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

No, they weren't personally in participation, however the world-famous celebrities were notably included in a slide discussion on social and sweepstakes casinos - the questionable sites offering both free casino-style video games and rewarding prizes, such as money, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are simply 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 gambling establishments serve as standard casinos, just without the oversight, consumer securities and tax laws. So not just can they prevent the steep 24-percent federal gambling levy, however sweepstakes operators aren't subject to regulatory difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the company deals with accusations of unlawful sports betting in a New York suit that claims VGW utilizes celebrity endorsers to 'develop a veneer of legitimacy' around its product. (See VGW's statement below)

'I'm not sure" if you do not trust us, you can trust 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 presenter, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers consist of a range of celebs from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions between traditional sports betting and sweepstakes play.

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

Ryan Seacrest urges fans to play at Chumba Casino, where many - however not all - games are totally free

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

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Instead, advertisements usually center around the social element of the casinos, while leaving out the potential for actual sports betting losses.

Others tempt clients with guarantees of prizes. One such operator, Stake, ran a social media ad displaying Drake's automobiles, aircrafts and estates before pivoting to video of the rapper playing online casino-style video games.

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

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

The discrepancy in between sports betting sites and social or sweepstakes casinos is a bit complicated, however operators of the latter insist they're not involved 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 data, the majority of the players on social-sweepstakes casinos are sports betting totally free.

'Most social sweeps consumers never ever purchase,' the SPGA representative told DailyMail.com. 'The minority of consumers who make purchases do so in amounts far smaller than the typical deposit or wager size at real-money online gambling websites.'

Social casinos use consumers an opportunity to play casino-style video games with friends. Players have the choice to purchase valueless currency frequently referred to as 'gold coins,' which can not be exchanged genuine money, however can be utilized to unlock numerous functions within the video games.

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

And therein lies the potential for monetary losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York. One gamer told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments 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 a Global Poker event

Social sweeps casino Stake ran an ad displaying Drake's cars, planes 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 assisted to fuel the appeal of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, allow clients to send mail-in ask for totally free sweeps coins, offered the gamers follow painfully specific guidelines. What's more, gamers are often rewarded with sweeps coins simply for registering, therefore providing a factor to attempt their hands at any variety of casino video games for a chance to win - or lose - real money.

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

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

'Social sweepstakes video games are merely a type of online entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is needed to dip into social casinos with sweepstakes rewards. Consumers never ever need to spend for an opportunity to win prizes. That absence of a purchase requirement - or" factor to consider" - is an important distinction in between social sweeps and standard online sports betting websites like gambling establishments.'

Think of the manner in which McDonald's uses its yearly Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're buying hamburgers and fries that provide them the chance to win rewarding rewards, such as a $1 million prize.

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

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

But to numerous gambling market experts, that argument does not cut it.

For beginners, video gaming attorney Daniel Wallach mentions, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a distinct beginning and end, thereby suggesting the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being used to promote genuine items like french fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [casinos] possess none of the qualities frequently related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos offer" casino-like" payouts, generally 80 percent or more of profits, whereas the normal payout portion for a temporary advertising sweepstakes is an unimportant share of the earnings made by the business [usually less than one percent]'

Wallach is quick to liken the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, using clients the chance to play casino-style video games for genuine rewards. A number of those brick-and-mortar facilities have because been shuttered over allegations of illegal gaming.

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

Now, Wallach argues, social sweeps casinos need to face comparable scrutiny.

'These distinctions are not arbitrary,' Wallach said of social sweeps casinos. 'They have repeatedly been pointed out by courts and state lawyer generals as essential aspects in determining that a sweepstakes promotion remained in reality a guise for prohibited gaming.'

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

'Consumers are being deprived of defenses and states are giving up significant tax and profits opportunities as this gambling replaces that carried out through managed channels,' read a well-circulated AGA memo.

And then there are the plaintiffs 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 wrongdoing, 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 costs and continued litigation.

Michael Phelps has signed an offer with the VGW Group, which owns Global Poker

In the newest suit, which is mostly similar to its predecessors, New York state locals Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'prohibited sports betting enterprise. '

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

'We typically do not discuss matters before the courts,' a VGW representative informed DailyMail.com via e-mail. 'However, we keep in mind that this claim has only simply been submitted with the court and VGW has actually not been officially served.

'We have complete self-confidence in our compliance with all laws and policies where we run, and stay confident about the future,' the spokesperson continued. 'We continue to offer our free-to-play games throughout most of The United States and Canada, as we have for more than a decade, developing not only terrific games, user experiences and home entertainment, however also guaranteeing this is done securely, properly and at the highest level of standards.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are fairly common throughout the online social games industry (and the US more broadly), and our basic practice is that we intend to intensely protect any claim which may be brought against us.'

The issues in between conventional online gaming and sweepstakes gambling establishments might show bothersome for some star endorsers.

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

'It's paradoxical that expert athletes are hawking unlawful sports betting 'sweeps' sites while at the very same time the leagues want to forecast a strong stance versus prohibited gambling - particularly when attempting to tamp down the periodic gambling scandal,' Glaser informed DailyMail.com.

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

In addition to VGW, Apple and Google are being demanded hosting allegedly prohibited gambling websites

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

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

Neither an NBA spokesperson nor the players' agents reacted to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to react to DailyMail.com e-mails.

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

'We have full self-confidence in our influencer and ambassadorial collaborations, and our organization practices more broadly,' the representative stated. 'A few of our values are" our players 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 sites, sees things in a different way.

'Celebrities who provide their names to sports betting sites are, at a minimum, putting their reputations at risk in addition to courting civil and class actions by customers who declare harm,' Glaser stated. 'There is also some risk that state regulators and state lawyers general rope celeb endorsers into enforcement efforts for assisting in illegal gambling.'

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