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

No, they weren't personally in presence, but the world-famous stars were conspicuously included in a slide presentation on social and sweepstakes gambling establishments - the questionable websites using both complimentary casino-style video 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 anybody can 'bet complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are just two cogs in the multibillion-dollar industry that now finds itself besieged by lawsuits. In the eyes of lots of video gaming corporations, not to mention suit plaintiffs and state regulators, sweepstakes gambling establishments function as traditional gambling establishments, just without the oversight, consumer protections and tax laws. So not only can they prevent the high 24-percent federal sports betting levy, but sweepstakes operators aren't subject to regulative hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the company faces allegations of unlawful gaming in a New York suit that claims VGW uses star endorsers to 'create a veneer of authenticity' around its item. (See VGW's declaration listed below)

'I'm unsure" if you don't trust us, you can trust 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 variety of stars from gambling lovers 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 conventional 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 - however not all - games are totally free

Drake has a handle social sweeps casino, Stake, that he frequently promotes on social networks

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Instead, ads usually center around the social element of the gambling establishments, while leaving out the capacity for real sports betting losses.

Others tempt consumers with promises of prizes. One such operator, Stake, ran a social media ad showing off Drake's cars and trucks, airplanes and mansions before pivoting to video of the rap artist playing online casino-style games.

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

Another caption explained: 'Because I never gave up.'

The inconsistency between gaming websites and social or sweepstakes gambling establishments is a bit intricate, however 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 competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, many of the gamers on social-sweepstakes gambling establishments are sports betting totally free.

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

Social casinos use customers an opportunity to play casino-style video games with good friends. Players have the alternative to buy worthless currency typically referred to as 'gold coins,' which can not be exchanged for real cash, but can be used to unlock numerous features within the games.

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

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

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

Social sweeps casino Stake ran an advertisement displaying 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 but 7 states, which has actually assisted to fuel the appeal of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, enable customers to send mail-in ask for complimentary sweeps coins, provided the players follow painfully particular instructions. What's more, gamers are typically rewarded with sweeps coins just for signing up, thus providing a reason to try their hands at any variety of gambling establishment video games for a chance to win - or lose - real cash.

So why are sweepstakes websites allowed to run in 48 states, while online gambling establishments are prohibited in all however 7?

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

'Social sweepstakes games are merely a kind of online home entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is needed to play at social gambling establishments with sweepstakes prizes. Consumers never need to pay for a chance to win rewards. That lack of a purchase requirement - or" consideration" - is a crucial distinction in between social sweeps and conventional online sports betting websites like casinos.'

Think about the method that 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 prizes, such as a $1 million prize.

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

'Sweepstakes are an enduring method for promoting all kinds of everyday services in the United States, whatever from burgers to magazine subscriptions to coffee and home improvement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are routinely 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 doesn't cut it.

For starters, gaming lawyer Daniel Wallach mentions, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a well-defined beginning and end, thus recommending the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being utilized to promote real products like fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're generally not tied to casino-style video games of opportunity,' Wallach informed DailyMail.com. 'They're simply money free gifts.

'The sweepstakes [gambling establishments] possess none of the characteristics commonly related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos provide" casino-like" payouts, normally 80 percent or more of incomes, whereas the common payout percentage for a momentary promotional sweepstakes is a trivial share of the earnings earned by the business [generally less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the internet coffee shops that emerged in Florida, offering consumers the possibility to play casino-style games for real rewards. Much of those brick-and-mortar establishments have since been shuttered over claims of illegal sports betting.

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

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

'These differences are not approximate,' Wallach said of social sweeps casinos. 'They have repeatedly been mentioned by courts and state chief law officer as essential factors in determining that a sweepstakes promotion was in reality a guise for prohibited gaming.'

Among the casino industry's leading trade organizations, the American Gaming Association, is now pressing legislators to examine sweepstakes operators and, in many cases, enact brand-new legislation on the concern.

'Consumers are being denied of protections and states are giving up considerable tax and income opportunities as this gambling changes that carried out through controlled channels,' read a well-circulated AGA memo.

And after that there are the complainants who have sued social casinos in more than a lots states.

Sweepstakes casino operators paid a combined $14.2 million in four separate cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action claim, saying the settlement was made to avoid legal costs and continued lawsuits.

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

In the most current claim, which is largely comparable 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 'illegal sports betting business. '

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

'We typically do not talk about 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 simply been filed with the court and VGW has actually not been formally served.

'We have complete self-confidence in our compliance with all laws and policies where we run, and remain confident about the future,' the spokesperson continued. 'We continue to offer our free-to-play games across many of North America, as we have for more than a decade, producing not only terrific games, user experiences and home entertainment, however also ensuring this is done securely, responsibly and at the highest level of standards.

'More broadly, we 'd restate that class actions and other litigations and arbitrations are fairly typical across the online social games market (and the US more broadly), and our standard practice is that we plan to intensely safeguard any claim which might be brought against us.'

The problems in between traditional online gambling and sweepstakes gambling establishments might show troublesome for some celebrity 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 conventional video gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking illegal sports betting wagering 'sweeps' sites while at the very same time the leagues wish to forecast a strong position against unlawful gambling - specifically when trying to tamp down the periodic sports betting scandal,' Glaser informed DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter got a life time 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.

In addition to VGW, Apple and Google are being taken legal action against for hosting allegedly prohibited gambling sites

Regardless, Glaser sees sweepstakes gambling establishments as a significant concern for leagues such as the NBA.

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

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

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

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our organization practices more broadly,' the spokesperson said. 'Some of our values 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 in a different way.

'Celebrities who provide their names to dubious prohibited gaming sites are, at a minimum, putting their credibilities at danger in addition to courting civil and class actions by customers who declare damage,' Glaser stated. 'There is also some threat that state regulators and state attorneys basic rope celeb endorsers into enforcement efforts for helping with illegal sports betting.'

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