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

No, they weren't personally in attendance, but the world-famous celebs were conspicuously included in a slide presentation on social and sweepstakes casinos - the questionable sites offering both free casino-style video games and lucrative prizes, such as cash, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for 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 market that now discovers itself besieged by lawsuits. In the eyes of lots of video gaming corporations, not to point out suit plaintiffs and state regulators, sweepstakes casinos function as conventional casinos, just without the oversight, customer protections and tax laws. So not only can they prevent the steep 24-percent federal gambling levy, but sweepstakes operators aren't subject to regulatory obstacles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the business deals with allegations of illegal gaming in a New york city lawsuit that claims VGW uses celebrity endorsers to 'produce a veneer of authenticity' around its product. (See VGW's statement below)

'I'm uncertain" if you do not trust us, you can trust Paris Hilton" is a winning message for companies operating multibillion-dollar prohibited operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a variety of celebs 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 use any differences between standard gaming and sweepstakes play.

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

Ryan Seacrest advises fans to dip into Chumba Casino, where numerous - but not all - games are free

Drake has a deal with social sweeps gambling establishment, Stake, that he frequently promotes on social networks

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Instead, advertisements generally focus around the social aspect of the gambling establishments, while omitting the capacity for real sports betting losses.

Others lure clients with promises of prizes. One such operator, Stake, ran a social networks ad revealing off Drake's automobiles, aircrafts and mansions before rotating to footage of the rapper playing online casino-style video games.

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

Another caption discussed: 'Because I never ever gave up.'

The discrepancy in between gambling websites and social or sweepstakes gambling establishments is a bit complicated, but operators of the latter insist they're not included with the previous.

A spokesperson for an industry 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, many of the gamers on social-sweepstakes gambling establishments are sports betting free.

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

Social gambling establishments offer clients an opportunity to play casino-style video games with friends. Players have the option to buy valueless currency often described as 'gold coins,' which can not be exchanged genuine cash, however can be used to unlock different features within the games.

But within the world of social gambling establishments exists sweepstakes gaming, enabling customers to obtain other currency known as 'sweeps coins' that can be exchanged for money 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 gamer told 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 worth.

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

Social sweeps gambling establishment Stake ran an advertisement displaying Drake's vehicles, airplanes and estates

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

Traditional online gambling establishments are banned in all however 7 states, which has actually helped to sustain the appeal of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, enable customers to send mail-in requests for complimentary sweeps coins, offered the players follow painfully particular guidelines. What's more, gamers are frequently rewarded with sweeps coins simply for signing up, thus giving them a factor to attempt their hands at any variety of casino games for a possibility to win - or lose - genuine 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 free casino-style gaming, and the real-stakes competition is just a means of promoting their support.

'Social sweepstakes games are simply a form of online entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is needed to dip into social gambling establishments with sweepstakes rewards. Consumers never ever have to spend for an opportunity to win rewards. That lack of a purchase requirement - or" factor to consider" - is a crucial difference in between social sweeps and standard online sports betting sites like gambling establishments.'

Think about the method that McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and fries that offer them the chance to win rewarding prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'consideration', the video game itself does not meet the definition of sports betting in the US.

'Sweepstakes are a long-standing approach for promoting all sort of daily services in the United States, whatever from burgers to publication subscriptions to coffee and home enhancement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are regularly used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many gambling industry insiders, that argument doesn't cut it.

For beginners, gaming attorney Daniel Wallach explains, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a distinct start and end, thereby recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote genuine products like french fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're normally not tied to casino-style video games of chance,' Wallach informed DailyMail.com. 'They're just money giveaways.

'The sweepstakes [gambling establishments] possess none of the attributes commonly associated with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments offer" casino-like" payouts, typically 80 percent or more of earnings, whereas the typical payment portion for a momentary marketing sweepstakes is a minor share of the profits earned by the business [typically less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the web 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 actually since been shuttered over allegations of unlawful gambling.

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

Now, Wallach argues, social sweeps casinos need to face similar analysis.

'These differences are not arbitrary,' Wallach stated of social sweeps casinos. 'They have actually repeatedly been pointed out by courts and state chief law officer as crucial consider determining that a sweepstakes promo was in truth a guise for unlawful gambling.'

Among the gambling establishment market's leading trade companies, the American Gaming Association, is now pressing lawmakers to investigate sweepstakes operators and, in many cases, enact brand-new legislation on the issue.

'Consumers are being denied of defenses and states are forgoing considerable tax and earnings chances as this gaming changes that performed through regulated channels,' checked out a well-circulated AGA memo.

And then there are the plaintiffs who have actually taken legal action against social casinos in more than a dozen states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in four different cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action lawsuit, 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 current suit, which is largely similar to its predecessors, New York state homeowners Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'unlawful sports betting business. '

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

'We normally do not comment on matters before the courts,' a VGW spokesperson told DailyMail.com by means of email. 'However, we note that this claim has actually only just been submitted 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 operate, and remain positive about the future,' the representative continued. 'We continue to use our free-to-play games throughout most of The United States and Canada, as we have for more than a decade, producing not just great video games, user experiences and entertainment, however also ensuring this is done securely, properly and at the highest level of standards.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are fairly common across the online social games market (and the US more broadly), and our basic practice is that we plan to vigorously defend any claim which might be brought versus us.'

The issues in between standard online sports betting and sweepstakes gambling establishments could prove problematic for some celeb 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 traditional video gaming titans like FanDuel and DraftKings.

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

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

Along with VGW, Apple and Google are being demanded hosting presumably unlawful gambling websites

Regardless, Glaser sees sweepstakes casinos as a significant problem 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 added.

Neither an NBA spokesman nor the gamers' agents responded to DailyMail.com's demands for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise ignored to respond to DailyMail.com e-mails.

Asked if their star endorsers have a duty to discuss to clients the differences and resemblances between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that requires to be done.

'We have complete confidence in our influencer and ambassadorial collaborations, and our business practices more broadly,' the representative said. 'Some of our worths are" our players precede" and" we do what's right", and we put our worths at the core of everything we do.'

Glaser, an outspoken challenger of sweepstakes websites, sees things differently.

'Celebrities who provide their names to shady illegal gambling websites are, at a minimum, putting their track records at danger along with courting civil and class actions by consumers who allege damage,' Glaser said. 'There is also some danger that state regulators and state lawyers basic rope celeb endorsers into enforcement efforts for helping with prohibited sports betting.'

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