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

No, they weren't personally in attendance, however the world-famous celebrities were notably consisted of in a slide presentation on social and sweepstakes casinos - the questionable sites using both free casino-style games and financially rewarding rewards, such as money, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are simply 2 cogs in the multibillion-dollar market that now finds itself besieged by claims. In the eyes of lots of gaming corporations, not to discuss suit plaintiffs and state regulators, sweepstakes gambling establishments serve as conventional casinos, only without the oversight, customer protections and tax laws. So not just can they avoid the high 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulative difficulties like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings last year alone. Now the business faces accusations of prohibited gaming in a New york city suit that claims VGW utilizes celebrity endorsers to 'create a veneer of authenticity' around its product. (See VGW's statement listed below)

'I'm not exactly sure" if you don't 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 speaker, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers include a series 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 offer any distinctions between standard gaming and sweepstakes play.

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

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

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

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Instead, ads normally focus around the social aspect of the casinos, while leaving out the capacity for real gaming losses.

Others tempt clients with pledges of prizes. One such operator, Stake, ran a social media advertisement showing off Drake's cars and trucks, aircrafts and estates before rotating to footage of the rapper playing online casino-style games.

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

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

The inconsistency between sports betting websites and social or sweepstakes casinos is a bit complex, but operators of the latter insist they're not involved with the former.

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

'Most social sweeps customers never ever make a purchase,' the SPGA representative told DailyMail.com. 'The minority of customers 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 use consumers a possibility to play casino-style video games with friends. Players have the option to buy worthless currency often referred to as 'gold coins,' which can not be exchanged genuine money, however can be utilized to unlock various functions within the video games.

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

And therein lies the potential 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 gambling establishments in the previous 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 Worldwide Poker occasion

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake's vehicles, aircrafts and mansions

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

Traditional online casinos are prohibited in all however 7 states, which has assisted to fuel the appeal of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, permit customers to send mail-in ask for complimentary sweeps coins, provided the gamers follow painfully particular instructions. What's more, gamers are frequently rewarded with sweeps coins merely for signing up, thereby providing a reason to attempt their hands at any number of casino games for a possibility to win - or lose - real cash.

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

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

'Social sweepstakes games are simply a type of online home entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is needed to dip into social gambling establishments with sweepstakes prizes. Consumers never have to spend for an opportunity to win rewards. That absence of a purchase requirement - or" consideration" - is an important difference in between social sweeps and conventional online gambling sites like casinos.'

Consider the manner in which McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're buying hamburgers and french fries that use them the chance to win profitable rewards, such as a $1 million prize.

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

'Sweepstakes are an enduring method for promoting all type of daily services in the United States, whatever from hamburgers to magazine subscriptions to coffee and home enhancement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are regularly utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting market insiders, that argument does not cut it.

For starters, gaming attorney Daniel Wallach explains, McDonald's Monopoly video 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 product. Instead, the sweepstakes is being utilized to promote real products like french fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're typically not tied to casino-style games of chance,' Wallach informed DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [casinos] have none of the characteristics commonly connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments provide" casino-like" payments, normally 80 percent or more of earnings, whereas the typical payout percentage for a short-lived promotional sweepstakes is an insignificant share of the profits made by the business [generally less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the web coffee shops that sprang up in Florida, using clients the possibility to play casino-style games for genuine prizes. A lot of those brick-and-mortar establishments have actually since been shuttered over accusations of illegal sports betting.

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

Now, Wallach argues, social sweeps gambling establishments should face similar scrutiny.

'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 crucial aspects in determining that a sweepstakes promotion was in reality a guise for prohibited sports betting.'

One of the casino market's leading trade organizations, the American Gaming Association, is now pushing lawmakers to examine sweepstakes operators and, in some cases, enact new legislation on the problem.

'Consumers are being deprived of securities and states are passing up considerable tax and revenue opportunities as this gaming replaces that performed through regulated 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 4 different cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action claim, saying the settlement was made to avoid legal expenses and continued litigation.

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

In the current suit, which is mainly comparable to its predecessors, New York state locals Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is described in the filing as an 'prohibited gambling enterprise. '

Apple and Google have also been called as defendants in claims for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's demand for comment.

'We usually do not discuss matters before the courts,' a VGW representative informed DailyMail.com via email. '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 full self-confidence in our compliance with all laws and policies where we operate, and remain positive about the future,' the representative continued. 'We continue to provide our free-to-play video games across most of The United States and Canada, as we have for more than a years, producing not only excellent video games, user experiences and entertainment, but also guaranteeing this is done safely, 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 market (and the US more broadly), and our basic practice is that we plan to intensely protect any claim which may be brought versus us.'

The concerns in between traditional online gambling and sweepstakes casinos could show bothersome 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 gaming titans like FanDuel and DraftKings.

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

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

In addition to VGW, Apple and Google are being sued for hosting supposedly illegal gambling websites

Regardless, Glaser sees sweepstakes gambling establishments as a major issue for leagues such as the NBA.

'I 'd anticipate that a league crackdown on professional athletes endorsing sweepstakes sites refers when, not if,' Glaser included.

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

Asked if their celeb endorsers have a duty to explain to customers the differences and resemblances between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that needs to be done.

'We have full confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the representative said. 'Some of our values are" our players come first" and" we do what's right", and we put our values at the core of whatever we do.'

Glaser, an outspoken challenger of sweepstakes sites, sees things in a different way.

'Celebrities who lend their names to dubious illegal sports betting websites are, at a minimum, putting their reputations at risk in addition to courting civil and class actions by consumers who declare damage,' Glaser said. 'There is also some danger that state regulators and state lawyers general rope celebrity endorsers into enforcement efforts for assisting in unlawful gaming.'

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