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

No, they weren't personally in participation, however the world-famous celebrities were notably consisted of in a slide presentation on social and sweepstakes gambling establishments - the questionable websites providing both free casino-style games and rewarding prizes, such as cash, present cards or cryptocurrency. In one advertisement, 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 sites are just two cogs in the multibillion-dollar industry that now discovers itself besieged by claims. In the eyes of many video gaming corporations, not to discuss lawsuit complainants and state regulators, sweepstakes casinos serve as traditional gambling establishments, only without the oversight, consumer defenses and tax laws. So not only can they avoid the steep 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulative difficulties like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the company deals with allegations of prohibited gaming in a New york city suit that declares VGW uses celeb endorsers to 'produce a veneer of legitimacy' around its item. (See VGW's declaration listed below)

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

Sweepstakes endorsers include a variety of celebrities 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 offer any distinctions in between standard gaming and sweepstakes play.

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

Ryan Seacrest prompts fans to play at Chumba Casino, where numerous - but not all - video games are totally free

Drake has a handle social sweeps gambling establishment, Stake, that he routinely promotes on social networks

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Instead, ads typically focus around the social aspect of the casinos, while omitting the capacity for real gaming losses.

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

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

Another caption explained: 'Because I never quit.'

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

A spokesperson for a market 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 information, many of the players on social-sweepstakes casinos are sports betting totally free.

'Most social sweeps customers never ever purchase,' the SPGA representative informed DailyMail.com. 'The minority of consumers who make purchases do so in quantities far smaller sized than the typical deposit or bet size at real-money online gaming websites.'

Social casinos use consumers a chance to play casino-style games with pals. Players have the choice to buy worthless currency often described as 'gold coins,' which can not be exchanged for genuine cash, but can be used to open different functions within the games.

But within the world of social casinos exists sweepstakes gaming, enabling consumers to obtain other currency called 'sweeps coins' that can be exchanged for cash or other prizes.

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

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

Social sweeps casino Stake ran an ad displaying Drake's cars, aircrafts 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 but seven states, which has actually helped to fuel the appeal of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, allow customers to send mail-in ask for free sweeps coins, supplied the gamers follow painfully specific directions. What's more, players are typically rewarded with sweeps coins simply for registering, consequently providing a factor to try their hands at any number of casino games for a possibility to win - or lose - genuine money.

So why are sweepstakes sites permitted to operate in 48 states, while online casinos are banned in all however 7?

According to the stakeholders, their item is the complimentary casino-style gaming, and the real-stakes competitors is simply a method of promoting their bread and butter.

'Social sweepstakes games are simply a type of online home entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is required to dip into social gambling establishments with sweepstakes rewards. Consumers never ever need to pay for an opportunity to win rewards. That absence of a purchase requirement - or" consideration" - is a vital distinction between social sweeps and standard online gaming websites like casinos.'

Think of the way that McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and fries that offer them the possibility to win rewarding prizes, such as a $1 million prize.

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

'Sweepstakes are a long-standing technique for promoting all kinds of everyday businesses in the United States, whatever from hamburgers to publication subscriptions to coffee and home improvement shops,' 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 numerous sports betting industry experts, that argument doesn't cut it.

For beginners, gaming attorney Daniel Wallach mentions, McDonald's Monopoly video game does not run indefinitely. Rather, it has a well-defined beginning and end, consequently recommending the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being utilized to promote real products like french fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're typically not connected to casino-style video games of opportunity,' Wallach informed DailyMail.com. 'They're simply cash giveaways.

'The sweepstakes [gambling establishments] possess none of the attributes frequently related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments use" casino-like" payouts, generally 80 percent or more of earnings, whereas the normal payment portion for a short-lived marketing sweepstakes is a minor share of the revenue earned by the company [normally less than one percent]'

Wallach is quick to liken the online social sweeps casinos to the internet cafes that emerged in Florida, using clients the possibility to play casino-style video games for genuine rewards. Much of those brick-and-mortar establishments have considering that been shuttered over accusations of illegal gaming.

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

Now, Wallach argues, social sweeps gambling establishments should face comparable examination.

'These differences are not arbitrary,' Wallach stated of social sweeps casinos. 'They have repeatedly been cited by courts and state attorney general of the United States as crucial consider identifying that a sweepstakes promotion was in fact a guise for prohibited gaming.'

One of the casino industry's leading trade companies, the American Gaming Association, is now pressing lawmakers to investigate sweepstakes operators and, sometimes, enact new legislation on the concern.

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

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in four separate cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action suit, saying the settlement was made to prevent legal expenses and continued lawsuits.

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

In the most recent lawsuit, which is mostly comparable to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited gambling business. '

Apple and Google have also been called as defendants in suits for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for comment.

'We normally do not discuss matters before the courts,' a VGW representative told DailyMail.com by means of 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 self-confidence in our compliance with all laws and guidelines where we run, and stay positive about the future,' the representative continued. 'We continue to offer our free-to-play video games throughout most of North America, as we have for more than a decade, developing not just excellent video games, user experiences and home entertainment, but also ensuring this is done securely, properly and at the highest level of standards.

'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are reasonably typical throughout the online social games industry (and the US more broadly), and our standard practice is that we intend to vigorously protect any claim which might be brought versus us.'

The issues between conventional online gambling and sweepstakes gambling establishments might prove bothersome 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 video 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 want to forecast a strong position versus prohibited gambling - especially when attempting to tamp down the occasional gambling scandal,' Glaser informed DailyMail.com.

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

Together with VGW, Apple and Google are being demanded hosting apparently prohibited gambling sites

Regardless, Glaser sees sweepstakes casinos as a major problem for leagues such as the NBA.

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

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

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

'We have full confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the representative said. 'Some of our worths are" our players 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 websites, sees things differently.

'Celebrities who lend their names to dubious illegal gambling websites are, at a minimum, putting their reputations at danger in addition to courting civil and class actions by customers who allege damage,' Glaser said. 'There is also some risk that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for assisting in illegal gambling.'

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