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

No, they weren't personally in participation, however the world-famous stars were notably included in a slide presentation on social and sweepstakes casinos - the questionable websites using both complimentary casino-style games and profitable prizes, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for free,' 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 industry that now discovers itself besieged by lawsuits. In the eyes of numerous video gaming corporations, not to discuss claim complainants and state regulators, sweepstakes gambling establishments function as standard casinos, only without the oversight, customer defenses and tax laws. So not just can they avoid the high 24-percent federal gambling levy, but sweepstakes operators aren't based on regulatory hurdles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the business faces allegations of unlawful gaming in a New york city suit that declares VGW uses star endorsers to 'develop a veneer of legitimacy' around its item. (See VGW's declaration listed below)

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

Sweepstakes endorsers include a variety of stars from sports betting 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 between traditional gambling and sweepstakes play.

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

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

Drake has a handle social sweeps casino, Stake, that he regularly touts on social media

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Instead, ads usually center around the social aspect of the gambling establishments, while leaving out the capacity for actual gambling losses.

Others lure customers with promises of prizes. One such operator, Stake, ran a social networks ad flaunting Drake's automobiles, planes and estates before pivoting to video footage of the rap artist playing online casino-style games.

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

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

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

A spokesperson for an industry 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, the majority of the gamers on social-sweepstakes casinos are sports betting complimentary.

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

Social casinos use clients an opportunity to play casino-style video games with friends. Players have the option to purchase valueless currency often referred to as 'gold coins,' which can not be exchanged genuine money, but can be used to unlock various features within the video games.

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

And therein lies the potential for monetary losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York. One player told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the past year after continuing to purchase more coins in pursuit of money and other things of worth.

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

Social sweeps casino Stake ran an ad showing off Drake's automobiles, aircrafts and estates

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 helped to sustain the appeal of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, enable clients to send mail-in demands for free sweeps coins, provided the gamers follow painfully specific guidelines. What's more, players are typically rewarded with sweeps coins just for registering, therefore offering them a reason to attempt their hands at any variety of casino video games for an opportunity to win - or lose - genuine money.

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

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

'Social sweepstakes video games are simply a form of online home entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is required to dip into social casinos with sweepstakes prizes. Consumers never ever have to spend for an opportunity to win rewards. That absence of a purchase requirement - or" consideration" - is an important difference in between social sweeps and standard online gaming sites like gambling establishments.'

Think of the way that McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and french fries that provide them the possibility to win profitable rewards, such as a $1 million jackpot.

And without a purchase requirement, or 'factor to consider', the game itself does not fulfill the meaning of sports betting in the US.

'Sweepstakes are a long-standing technique for promoting all type of daily services in the United States, everything from hamburgers to magazine memberships to coffee and home improvement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are routinely utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting market insiders, that argument does not cut it.

For starters, video gaming lawyer Daniel Wallach explains, McDonald's Monopoly video game does not run indefinitely. Rather, it has a well-defined start and end, thus suggesting the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being used to promote real products like french fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're usually not tied to casino-style video games of possibility,' Wallach told DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [gambling establishments] possess none of the qualities typically connected with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments provide" casino-like" payouts, normally 80 percent or more of revenues, whereas the typical payout portion for a momentary advertising sweepstakes is an unimportant share of the earnings made by the company [usually less than one percent]'

Wallach is fast to compare the online social sweeps gambling establishments to the internet coffee shops that sprang up in Florida, offering consumers the opportunity to play casino-style games for real rewards. A lot of those brick-and-mortar establishments have actually since been shuttered over accusations of prohibited gambling.

DJ Khaled is among a number of star spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps casinos ought to face similar analysis.

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

Among the gambling establishment market's leading trade organizations, the American Gaming Association, is now pressing legislators to investigate sweepstakes operators and, in many cases, enact brand-new legislation on the problem.

'Consumers are being denied of defenses and states are passing up significant tax and revenue opportunities as this sports betting replaces that carried out through managed channels,' read a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in 4 separate cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action claim, stating the settlement was made to avoid legal expenses and continued litigation.

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

In the current claim, which is mainly comparable to its predecessors, New york city state residents 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 gaming enterprise. '

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

'We generally don't talk about matters before the courts,' a VGW representative informed DailyMail.com via email. 'However, we note that this claim has actually only simply been filed with the court and VGW has actually not been officially served.

'We have full self-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 video games throughout many of North America, as we have for more than a decade, developing not only great video games, user experiences and entertainment, however 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 reasonably typical throughout the online social games market (and the US more broadly), and our basic practice is that we plan to intensely protect any claim which might be brought against us.'

The problems between standard online sports betting and sweepstakes gambling establishments might prove bothersome 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 expert athletes are hawking prohibited sports betting 'sweeps' websites while at the same time the leagues want to predict a strong stance against illegal gambling - particularly when trying to tamp down the occasional gaming scandal,' Glaser informed DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter got a life time ban from the NBA over allegations he conspired with gamblers. 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 taken legal action against for hosting allegedly prohibited sports betting websites

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

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

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

Asked if their star endorsers have an obligation to explain to customers the distinctions and similarities in between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that needs to be done.

'We have full confidence in our influencer and ambassadorial collaborations, and our organization practices more broadly,' the spokesperson said. 'A few of our values are" our players come initially" and" we do what's right", and we put our worths at the core of everything we do.'

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

'Celebrities who lend their names to dubious prohibited sports betting sites are, at a minimum, putting their credibilities at danger as well as courting civil and class actions by customers who declare damage,' Glaser said. 'There is likewise some threat that state regulators and state chief law officers rope star endorsers into enforcement efforts for facilitating illegal gambling.'

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