speaker, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers include a variety of celebrities from gambling enthusiasts 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 in between standard gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of numerous sweepstakes casinos found online

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

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

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Instead, ads typically center around the social element of the casinos, while leaving out the capacity for actual gambling losses.

Others lure consumers with pledges of prizes. One such operator, Stake, ran a social media advertisement flaunting Drake's automobiles, airplanes and estates before rotating to footage of the rapper playing online casino-style games.

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

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

The inconsistency in between gaming websites and social or sweepstakes gambling establishments is a bit complicated, however operators of the latter insist they're not included with the former.

A representative for an industry 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 consumers never make a purchase,' the SPGA representative told DailyMail.com. 'The minority of clients who make purchases do so in quantities far smaller than the typical deposit or bet size at real-money online gaming sites.'

Social gambling establishments provide clients a possibility 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 utilized to open numerous features within the games.

But within the world of social casinos exists sweepstakes gaming, permitting consumers to obtain other currency called 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the capacity for financial losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York. One player told the Washington Post he lost more than $100,000 on sweepstakes casinos in the previous year after continuing to purchase 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 gambling establishment Stake ran an ad displaying Drake's cars and trucks, 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 however 7 states, which has helped to fuel the appeal of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, allow consumers to send mail-in requests for complimentary sweeps coins, provided the gamers follow painfully specific guidelines. What's more, players are frequently rewarded with sweeps coins simply for registering, thereby giving them a factor to try their hands at any number of gambling establishment games for a chance to win - or lose - genuine money.

So why are sweepstakes sites enabled to operate in 48 states, while online casinos are prohibited in all but 7?

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

'Social sweepstakes games are just a kind of online home entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is needed to play at social casinos with sweepstakes rewards. Consumers never ever need to spend for a chance to win rewards. That lack of a purchase requirement - or" factor to consider" - is a crucial distinction in between social sweeps and traditional online gaming sites like gambling establishments.'

Think about the way that McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and french fries that provide them the opportunity to win financially rewarding rewards, such as a $1 million jackpot.

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

'Sweepstakes are an enduring method for promoting all sort of everyday businesses in the United States, whatever from hamburgers to magazine subscriptions to coffee and home improvement shops,' the SPGA representative informed 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 experts, that argument doesn't cut it.

For starters, gaming lawyer Daniel Wallach mentions, McDonald's Monopoly game does not run forever. Rather, it has a well-defined start and end, consequently suggesting the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being utilized to promote genuine products like fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're generally not connected to casino-style video games of chance,' Wallach told DailyMail.com. 'They're just money giveaways.

'The sweepstakes [gambling establishments] have none of the attributes commonly associated with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos offer" casino-like" payments, typically 80 percent or more of revenues, whereas the common payout percentage for a short-term promotional sweepstakes is an insignificant share of the revenue earned by the company [normally less than one percent]'

Wallach is fast to compare the online social sweeps casinos to the internet cafes that sprang up in Florida, providing customers the possibility to play casino-style video games for real prizes. A lot of those brick-and-mortar facilities have actually given that been shuttered over claims of unlawful gambling.

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

Now, Wallach argues, social sweeps gambling establishments should face comparable scrutiny.

'These distinctions are not arbitrary,' Wallach said of social sweeps casinos. 'They have consistently been mentioned by courts and state chief law officer as crucial elements in figuring out that a sweepstakes promotion was in truth a guise for prohibited gambling.'

One of the casino market's leading trade organizations, the American Gaming Association, is now pressing lawmakers to investigate sweepstakes operators and, in many cases, enact brand-new legislation on the concern.

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

And then there are the plaintiffs who have taken legal action against social gambling establishments in more than a dozen states.

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

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

In the most recent suit, which is largely similar to its predecessors, New York state citizens Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'prohibited sports betting business. '

Apple and Google have likewise been named as accuseds in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's demand for comment.

'We normally do not discuss matters before the courts,' a VGW spokesperson told DailyMail.com via email. 'However, we note 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 regulations where we operate, and remain positive about the future,' the spokesperson continued. 'We continue to provide our free-to-play games throughout the majority of North America, as we have for more than a decade, developing not only great video games, user experiences and home entertainment, but also ensuring this is done safely, responsibly and at the greatest level of standards.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are reasonably typical throughout the online social games market (and the US more broadly), and our standard practice is that we mean to vigorously protect any claim which may be brought versus us.'

The problems between traditional online sports betting and sweepstakes gambling establishments might prove problematic for some celeb 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 video gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking illegal sports betting wagering 'sweeps' sites while at the same time the leagues desire to forecast a strong stance versus prohibited gaming - especially when trying to tamp down the periodic gaming scandal,' Glaser informed DailyMail.com.

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

Along with VGW, Apple and Google are being demanded hosting apparently prohibited sports betting sites

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

'I 'd anticipate that a league crackdown on athletes backing sweepstakes websites is a matter of 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 ignored to react to DailyMail.com emails.

Asked if their celebrity endorsers have a responsibility to discuss to customers the distinctions 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 players precede" and" we do what's right", and we put our worths at the core of everything we do.'

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

'Celebrities who provide their names to shady unlawful sports betting websites are, at a minimum, putting their reputations at danger along with courting civil and class actions by customers who allege damage,' Glaser stated. 'There is likewise some risk that state regulators and state chief law officers rope celebrity endorsers into enforcement efforts for helping with prohibited sports betting.'

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