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 presence, but the world-famous celebrities were notably consisted of in a slide discussion on social and sweepstakes gambling establishments - the controversial sites offering both free casino-style video games and financially rewarding prizes, such as cash, gift 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 finds itself besieged by suits. In the eyes of lots of gaming corporations, not to point out claim plaintiffs and state regulators, sweepstakes gambling establishments serve as traditional casinos, only without the oversight, customer protections and tax laws. So not only can they prevent the steep 24-percent federal sports betting levy, however sweepstakes operators aren't subject to regulative difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income last year alone. Now the business deals with allegations of illegal gaming in a New York suit that claims VGW utilizes celeb endorsers to 'develop a veneer of legitimacy' around its item. (See VGW's statement listed below)

'I'm uncertain" 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 video gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a series of celebrities 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 differences between conventional gambling and sweepstakes play.

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

Ryan Seacrest urges fans to dip into Chumba Casino, where numerous - however not all - video games are free

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

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Instead, advertisements generally focus around the social aspect of the casinos, while omitting the capacity for actual gaming losses.

Others lure customers with pledges of prizes. One such operator, Stake, ran a social networks ad flaunting Drake's vehicles, airplanes and mansions before rotating to video of the rapper playing online casino-style games.

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

Another caption discussed: 'Because I never quit.'

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

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

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

Social gambling establishments offer clients a possibility to play casino-style video games with good friends. Players have the alternative to purchase worthless currency frequently described as 'gold coins,' which can not be exchanged genuine cash, but can be utilized to unlock different features within the games.

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

And therein lies the capacity 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 gambling establishments in the previous year after continuing to purchase more coins in pursuit of money and other things of worth.

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

Social sweeps casino Stake ran an advertisement showing off Drake's cars, planes 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 helped to fuel the popularity of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, enable clients to submit mail-in requests for complimentary sweeps coins, offered the players follow painfully particular guidelines. What's more, gamers are often rewarded with sweeps coins merely for signing up, therefore offering them a reason to attempt their hands at any variety of casino games for an opportunity to win - or lose - real cash.

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

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

'Social sweepstakes games are simply a form of online entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is needed to dip into social casinos with sweepstakes prizes. Consumers never ever need to pay for a chance to win rewards. That lack of a purchase requirement - or" factor to consider" - is a vital difference in between social sweeps and traditional online gambling websites like casinos.'

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

And without a purchase requirement, or 'factor to consider', the game itself does not 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, everything from burgers to magazine memberships to coffee and home enhancement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are frequently used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling industry insiders, that argument does not cut it.

For beginners, video gaming lawyer Daniel Wallach explains, McDonald's Monopoly game does not run indefinitely. Rather, it has a distinct start and end, thus suggesting the sweepstakes is not the fast-food giant's main product. 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 usually not connected to casino-style games of opportunity,' Wallach informed DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [gambling establishments] possess none of the qualities commonly related to McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes casinos offer" casino-like" payments, generally 80 percent or more of earnings, whereas the typical payout percentage for a temporary advertising sweepstakes is a trivial share of the income made by the company [usually less than one percent]'

Wallach is quick to liken the online social sweeps casinos to the internet cafes that sprang up in Florida, offering customers the possibility to play casino-style video games for real prizes. Much of those brick-and-mortar establishments have actually considering that been shuttered over allegations of illegal sports betting.

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

Now, Wallach argues, social sweeps gambling establishments ought to deal with comparable scrutiny.

'These differences are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have actually consistently been pointed out by courts and state lawyer generals as essential consider identifying that a sweepstakes promotion remained in truth a guise for prohibited gaming.'

Among the casino industry'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 issue.

'Consumers are being denied of securities and states are giving up significant tax and profits opportunities as this sports betting changes that carried out through managed channels,' read a well-circulated AGA memo.

And after that there are the plaintiffs who have 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 separate cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action suit, saying the settlement was made to avoid legal expenses and continued litigation.

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

In the most current suit, which is largely similar to its predecessors, New York state residents Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited gambling business. '

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

'We normally 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 just been submitted with the court and VGW has not been officially served.

'We have full confidence in our compliance with all laws and guidelines where we operate, and remain confident about the future,' the representative continued. 'We continue to use our free-to-play games across the majority of The United States and Canada, as we have for more than a decade, producing not just fantastic games, user experiences and entertainment, however also ensuring this is done safely, responsibly and at the highest level of standards.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are fairly common throughout the online social games industry (and the US more broadly), and our basic practice is that we mean to vigorously defend any claim which might be brought against us.'

The concerns between conventional online gambling and sweepstakes casinos could prove bothersome for some celeb endorsers.

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

'It's paradoxical that professional athletes are hawking illegal sports betting 'sweeps' websites while at the same time the leagues want to predict a strong position against prohibited gaming - particularly when trying to tamp down the occasional gambling scandal,' Glaser told DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter received a life time ban from the NBA over claims he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes casinos.

Together with VGW, Apple and Google are being taken legal action against for hosting supposedly unlawful sports betting sites

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

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

Neither an NBA representative nor the gamers' representatives reacted to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also ignored to react to DailyMail.com emails.

Asked if their star endorsers have an obligation to discuss to consumers the differences 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 collaborations, and our service practices more broadly,' the representative said. 'Some of our values are" our players precede" 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 shady prohibited gaming 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 likewise some risk that state regulators and state attorneys basic rope celeb endorsers into enforcement efforts for assisting in unlawful gaming.'

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