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

No, they weren't personally in presence, but the world-famous celebs were notably consisted of in a slide discussion on social and sweepstakes gambling establishments - the questionable sites offering both free casino-style video games and profitable prizes, such as money, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are just two cogs in the multibillion-dollar industry that now finds itself besieged by lawsuits. In the eyes of many gaming corporations, not to point out suit complainants and state regulators, sweepstakes casinos serve as standard casinos, just without the oversight, consumer defenses and tax laws. So not only can they avoid the steep 24-percent federal gambling levy, but sweepstakes operators aren't subject to regulative difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings last year alone. Now the business deals with accusations of illegal gambling in a New York claim that claims VGW uses celeb endorsers to 'develop a veneer of authenticity' around its product. (See VGW's statement below)

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

Sweepstakes endorsers include a variety of celebrities from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions between conventional gambling and sweepstakes play.

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

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

Drake has a deal with social sweeps casino, Stake, that he routinely touts on social media

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Instead, advertisements normally center around the social aspect of the gambling establishments, while omitting the capacity for real gaming losses.

Others lure clients with pledges of rewards. One such operator, Stake, ran a social media ad flaunting Drake's cars and trucks, aircrafts and mansions before pivoting to video footage of the rap artist playing online casino-style games.

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

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

The discrepancy in between gambling 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), discussed its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, the majority of the gamers on social-sweepstakes casinos 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 quantities far smaller than the normal deposit or wager size at real-money online gambling sites.'

Social casinos use consumers an opportunity to play casino-style games with pals. Players have the option to purchase valueless currency typically referred to as 'gold coins,' which can not be exchanged for real cash, however can be utilized to open different features within the games.

But within the world of social gambling establishments exists sweepstakes video gaming, enabling customers to get other currency referred to as 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the potential for monetary losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York City. 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 money and other things of value.

The Philadelphia 76ers' Paul George is seen promoting an International Poker occasion

Social sweeps gambling establishment Stake ran an ad flaunting Drake's vehicles, airplanes and mansions

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

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

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

Many sites, like the crypto-compatible Stake, permit clients to send mail-in ask for complimentary sweeps coins, offered the gamers follow painfully specific instructions. What's more, players are often rewarded with sweeps coins just for registering, thus providing a reason to attempt their hands at any number of casino video games for a chance to win - or lose - real cash.

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

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

'Social sweepstakes games are simply a form of online home entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is required to play at social casinos with sweepstakes rewards. 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 traditional online sports betting websites like casinos.'

Consider the manner in which McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to bet, but rather they're buying hamburgers and fries that offer them the possibility to win rewarding prizes, such as a $1 million prize.

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

'Sweepstakes are a long-standing approach for promoting all kinds of daily organizations in the United States, everything from hamburgers to publication memberships to coffee and home enhancement stores,' the SPGA spokesperson 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 many gambling market experts, that argument does not cut it.

For beginners, gaming attorney Daniel Wallach points out, McDonald's Monopoly video game doesn't run forever. Rather, it has a well-defined start and end, consequently 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 informed DailyMail.com. 'They're just money giveaways.

'The sweepstakes [casinos] have none of the attributes commonly related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes casinos offer" casino-like" payouts, normally 80 percent or more of earnings, whereas the normal payout percentage for a short-term promotional sweepstakes is an unimportant share of the income made by the company [normally less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the web cafes that emerged in Florida, offering clients the opportunity to play casino-style games for real prizes. A number of those brick-and-mortar facilities have actually because been shuttered over claims of prohibited gaming.

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

Now, Wallach argues, social sweeps casinos must face comparable analysis.

'These differences are not approximate,' Wallach said of social sweeps gambling establishments. 'They have repeatedly been cited by courts and state attorney generals as essential aspects in determining that a sweepstakes promo remained in fact a guise for unlawful gambling.'

One of the gambling establishment industry's leading trade organizations, 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 securities and states are giving up significant tax and earnings chances as this gambling changes that conducted through managed channels,' checked out a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 different cases in Kentucky without admitting any misbehavior, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, stating 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 lawsuit, 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 'illegal gaming business. '

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

'We generally do not discuss matters before the courts,' a VGW representative told DailyMail.com by means of email. 'However, we note that this claim has only just been submitted with the court and VGW has not been officially served.

'We have complete confidence in our compliance with all laws and policies where we operate, and remain positive about the future,' the spokesperson continued. 'We continue to offer our free-to-play video games throughout many of The United States and Canada, as we have for more than a decade, producing not just fantastic video games, user experiences and entertainment, but likewise guaranteeing this is done safely, properly and at the greatest level of standards.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are fairly typical across the online social games market (and the US more broadly), and our standard practice is that we plan to strongly protect any claim which may be brought versus us.'

The issues between traditional online gambling and sweepstakes casinos might prove problematic 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 traditional gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking unlawful sports betting wagering 'sweeps' sites while at the same time the leagues desire to predict a strong position against prohibited gambling - especially when attempting to tamp down the periodic sports betting scandal,' Glaser told DailyMail.com.

It was just 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 gambling establishments.

Together with VGW, Apple and Google are being demanded hosting supposedly unlawful sports betting websites

Regardless, Glaser sees sweepstakes gambling establishments as a significant problem for leagues such as the NBA.

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

Neither an NBA spokesman nor the players' 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 e-mails.

Asked if their celeb endorsers have a responsibility to discuss to clients the differences and similarities in between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial collaborations, and our service practices more broadly,' the spokesperson said. 'Some of our worths are" our gamers come first" and" we do what's right", and we put our worths at the core of whatever we do.'

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

'Celebrities who provide their names to dubious unlawful gaming websites are, at a minimum, putting their reputations at threat in addition to courting civil and class actions by customers who allege harm,' Glaser said. 'There is also some risk that state regulators and state chief law officers rope star endorsers into enforcement efforts for helping with unlawful sports betting.'

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