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

No, they weren't personally in participation, but the world-famous celebrities were conspicuously consisted of in a slide presentation on social and sweepstakes casinos - the questionable websites offering both complimentary casino-style video games and financially rewarding rewards, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody 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 two cogs in the multibillion-dollar industry that now discovers itself besieged by suits. In the eyes of many video gaming corporations, not to mention claim plaintiffs and state regulators, sweepstakes casinos function as standard casinos, only without the oversight, customer securities and tax laws. So not only can they avoid the steep 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulatory hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income last year alone. Now the business faces accusations of unlawful gaming in a New york city suit that declares VGW uses star endorsers to 'develop a veneer of legitimacy' around its product. (See VGW's statement below)

'I'm not sure" if you do not trust us, you can trust Paris Hilton" is a winning message for business operating multibillion-dollar illegal operations out of places 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 series of stars 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 provide any differences between conventional gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among lots of sweepstakes casinos discovered online

Ryan Seacrest prompts fans to dip into Chumba Casino, where many - however not all - video games are complimentary

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

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Instead, advertisements generally center around the social aspect of the gambling establishments, while leaving out the potential for real gaming losses.

Others lure customers with pledges of rewards. One such operator, Stake, ran a social media advertisement showing off Drake's cars, aircrafts and estates before rotating to footage of the rap artist playing online casino-style games.

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

Another caption discussed: 'Because I never ever quit.'

The discrepancy in between sports betting websites and social or sweepstakes casinos is a bit complex, however 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), discussed its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA information, many of the gamers 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 wager size at real-money online sports betting sites.'

Social casinos use consumers a possibility to play casino-style video games with buddies. Players have the alternative to purchase worthless currency frequently described as 'gold coins,' which can not be exchanged for real money, but can be used to unlock different features within the video games.

But within the world of social gambling establishments exists sweepstakes gaming, permitting clients to acquire other currency referred to as 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the capacity for monetary losses, like the ones declared 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 purchase more coins in pursuit of cash and other things of value.

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

Social sweeps gambling establishment Stake ran an ad displaying Drake's automobiles, planes and mansions

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

Traditional online casinos are banned in all but 7 states, which has assisted to sustain the appeal of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes sites, which do not require normally require recognition. However, sites like Chumba will request IDs from gamers trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, enable customers to send mail-in ask for free sweeps coins, offered the gamers follow painfully particular guidelines. What's more, players are typically rewarded with sweeps coins just for registering, consequently providing a factor to attempt their hands at any number of gambling establishment video games for an opportunity to win - or lose - real cash.

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

According to the stakeholders, their product is the free casino-style video gaming, and the real-stakes competition is just a way of promoting their support.

'Social sweepstakes video games are merely a form of online entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is required to dip into social gambling establishments with sweepstakes prizes. Consumers never have to spend for a chance to win prizes. That absence of a purchase requirement - or" consideration" - is a vital difference between social sweeps and conventional online sports betting sites like gambling establishments.'

Think about the manner in which McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and french fries that offer them the chance to win lucrative rewards, such as a $1 million jackpot.

And without a purchase requirement, or 'factor to consider', the video game itself does not meet the definition of gambling in the US.

'Sweepstakes are a long-standing approach for promoting all type of everyday services in the United States, whatever from hamburgers to magazine subscriptions to coffee and home improvement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are frequently used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For beginners, video gaming lawyer Daniel Wallach mentions, McDonald's Monopoly video game doesn't run forever. Rather, it has a well-defined beginning and end, therefore recommending the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being utilized to promote real items like fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're normally not tied to casino-style games of chance,' Wallach told DailyMail.com. 'They're just money free gifts.

'The sweepstakes [gambling establishments] possess none of the characteristics typically related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments use" casino-like" payments, typically 80 percent or more of incomes, whereas the normal payment portion for a short-term marketing sweepstakes is an unimportant share of the income made by the company [generally less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, providing clients the possibility to play casino-style video games for genuine rewards. Many of those brick-and-mortar facilities have actually given that been shuttered over claims 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 should face comparable examination.

'These distinctions are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have repeatedly been pointed out by courts and state chief law officer as essential consider identifying that a sweepstakes promotion was in fact a guise for unlawful sports betting.'

Among the gambling establishment industry's leading trade organizations, the American Gaming Association, is now pressing lawmakers to investigate sweepstakes operators and, in many cases, enact new legislation on the problem.

'Consumers are being denied of defenses and states are forgoing significant tax and earnings opportunities 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 gambling establishments 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 wrongdoing, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, saying the settlement was made to avoid legal expenses and continued lawsuits.

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

In the current claim, which is largely similar to its predecessors, New york city state citizens 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 'prohibited gambling business. '

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

'We normally do not discuss matters before the courts,' a VGW spokesperson told DailyMail.com via email. 'However, we keep in mind that this claim has only just been submitted with the court and VGW has actually not been officially served.

'We have complete self-confidence in our compliance with all laws and guidelines where we operate, and remain confident about the future,' the spokesperson continued. 'We continue to provide our free-to-play games across the majority of The United States and Canada, as we have for more than a years, producing not just excellent games, user experiences and home entertainment, but likewise ensuring this is done securely, responsibly and at the highest level of standards.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are fairly typical throughout the online social video games industry (and the US more broadly), and our standard practice is that we mean to intensely protect any claim which may be brought against us.'

The problems between traditional online gambling and sweepstakes casinos could prove problematic for some star 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 gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking prohibited sports betting 'sweeps' sites while at the exact same time the leagues want to forecast a strong position versus illegal gaming - particularly when attempting to tamp down the periodic gambling scandal,' Glaser told DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter got a life time ban from the NBA over accusations he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes casinos.

Together with VGW, Apple and Google are being taken legal action against for hosting apparently illegal gambling websites

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

'I 'd expect that a league crackdown on athletes backing sweepstakes sites refers when, not if,' Glaser added.

Neither an NBA spokesperson nor the players' representatives reacted to DailyMail.com's requests for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also overlooked to react to DailyMail.com e-mails.

Asked if their celeb endorsers have an obligation to discuss to clients the distinctions and resemblances between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that requires to be done.

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the representative said. 'Some of our values are" our gamers precede" and" we do what's right", and we put our worths 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 gaming websites are, at a minimum, putting their track records at risk along with courting civil and class actions by customers who allege damage,' Glaser stated. 'There is likewise some risk that state regulators and state chief law officers rope celebrity endorsers into enforcement efforts for helping with unlawful gaming.'

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