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

No, they weren't personally in participation, but the world-famous celebs were conspicuously included in a slide presentation on social and sweepstakes gambling establishments - the questionable sites using both complimentary casino-style games and 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 free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are just 2 cogs in the multibillion-dollar market that now finds itself besieged by claims. In the eyes of many video gaming corporations, not to point out suit complainants and state regulators, sweepstakes casinos serve as traditional gambling establishments, only without the oversight, consumer defenses and tax laws. So not just can they prevent the high 24-percent federal gaming levy, however sweepstakes operators aren't subject to regulatory hurdles 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 company faces allegations of unlawful gaming in a New york city lawsuit that claims VGW uses celebrity endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's declaration below)

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

Sweepstakes endorsers consist of a range of celebs from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom offer any differences in between traditional gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among many sweepstakes casinos found online

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

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

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

Others tempt consumers with pledges of prizes. One such operator, Stake, ran a social media advertisement displaying Drake's automobiles, planes and estates before rotating to video of the rapper playing online casino-style games.

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

Another caption explained: 'Because I never quit.'

The discrepancy between gaming sites and social or sweepstakes casinos is a bit complex, but operators of the latter insist they're not included with the previous.

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

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

Social casinos use customers a possibility to play casino-style video games with good friends. Players have the choice to buy worthless currency typically described as 'gold coins,' which can not be exchanged genuine money, however can be utilized to open different functions within the video games.

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

And therein lies the potential for monetary losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York City. One player told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments 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 Global Poker event

Social sweeps casino Stake ran an advertisement displaying Drake's cars, airplanes and mansions

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

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

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

Many websites, like the crypto-compatible Stake, enable clients to submit mail-in ask for totally free sweeps coins, supplied the players follow painfully particular directions. What's more, gamers are typically rewarded with sweeps coins just for signing up, thus providing them a factor to try their hands at any number of casino video games for a possibility to win - or lose - genuine money.

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

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

'Social sweepstakes video games are merely a type of online home entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is required to play at social gambling establishments with sweepstakes prizes. Consumers never have to spend for a chance to win prizes. That absence of a purchase requirement - or" factor to consider" - is a crucial difference in between social sweeps and traditional online gaming sites like casinos.'

Think about the manner in which McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and fries that provide them the possibility to win lucrative prizes, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the video game itself doesn't fulfill the meaning of gaming in the US.

'Sweepstakes are an enduring approach for promoting all kinds of daily businesses in the United States, whatever from burgers to publication memberships to coffee and home enhancement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promos 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 market experts, that argument doesn't cut it.

For starters, gaming attorney Daniel Wallach points out, McDonald's Monopoly game does not run forever. Rather, it has a distinct start and end, consequently recommending the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being used to promote genuine items like fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're typically not tied to casino-style video games of possibility,' Wallach told DailyMail.com. 'They're just money giveaways.

'The sweepstakes [casinos] possess none of the characteristics commonly connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments offer" casino-like" payments, typically 80 percent or more of revenues, whereas the typical payout portion for a temporary promotional sweepstakes is a trivial share of the revenue earned by the business [usually less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the internet coffee shops that emerged in Florida, providing consumers the opportunity to play casino-style games for genuine prizes. Many of those brick-and-mortar establishments have because been shuttered over claims of illegal gambling.

DJ Khaled is among numerous star spokespeople for VGW's Global Poker brand

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

'These distinctions are not approximate,' Wallach said of social sweeps gambling establishments. 'They have repeatedly been cited by courts and state chief law officer as crucial aspects in figuring out that a sweepstakes promotion remained in fact a guise for prohibited gaming.'

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 brand-new legislation on the problem.

'Consumers are being denied of protections and states are giving up significant tax and profits opportunities as this gaming replaces that conducted through controlled channels,' read a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in 4 separate cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action claim, saying the settlement was made to avoid legal costs and continued lawsuits.

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

In the most recent lawsuit, which is largely comparable to its predecessors, New york city 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 gaming business. '

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

'We generally do not discuss matters before the courts,' a VGW representative 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 officially served.

'We have complete self-confidence in our compliance with all laws and guidelines where we run, and stay positive 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 decade, producing not just fantastic video games, user experiences and entertainment, however also guaranteeing this is done securely, properly and at the greatest level of requirements.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are relatively common across the online social games industry (and the US more broadly), and our basic practice is that we intend to intensely safeguard any claim which may be brought against us.'

The issues in between conventional online gambling and sweepstakes gambling establishments could show problematic for some celebrity endorsers.

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

'It's paradoxical that professional athletes are hawking illegal sports betting 'sweeps' websites while at the very same time the leagues want to forecast a strong stance versus illegal gaming - specifically when trying to tamp down the periodic sports betting scandal,' Glaser informed DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter got a lifetime restriction from the NBA over claims he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes casinos.

Together with VGW, Apple and Google are being sued for hosting presumably prohibited gambling sites

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

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

Neither an NBA representative nor the players' representatives responded 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 celeb endorsers have a duty to describe to clients the differences and resemblances between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is absolutely nothing more that requires to be done.

'We have full self-confidence in our influencer and ambassadorial collaborations, and our service 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 opponent of sweepstakes websites, sees things in a different way.

'Celebrities who lend their names to shady unlawful gaming websites are, at a minimum, putting their reputations at threat in addition to courting civil and class actions by customers who declare harm,' Glaser said. 'There is likewise some threat that state regulators and state lawyers basic rope celeb endorsers into enforcement efforts for facilitating unlawful gaming.'

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