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 celebs were notably included in a slide discussion on social and sweepstakes gambling establishments - the controversial sites offering both complimentary casino-style video games and financially rewarding prizes, such as cash, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are simply two cogs in the multibillion-dollar market that now finds itself besieged by suits. In the eyes of lots of video gaming corporations, not to mention claim plaintiffs and state regulators, sweepstakes gambling establishments act as standard casinos, just without the oversight, customer securities and tax laws. So not just can they prevent the high 24-percent federal gambling levy, but sweepstakes operators aren't based on regulative 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 deals with accusations of unlawful sports betting in a New york city suit that declares VGW utilizes celebrity endorsers to 'create a veneer of authenticity' around its item. (See VGW's declaration listed below)

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

Sweepstakes endorsers consist of a variety of celebs from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom use any differences between traditional gambling and sweepstakes play.

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

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

Drake has a deal with social sweeps gambling establishment, Stake, that he frequently promotes on social media

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Instead, advertisements usually center around the social element of the casinos, while omitting the potential for actual gaming losses.

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

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

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

The disparity between gaming websites and social or sweepstakes casinos is a bit complex, but operators of the latter insist they're not included with the former.

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

'Most social sweeps clients never ever make a purchase,' the SPGA spokesperson told DailyMail.com. 'The minority of consumers who make purchases do so in quantities far smaller sized than the common deposit or wager size at real-money online gaming sites.'

Social casinos offer customers a chance to play casino-style video games with good friends. Players have the option to purchase valueless currency often referred to as 'gold coins,' which can not be exchanged for genuine money, but can be utilized to open numerous functions within the video games.

But within the world of social gambling establishments exists sweepstakes gaming, allowing customers to acquire other currency called 'sweeps coins' that can be exchanged for cash or other prizes.

And therein lies the capacity for financial 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 buy more coins in pursuit of cash and other things of value.

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

Social sweeps casino Stake ran an ad flaunting Drake's cars and trucks, airplanes and mansions

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

Traditional online gambling establishments are banned in all but 7 states, which has actually helped to sustain the popularity of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, allow customers to send mail-in ask for complimentary sweeps coins, offered the players follow painfully specific instructions. What's more, gamers are typically rewarded with sweeps coins simply for signing up, therefore giving them a reason to attempt their hands at any number of gambling establishment games for a chance to win - or lose - real cash.

So why are sweepstakes sites enabled 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 method of promoting their bread and butter.

'Social sweepstakes video games are just a form of online entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is required to play at social casinos with sweepstakes prizes. Consumers never have to spend for an opportunity to win rewards. That absence of a purchase requirement - or" factor to consider" - is an important difference between social sweeps and standard online gaming sites like gambling establishments.'

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

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

'Sweepstakes are a long-standing method for promoting all type of daily organizations in the United States, whatever from hamburgers to publication memberships to coffee and home enhancement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are frequently utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For beginners, gaming lawyer Daniel Wallach mentions, McDonald's Monopoly video game doesn't run forever. Rather, it has a well-defined beginning and end, thereby recommending the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being used to promote genuine products like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [casinos] have none of the qualities frequently connected with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos offer" casino-like" payouts, generally 80 percent or more of incomes, whereas the typical payout portion for a temporary marketing sweepstakes is a minor share of the profits earned by the company [generally less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the web cafes that sprang up in Florida, offering customers the opportunity to play casino-style games for real rewards. A lot of those brick-and-mortar establishments have actually considering that been shuttered over accusations of illegal sports betting.

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

Now, Wallach argues, social sweeps gambling establishments need to face similar examination.

'These differences are not arbitrary,' Wallach said of social sweeps casinos. 'They have actually repeatedly been pointed out by courts and state chief law officer as key consider figuring out that a sweepstakes promotion was in fact a guise for prohibited sports betting.'

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

'Consumers are being deprived of securities and states are forgoing substantial tax and income chances as this gambling changes that performed through controlled channels,' checked out a well-circulated AGA memo.

And after that there are the complainants 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 4 different cases in Kentucky without admitting any misbehavior, according to the Washington Post. Meanwhile VGW accepted 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 an offer with the VGW Group, which owns Global Poker

In the latest lawsuit, which is mostly comparable to its predecessors, New York state residents Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is explained in the filing as an 'unlawful gambling business. '

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

'We usually do not comment on matters before the courts,' a VGW representative informed DailyMail.com through e-mail. 'However, we note that this claim has actually only just been filed with the court and VGW has actually not been formally served.

'We have complete self-confidence in our compliance with all laws and guidelines where we run, and remain positive about the future,' the representative continued. 'We continue to offer our free-to-play games across the majority of The United States and Canada, as we have for more than a years, developing not just great video games, user experiences and home entertainment, however likewise guaranteeing this is done securely, responsibly and at the greatest level of standards.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are reasonably typical throughout the online social games industry (and the US more broadly), and our basic practice is that we plan to vigorously defend any claim which may be brought against us.'

The problems in between standard online sports betting and sweepstakes gambling establishments might show problematic for some star endorsers.

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

'It's ironic that professional athletes are hawking illegal sports betting 'sweeps' websites while at the very same time the leagues desire to predict a strong stance against unlawful sports betting - particularly when attempting to tamp down the occasional gaming scandal,' Glaser told DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter received 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 gambling establishments.

In addition to VGW, Apple and Google are being taken legal action against for hosting supposedly prohibited gambling websites

Regardless, Glaser sees sweepstakes casinos as a significant concern for leagues such as the NBA.

'I 'd anticipate that a league crackdown on athletes endorsing sweepstakes websites is a matter of when, not if,' Glaser included.

Neither an NBA representative nor the gamers' representatives reacted to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise disregarded to respond to DailyMail.com e-mails.

Asked if their celebrity endorsers have a responsibility to explain to customers the distinctions and similarities between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that requires to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the spokesperson said. 'A few of our values are" our gamers come initially" 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 in a different way.

'Celebrities who provide their names to shady prohibited sports betting sites are, at a minimum, putting their reputations at threat in addition to courting civil and class actions by customers who declare harm,' Glaser stated. 'There is also some danger that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for facilitating prohibited gambling.'

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