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, but the world-famous celebs were conspicuously included in a slide presentation on social and sweepstakes casinos - the controversial websites providing both free casino-style video games and lucrative rewards, 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 simply 2 cogs in the multibillion-dollar industry that now discovers itself besieged by suits. In the eyes of many gaming corporations, not to discuss lawsuit plaintiffs and state regulators, sweepstakes casinos act as conventional gambling establishments, just without the oversight, customer defenses and tax laws. So not only can they prevent the steep 24-percent federal gambling levy, but sweepstakes operators aren't based on regulative hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the company faces allegations of unlawful sports betting in a New York suit that declares VGW uses star endorsers to 'create a veneer of authenticity' around its product. (See VGW's declaration below)

'I'm not sure" if you don't trust us, you can rely on Paris Hilton" is a winning message for companies running multibillion-dollar prohibited 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 range 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 in between conventional gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of numerous sweepstakes gambling establishments discovered online

Ryan Seacrest urges fans to dip into Chumba Casino, where lots of - but not all - video games are complimentary

Drake has a handle social sweeps gambling establishment, Stake, that he frequently touts on social media

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Instead, advertisements generally focus around the social aspect of the casinos, while leaving out the capacity for actual gambling losses.

Others tempt consumers with guarantees of prizes. One such operator, Stake, ran a social media ad showing off Drake's cars and trucks, aircrafts and mansions before rotating to footage of the rap artist playing online casino-style games.

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

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

The discrepancy between gaming sites and social or sweepstakes gambling establishments is a bit intricate, however operators of the latter insist they're not involved with the former.

A representative for an industry trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, the majority of the gamers on social-sweepstakes gambling establishments are sports betting complimentary.

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

Social gambling establishments offer customers an opportunity to play casino-style games with good friends. Players have the alternative to buy valueless currency often referred to as 'gold coins,' which can not be exchanged genuine money, however can be utilized to unlock different functions within the video games.

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

And therein lies the capacity for monetary losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York City. One gamer told 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 money and other things of worth.

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

Social sweeps casino Stake ran an advertisement displaying Drake's vehicles, planes and mansions

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

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

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

Many sites, like the crypto-compatible Stake, permit customers to send mail-in demands for totally free sweeps coins, supplied the players follow painfully particular instructions. What's more, players are typically rewarded with sweeps coins just for registering, thereby providing a reason to attempt their hands at any variety of casino video games for an opportunity to win - or lose - real cash.

So why are sweepstakes sites enabled to operate in 48 states, while online gambling establishments are prohibited in all however 7?

According to the stakeholders, their item is the free casino-style video gaming, and the real-stakes competitors is merely a way of promoting their bread and butter.

'Social sweepstakes games are merely a form of online entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is required to play at social gambling establishments with sweepstakes rewards. Consumers never need to pay for a chance to win prizes. That lack of a purchase requirement - or" factor to consider" - is an important difference between social sweeps and conventional online sports betting websites like gambling establishments.'

Think about the manner in which McDonald's utilizes its annual Monopoly game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and french fries that offer them the opportunity to win profitable rewards, such as a $1 million prize.

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

'Sweepstakes are an enduring approach for promoting all sort of everyday organizations in the United States, everything from hamburgers to magazine subscriptions to coffee and home improvement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are regularly utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of gambling industry experts, that argument does not cut it.

For starters, video gaming attorney Daniel Wallach explains, McDonald's Monopoly video game does not run indefinitely. Rather, it has a well-defined start and end, thereby recommending the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being used to promote genuine items like french fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're normally not tied to casino-style video games of chance,' Wallach informed DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [gambling establishments] have none of the attributes commonly related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos use" casino-like" payouts, normally 80 percent or more of revenues, whereas the common payout percentage for a short-lived promotional sweepstakes is a minor share of the earnings made by the company [normally less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, offering clients the opportunity to play casino-style video games for real rewards. Much of those brick-and-mortar establishments have actually given that been shuttered over allegations of unlawful gambling.

DJ Khaled is amongst a number of celeb spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps casinos ought to deal with comparable analysis.

'These distinctions are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been mentioned by courts and state attorney general of the United States as key factors in figuring out that a sweepstakes promotion was in fact a guise for prohibited sports betting.'

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

'Consumers are being deprived of protections and states are giving up considerable tax and profits chances as this gaming replaces that carried out through regulated channels,' read a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in 4 different cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW accepted 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 handle the VGW Group, which owns Global Poker

In the most recent lawsuit, which is mainly comparable to its predecessors, New York state locals 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 'unlawful sports betting enterprise. '

Apple and Google have actually likewise been named as defendants in claims for hosting the sweepstakes websites. But unlike VGW, neither tech business responded to DailyMail.com's request for remark.

'We generally don't discuss matters before the courts,' a VGW representative informed DailyMail.com via e-mail. 'However, we keep in mind that this claim has actually only just been filed with the court and VGW has actually not been formally served.

'We have full confidence in our compliance with all laws and regulations where we run, and stay confident about the future,' the representative continued. 'We continue to provide our free-to-play video games across most of North America, as we have for more than a decade, producing not just terrific games, user experiences and home entertainment, however likewise ensuring this is done safely, responsibly and at the greatest level of standards.

'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are relatively common across the online social video games industry (and the US more broadly), and our basic practice is that we intend to intensely protect any claim which may be brought versus us.'

The problems between standard online gambling and sweepstakes casinos might show troublesome for some celeb 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 traditional gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking unlawful sports betting 'sweeps' sites while at the same time the leagues wish to project a strong position versus illegal gaming - particularly when attempting to tamp down the occasional sports betting scandal,' Glaser informed DailyMail.com.

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

In addition to VGW, Apple and Google are being demanded hosting presumably illegal gambling websites

Regardless, Glaser sees sweepstakes gambling establishments as a significant 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 representative nor the gamers' representatives reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also disregarded to react to DailyMail.com emails.

Asked if their celebrity endorsers have an obligation to discuss to customers the differences and similarities between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that requires to be done.

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our service practices more broadly,' the spokesperson said. 'Some of our values are" our gamers come first" 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 shady illegal gaming websites are, at a minimum, putting their credibilities at threat as well as courting civil and class actions by consumers who declare damage,' Glaser stated. 'There is also some threat that state regulators and state attorneys general rope star endorsers into enforcement efforts for assisting in unlawful gaming.'

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