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 attendance, however the world-famous celebs were conspicuously included in a slide presentation on social and sweepstakes casinos - the questionable sites providing both totally free casino-style video games and rewarding rewards, such as money, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet free,' 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 market that now discovers itself besieged by suits. In the eyes of many gaming corporations, not to point out claim complainants and state regulators, sweepstakes gambling establishments serve as traditional casinos, only without the oversight, customer defenses and tax laws. So not only can they avoid 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 profits in 2015 alone. Now the business faces allegations of illegal gaming in a New York lawsuit that claims VGW uses star endorsers to 'develop a veneer of authenticity' around its item. (See VGW's declaration below)

'I'm not sure" if you don't trust us, you can trust Paris Hilton" is a winning message for companies running 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, informed DailyMail.com.

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

Paris Hilton is seen plugging Wow Vegas, one of many sweepstakes casinos discovered online

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

Drake has a deal with social sweeps casino, Stake, that he frequently touts on social networks

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Instead, ads usually center around the social element of the gambling establishments, while omitting the capacity for real gambling losses.

Others tempt clients with guarantees of prizes. One such operator, Stake, ran a social media ad revealing off Drake's cars, airplanes and mansions before rotating to video of the rapper playing online casino-style video games.

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

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

The discrepancy between gaming websites and social or sweepstakes gambling establishments is a bit complex, however operators of the latter insist they're not involved with the previous.

A spokesperson for a market trade group, the Social and Promotional Gaming Association (SPGA), described 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 casinos are playing for complimentary.

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

Social casinos use clients a chance to play casino-style video games with buddies. Players have the option to purchase valueless currency frequently referred to as 'gold coins,' which can not be exchanged for real money, but can be utilized to unlock numerous features within the games.

But within the world of social casinos exists sweepstakes gaming, enabling clients to get other currency known as 'sweeps coins' that can be exchanged for cash or other rewards.

And therein lies the capacity for monetary losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York. One player 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 worth.

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

Social sweeps gambling establishment Stake ran an ad flaunting Drake's cars and trucks, airplanes and estates

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 seven states, which has assisted to sustain the popularity of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, allow customers to send mail-in ask for totally free sweeps coins, offered the gamers follow painfully specific instructions. What's more, players are frequently rewarded with sweeps coins simply for signing up, consequently providing them a reason to try their hands at any number of casino games for a possibility to win - or lose - real money.

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

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

'Social sweepstakes video games are merely a form of online home entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is needed to play at social casinos with sweepstakes rewards. Consumers never need to pay for a chance to win rewards. That absence of a purchase requirement - or" factor to consider" - is an essential difference between social sweeps and conventional online gaming websites like gambling establishments.'

Think of the manner in which McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're buying hamburgers and french fries that use them the possibility to win financially rewarding rewards, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the game itself doesn't meet the definition of gambling in the US.

'Sweepstakes are a long-standing approach for promoting all type of daily services in the United States, whatever from burgers to magazine subscriptions to coffee and home enhancement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are regularly utilized 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 doesn't cut it.

For starters, gaming attorney Daniel Wallach mentions, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a distinct start and end, therefore suggesting the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being used to promote real products like french fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're usually not connected to casino-style games of chance,' Wallach informed DailyMail.com. 'They're simply cash giveaways.

'The sweepstakes [gambling establishments] have none of the qualities frequently related to McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments provide" casino-like" payments, typically 80 percent or more of earnings, whereas the typical payout percentage for a temporary marketing sweepstakes is an insignificant share of the income made by the business [typically less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the web coffee shops that sprang up in Florida, offering consumers the possibility to play casino-style video games for real prizes. A number of those brick-and-mortar facilities have considering that been shuttered over accusations of prohibited gambling.

DJ Khaled is amongst several celeb spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps casinos ought to face similar scrutiny.

'These distinctions are not approximate,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been pointed out by courts and state attorney generals as key consider identifying that a sweepstakes promo remained in truth a guise for illegal gambling.'

One of the gambling establishment industry's leading trade companies, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, sometimes, enact new legislation on the issue.

'Consumers are being denied of defenses and states are passing up considerable tax and profits chances as this sports betting replaces that carried out through regulated channels,' read a well-circulated AGA memo.

And after that there are the complainants 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 different 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, stating the settlement was made to avoid legal costs and continued litigation.

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

In the most recent claim, which is mostly similar to its predecessors, New york city state locals Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is explained in the filing as an 'unlawful sports betting enterprise. '

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

'We generally don't talk about matters before the courts,' a VGW spokesperson told DailyMail.com via email. 'However, we keep in mind that this claim has only simply been submitted with the court and VGW has actually not been formally served.

'We have full confidence in our compliance with all laws and regulations where we operate, and remain positive about the future,' the spokesperson continued. 'We continue to offer our free-to-play video games throughout most of The United States and Canada, as we have for more than a decade, producing not only excellent games, user experiences and home entertainment, but likewise guaranteeing this is done safely, properly and at the highest level of standards.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are relatively common throughout the online social games market (and the US more broadly), and our standard practice is that we intend to strongly safeguard any claim which may be brought versus us.'

The concerns in between standard online gaming and sweepstakes casinos could prove problematic for some star 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 prohibited sports betting wagering 'sweeps' websites while at the same time the leagues desire to project a strong position against illegal gambling - particularly when trying to tamp down the periodic gaming scandal,' Glaser informed DailyMail.com.

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

Along with VGW, Apple and Google are being demanded hosting allegedly prohibited sports betting websites

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

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

Neither an NBA spokesperson nor the players' representatives reacted to DailyMail.com's demands for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise disregarded to respond to DailyMail.com emails.

Asked if their celebrity endorsers have an obligation to discuss to consumers the distinctions and resemblances between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that needs to be done.

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our business practices more broadly,' the spokesperson stated. 'A few of our values are" our players come initially" 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 provide their names to dubious illegal sports betting websites are, at a minimum, putting their credibilities at risk as well as courting civil and class actions by customers who declare harm,' Glaser stated. 'There is likewise some danger that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for helping with prohibited gaming.'

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