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

No, they weren't personally in presence, however the world-famous celebs were notably included in a slide presentation on social and sweepstakes casinos - the controversial websites using both complimentary casino-style video games and financially rewarding rewards, such as money, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

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

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the company deals with allegations of prohibited sports betting in a New york city claim that claims VGW uses star endorsers to 'create a veneer of legitimacy' around its product. (See VGW's statement below)

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

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

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

Ryan Seacrest advises fans to play at Chumba Casino, where lots of - but not all - video games are complimentary

Drake has an offer with social sweeps gambling establishment, Stake, that he frequently touts on social media

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Instead, ads generally focus around the social element of the gambling establishments, while leaving out the capacity for actual gambling losses.

Others lure clients with pledges of prizes. One such operator, Stake, ran a social networks advertisement revealing off Drake's cars and trucks, airplanes and estates before rotating to video footage of the rap artist playing online casino-style video games.

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

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

The discrepancy between gaming sites and social or sweepstakes casinos is a bit complicated, but 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), explained its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA information, many of the players on social-sweepstakes casinos are sports betting complimentary.

'Most social sweeps consumers never ever buy,' the SPGA spokesperson informed DailyMail.com. 'The minority of consumers who make purchases do so in amounts far smaller than the typical deposit or bet size at real-money online gambling websites.'

Social gambling establishments use clients an opportunity to play casino-style video games with friends. Players have the option to purchase valueless currency typically described as 'gold coins,' which can not be exchanged genuine cash, however can be utilized to open different functions within the video games.

But within the world of social casinos exists sweepstakes video gaming, allowing consumers to obtain 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 told the Washington Post he lost more than $100,000 on sweepstakes casinos in the previous year after continuing to purchase more coins in pursuit of cash and other things of value.

The Philadelphia 76ers' Paul George is seen promoting an International Poker event

Social sweeps casino Stake ran an ad revealing off Drake's vehicles, aircrafts 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 helped to fuel the appeal of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes sites, which do not need usually require recognition. However, websites like Chumba will request for IDs from players attempting to withdraw any funds.

Many websites, like the crypto-compatible Stake, permit consumers to send mail-in demands for complimentary sweeps coins, supplied the gamers follow painfully specific instructions. What's more, players are frequently rewarded with sweeps coins simply for signing up, therefore offering them a factor to try their hands at any number of casino video games for an opportunity to win - or lose - genuine money.

So why are sweepstakes websites permitted to operate in 48 states, while online gambling establishments are banned in all but 7?

According to the stakeholders, their item is the complimentary casino-style video gaming, and the real-stakes competition is just a method of promoting their bread and butter.

'Social sweepstakes video games are just a type of online entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is needed to play at social gambling establishments with sweepstakes rewards. Consumers never ever have to spend for a chance to win prizes. That lack of a purchase requirement - or" consideration" - is an essential difference in between social sweeps and conventional online gaming websites like casinos.'

Consider the way that McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and fries that use them the possibility to win rewarding rewards, such as a $1 million prize.

And without a purchase requirement, or 'factor to consider', the video game itself doesn't satisfy the definition of gaming in the US.

'Sweepstakes are an enduring method for promoting all sort of daily services in the United States, whatever from hamburgers to magazine subscriptions to coffee and home improvement stores,' the SPGA representative 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 numerous sports betting market experts, that argument does not cut it.

For beginners, video gaming attorney Daniel Wallach mentions, McDonald's Monopoly video game doesn't run forever. Rather, it has a well-defined beginning and end, thus 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 generally not connected to casino-style video games of possibility,' Wallach informed DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [casinos] have none of the characteristics frequently related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments provide" casino-like" payouts, normally 80 percent or more of profits, whereas the common payment percentage for a short-lived marketing sweepstakes is an unimportant share of the profits earned by the company [typically less than one percent]'

Wallach is fast to compare the online social sweeps gambling establishments to the internet coffee shops that emerged in Florida, offering consumers the chance to play casino-style games for genuine prizes. A number of those brick-and-mortar establishments have considering that been shuttered over accusations of unlawful gaming.

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

Now, Wallach argues, social sweeps gambling establishments ought to face comparable examination.

'These distinctions are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have consistently been pointed out by courts and state attorney general of the United States as crucial consider determining that a sweepstakes promo was in fact a guise for prohibited gambling.'

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

'Consumers are being deprived of protections and states are forgoing considerable tax and profits opportunities as this sports betting replaces that carried out through managed channels,' read a well-circulated AGA memo.

And then there are the complainants who have actually taken legal action against social gambling establishments in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in four different cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action suit, stating the settlement was made to avoid legal expenses and continued litigation.

Michael Phelps has signed an offer with the VGW Group, which owns Global Poker

In the latest suit, which is mainly 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 described in the filing as an 'prohibited sports betting business. '

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

'We normally don't comment on matters before the courts,' a VGW representative told DailyMail.com through email. 'However, we keep in mind that this claim has only just been filed with the court and VGW has not been formally served.

'We have complete confidence in our compliance with all laws and regulations where we operate, and remain confident about the future,' the spokesperson continued. 'We continue to use our free-to-play video games throughout many of North America, as we have for more than a years, developing not only fantastic games, user experiences and entertainment, however also ensuring this is done securely, properly and at the highest level of requirements.

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

The issues in between standard online gaming and sweepstakes casinos might show 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 paradoxical that expert athletes are hawking unlawful sports betting wagering 'sweeps' sites while at the same time the leagues wish to predict a strong position versus prohibited sports betting - specifically when trying to tamp down the periodic gambling scandal,' Glaser informed DailyMail.com.

It was simply eight 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 gambling establishments.

Along with VGW, Apple and Google are being demanded hosting supposedly prohibited gambling sites

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

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

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

Asked if their celeb endorsers have an obligation to describe to customers the differences and resemblances in between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial collaborations, and our organization practices more broadly,' the representative said. 'Some of our worths 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 opponent of sweepstakes sites, sees things in a different way.

'Celebrities who lend their names to dubious prohibited sports betting websites are, at a minimum, putting their reputations at risk in addition to courting civil and class actions by consumers who declare harm,' Glaser said. 'There is also some threat that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for assisting in prohibited sports betting.'

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