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 attendance, however the world-famous stars were conspicuously included in a slide discussion on social and sweepstakes casinos - the questionable sites using both totally free casino-style games and lucrative prizes, such as money, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites 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 casinos serve as conventional gambling establishments, just without the oversight, consumer defenses and tax laws. So not just can they avoid the steep 24-percent federal sports betting levy, but sweepstakes operators aren't based on regulatory obstacles 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 company faces allegations of illegal gambling in a New York claim that claims VGW utilizes star endorsers to 'create a veneer of authenticity' around its item. (See VGW's statement below)

'I'm not exactly sure" if you do not trust us, you can rely on Paris Hilton" is a winning message for business running multibillion-dollar illegal operations out of locations 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 variety of stars 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 use any distinctions between standard gambling and sweepstakes play.

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

Ryan Seacrest advises fans to play at Chumba Casino, where lots of - but not all - games are totally free

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

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Instead, ads typically focus around the social aspect of the gambling establishments, while leaving out the potential for actual gambling losses.

Others lure clients with guarantees of rewards. One such operator, Stake, ran a social networks ad flaunting Drake's cars, airplanes and mansions before rotating to footage of the rapper playing online casino-style video games.

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

Another caption discussed: 'Because I never ever quit.'

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

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

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

Social casinos offer customers an opportunity to play casino-style games with pals. Players have the alternative to purchase worthless currency frequently referred to as 'gold coins,' which can not be exchanged for real money, but can be used to unlock different functions within the video games.

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

And therein lies the potential for financial losses, like the ones claimed by plaintiffs 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 past year after continuing to purchase 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 advertisement showing off Drake's cars and trucks, airplanes and estates

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

Traditional online casinos are banned in all however seven states, which has actually assisted to fuel the appeal of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, enable customers to send mail-in ask for complimentary sweeps coins, provided the gamers follow painfully particular directions. What's more, gamers are frequently rewarded with sweeps coins merely for registering, thus providing a factor to attempt their hands at any variety of gambling establishment video games for a chance to win - or lose - genuine money.

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

According to the stakeholders, their product is the totally free casino-style video gaming, and the real-stakes competition is merely a means of promoting their bread and butter.

'Social sweepstakes games are merely a type of online home entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is needed to dip into social casinos with sweepstakes prizes. Consumers never have to pay for an opportunity to win prizes. That absence of a purchase requirement - or" factor to consider" - is an essential difference between social sweeps and standard online sports betting sites like casinos.'

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

And without a purchase requirement, or 'consideration', the video game itself does not fulfill the meaning of gaming in the US.

'Sweepstakes are a long-standing technique for promoting all sort of daily businesses in the United States, everything from hamburgers to magazine subscriptions to coffee and home enhancement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are frequently used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling market insiders, that argument doesn't cut it.

For starters, video gaming lawyer Daniel Wallach points out, 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 main item. Instead, the sweepstakes is being utilized to promote genuine items like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [gambling establishments] have none of the characteristics typically related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes casinos provide" casino-like" payouts, typically 80 percent or more of revenues, whereas the common payment percentage for a temporary marketing sweepstakes is an insignificant share of the profits made by the company [normally less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the web cafes that emerged in Florida, using clients the chance to play casino-style video games for genuine prizes. Much of those brick-and-mortar facilities have since been shuttered over allegations of unlawful sports betting.

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

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

'These differences are not arbitrary,' Wallach stated of social sweeps casinos. 'They have actually repeatedly been mentioned by courts and state chief law officer as crucial elements in figuring out that a sweepstakes promotion remained in fact a guise for unlawful sports betting.'

Among the gambling establishment market's leading trade companies, the American Gaming Association, is now pushing lawmakers to examine sweepstakes operators and, in many cases, enact brand-new legislation on the concern.

'Consumers are being denied of protections and states are passing up significant tax and revenue chances as this gambling changes that conducted through controlled channels,' read a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in four different cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action suit, stating the settlement was made to avoid legal costs and continued lawsuits.

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

In the most recent claim, which is mostly similar to its predecessors, New York state locals Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is described in the filing as an 'unlawful gaming enterprise. '

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

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

'We have full confidence in our compliance with all laws and guidelines where we operate, and stay positive about the future,' the spokesperson continued. 'We continue to offer our free-to-play video games across many of North America, as we have for more than a decade, developing not just excellent games, user experiences and entertainment, however likewise guaranteeing this is done securely, responsibly and at the highest level of standards.

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

The problems in between standard online sports betting and sweepstakes gambling establishments could prove troublesome for some star endorsers.

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

'It's ironic that expert athletes are hawking unlawful sports betting wagering 'sweeps' sites while at the very same time the leagues wish to predict a strong position against unlawful sports betting - particularly when trying to tamp down the periodic gaming scandal,' Glaser told DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter got a lifetime ban from the NBA over claims he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes casinos.

Along with VGW, Apple and Google are being taken legal action against for hosting allegedly prohibited sports betting websites

Regardless, Glaser sees sweepstakes casinos as a significant concern 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 spokesman nor the players' representatives reacted to DailyMail.com's requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise disregarded to react to DailyMail.com emails.

Asked if their celebrity endorsers have an obligation to discuss to consumers the differences and resemblances in between iGaming and sweepstakes casinos, VGW firmly insisted there is absolutely nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the representative stated. 'Some of our values are" our gamers precede" and" we do what's right", and we put our worths at the core of whatever we do.'

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

'Celebrities who lend their names to dubious prohibited gaming websites are, at a minimum, putting their track records at threat along with courting civil and class actions by consumers who declare damage,' Glaser said. 'There is also some risk that state regulators and state lawyers general rope celeb endorsers into enforcement efforts for assisting in prohibited gaming.'

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