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

No, they weren't personally in participation, but the world-famous stars were notably consisted of in a slide discussion on social and sweepstakes gambling establishments - the controversial sites offering both free casino-style games and financially rewarding rewards, such as cash, gift cards or cryptocurrency. In one ad, 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 websites are simply 2 cogs in the multibillion-dollar industry that now discovers itself besieged by lawsuits. In the eyes of numerous video gaming corporations, not to point out claim plaintiffs and state regulators, sweepstakes casinos function as conventional gambling establishments, just without the oversight, customer protections and tax laws. So not only can they avoid the high 24-percent federal sports betting levy, but sweepstakes operators aren't based on regulatory obstacles 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 faces allegations of illegal gaming in a New york city 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 do not trust us, you can trust Paris Hilton" is a winning message for companies running multibillion-dollar unlawful operations out of places like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of video gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers include a variety of celebrities from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom provide any differences between conventional gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among numerous sweepstakes casinos found online

Ryan Seacrest advises fans to play at Chumba Casino, where numerous - however not all - video games are complimentary

Drake has an offer with social sweeps gambling establishment, Stake, that he routinely touts on social media

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Instead, advertisements normally focus around the social element of the gambling establishments, while leaving out the capacity for real sports betting losses.

Others tempt clients with promises of prizes. One such operator, Stake, ran a social networks advertisement showing off Drake's vehicles, airplanes and estates before rotating to video of the rap artist playing online casino-style video games.

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

Another caption discussed: 'Because I never quit.'

The discrepancy in between gaming sites and social or sweepstakes gambling establishments 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), described its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA information, the majority of the players on social-sweepstakes casinos are sports betting complimentary.

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

Social casinos provide clients an opportunity to play casino-style video games with pals. Players have the alternative to purchase valueless currency typically described as 'gold coins,' which can not be exchanged genuine cash, but can be utilized to open various functions within the games.

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

And therein lies the capacity for financial losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York City. One player informed the Washington Post he lost more than $100,000 on sweepstakes casinos in the previous year after continuing to buy more coins in pursuit of money and other things of value.

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

Social sweeps gambling establishment Stake ran an advertisement showing off 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 prohibited in all however seven states, which has assisted to sustain the popularity of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, permit clients to send mail-in demands for free sweeps coins, supplied the players follow painfully specific instructions. What's more, gamers are typically rewarded with sweeps coins merely for signing up, consequently providing a reason to try their hands at any variety of casino video games for a possibility to win - or lose - real cash.

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

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

'Social sweepstakes video games are simply 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 rewards. Consumers never ever need to pay for a chance to win rewards. That absence of a purchase requirement - or" factor to consider" - is an essential difference in between social sweeps and conventional online sports betting sites like casinos.'

Think of the manner in which McDonald's uses its annual Monopoly video 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 rewarding prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'factor to consider', the game itself doesn't satisfy the definition of sports betting in the US.

'Sweepstakes are a long-standing approach for promoting all kinds of daily businesses in the United States, whatever from hamburgers to magazine subscriptions to coffee and home improvement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are routinely used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many sports betting industry experts, that argument does not cut it.

For starters, gaming lawyer Daniel Wallach explains, McDonald's Monopoly game does not run forever. Rather, it has a well-defined beginning and end, thereby suggesting 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 do not last permanently and they're generally not tied to casino-style video games of possibility,' Wallach informed DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [casinos] have none of the attributes commonly connected with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments offer" casino-like" payments, usually 80 percent or more of profits, whereas the common payout portion for a temporary advertising sweepstakes is a minor share of the income made by the company [usually less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the internet coffee shops that sprang up in Florida, using customers the possibility to play casino-style games for real prizes. A number of those brick-and-mortar establishments have since been shuttered over allegations of unlawful gaming.

DJ Khaled is amongst numerous celebrity spokespeople for VGW's Global Poker brand

Now, Wallach argues, social sweeps casinos need to deal with similar examination.

'These differences are not approximate,' Wallach said of social sweeps casinos. 'They have actually consistently been cited by courts and state attorney general of the United States as key aspects in identifying that a sweepstakes promo was in fact a guise for unlawful gambling.'

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

'Consumers are being deprived of securities and states are forgoing considerable tax and revenue opportunities as this gambling changes that conducted through managed channels,' read a well-circulated AGA memo.

And after that there are the plaintiffs who have actually sued social casinos in more than a dozen states.

Sweepstakes casino operators paid a combined $14.2 million in four separate cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action lawsuit, 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 suit, which is largely comparable 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 sports betting enterprise. '

Apple and Google have actually likewise been called as accuseds in suits for hosting the sweepstakes websites. But unlike VGW, neither tech business reacted to DailyMail.com's demand for comment.

'We normally do not comment on matters before the courts,' a VGW spokesperson informed DailyMail.com through e-mail. 'However, we keep in mind that this claim has actually only simply been filed with the court and VGW has actually not been officially served.

'We have full self-confidence in our compliance with all laws and guidelines where we operate, and stay positive about the future,' the representative continued. 'We continue to offer our free-to-play video games throughout the majority of North America, as we have for more than a years, producing not just fantastic games, user experiences and entertainment, but also ensuring this is done securely, properly and at the greatest level of standards.

'More broadly, we 'd restate that class actions and other litigations and arbitrations are reasonably common throughout the online social video games market (and the US more broadly), and our standard practice is that we mean to vigorously protect any claim which may be brought versus us.'

The concerns in between standard online sports betting and sweepstakes casinos could prove problematic 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 paradoxical that expert athletes are hawking prohibited sports betting wagering 'sweeps' websites while at the same time the leagues want to predict a strong position against illegal gaming - specifically when trying to tamp down the occasional sports betting scandal,' Glaser informed DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter received a lifetime ban from the NBA over allegations he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes gambling establishments.

Together with VGW, Apple and Google are being demanded hosting allegedly illegal sports betting sites

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 spokesperson nor the players' agents reacted to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise disregarded to react to DailyMail.com emails.

Asked if their celeb endorsers have an obligation to discuss to customers the differences and similarities in between iGaming and sweepstakes casinos, 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 business practices more broadly,' the spokesperson stated. 'A few of our worths are" our gamers precede" and" we do what's right", and we put our values 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 sports betting sites are, at a minimum, putting their track records at threat in addition to courting civil and class actions by consumers who allege harm,' Glaser said. 'There is likewise some danger that state regulators and state lawyers general rope celeb endorsers into enforcement efforts for facilitating illegal sports betting.'

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