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 participation, but the world-famous celebrities were conspicuously included in a slide presentation on social and sweepstakes gambling establishments - the controversial websites using both totally free casino-style games and lucrative prizes, such as money, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet 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 finds itself besieged by claims. In the eyes of many video gaming corporations, not to point out suit complainants and state regulators, sweepstakes gambling establishments act as traditional gambling establishments, only without the oversight, consumer defenses and tax laws. So not just can they prevent the high 24-percent federal gambling levy, but sweepstakes operators aren't based on regulatory hurdles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the company deals with allegations of illegal gambling in a New york city lawsuit that claims VGW uses star endorsers to 'produce a veneer of legitimacy' around its item. (See VGW's declaration listed below)

'I'm not sure" if you don't 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 video gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers consist of a variety of stars 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 provide any distinctions between traditional gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of numerous sweepstakes gambling establishments discovered online

Ryan Seacrest advises fans to play at Chumba Casino, where many - but not all - video games are totally free

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

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Instead, advertisements usually center around the social aspect of the gambling establishments, while omitting the potential for real gaming losses.

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

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

Another caption described: 'Because I never offered up.'

The disparity in between gaming websites and social or sweepstakes casinos is a bit intricate, however operators of the latter insist they're not involved with the former.

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

'Most social sweeps clients never buy,' the SPGA spokesperson 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 sports betting websites.'

Social gambling establishments offer consumers an opportunity to play casino-style games with pals. Players have the option to buy valueless currency frequently referred to as 'gold coins,' which can not be exchanged genuine cash, but can be used to unlock numerous features within the video games.

But within the world of social casinos exists sweepstakes video gaming, permitting consumers to get other currency referred to as 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the potential for monetary losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York. One gamer told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the past year after continuing to purchase more coins in pursuit of money and other things of value.

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

Social sweeps casino Stake ran an ad revealing off Drake's vehicles, planes and mansions

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

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

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

Many sites, like the crypto-compatible Stake, allow consumers to send mail-in demands for free sweeps coins, provided the players follow painfully particular instructions. What's more, gamers are often rewarded with sweeps coins simply for registering, thereby providing a factor to try their hands at any number of gambling establishment video games for a possibility to win - or lose - genuine cash.

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

According to the stakeholders, their item is the free casino-style video gaming, and the real-stakes competition is merely a means of promoting their support.

'Social sweepstakes video games are just a type of online entertainment,' an SPGA representative told DailyMail.com by e-mail. 'No purchase is needed to dip into social casinos with sweepstakes prizes. Consumers never ever need to spend for an opportunity to win prizes. That absence of a purchase requirement - or" factor to consider" - is an essential distinction between social sweeps and conventional online gaming websites like gambling establishments.'

Think of the manner in which 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 opportunity to win financially rewarding prizes, such as a $1 million jackpot.

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

'Sweepstakes are an enduring method for promoting all sort of daily companies in the United States, whatever from hamburgers to magazine subscriptions to coffee and home improvement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are regularly used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For starters, gaming attorney Daniel Wallach explains, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a well-defined start and end, consequently recommending 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 forever and they're typically not connected to casino-style games of opportunity,' Wallach informed DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [gambling establishments] have none of the qualities typically associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments provide" casino-like" payouts, typically 80 percent or more of profits, whereas the typical payout percentage for a short-lived marketing sweepstakes is an insignificant share of the income earned by the company [typically less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the web cafes that emerged in Florida, offering consumers the chance to play casino-style games for real rewards. Many of those brick-and-mortar facilities have actually since been shuttered over claims of prohibited sports betting.

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

Now, Wallach argues, social sweeps gambling establishments need to deal with similar analysis.

'These differences are not approximate,' Wallach said of social sweeps gambling establishments. 'They have repeatedly been mentioned by courts and state chief law officer as key consider figuring out that a sweepstakes promo remained in reality a guise for prohibited sports betting.'

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

'Consumers are being deprived of protections and states are passing up significant tax and income opportunities as this sports betting changes that conducted through regulated channels,' read a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action suit, stating the settlement was made to prevent legal expenses and continued lawsuits.

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

In the most recent suit, which is largely comparable to its predecessors, New York state residents Lamar Prater and Rebecca Pratt both claim to have 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 named as offenders in suits for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's ask for remark.

'We normally don't talk about 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 filed with the court and VGW has actually not been officially served.

'We have full confidence in our compliance with all laws and policies where we operate, and remain confident about the future,' the spokesperson continued. 'We continue to use our free-to-play games across the majority of The United States and Canada, as we have for more than a years, developing not just great video games, user experiences and entertainment, however likewise guaranteeing this is done safely, properly and at the greatest level of standards.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are fairly common throughout the online social video games market (and the US more broadly), and our basic practice is that we intend to intensely safeguard any claim which might be brought against us.'

The problems between traditional online gambling and sweepstakes casinos could show problematic for some celeb endorsers.

Towns, a star center with the Knicks, and the 76ers' George both endorse VGW's Global Poker brand name 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' sites while at the very same time the leagues want to project a strong stance versus prohibited gambling - especially when attempting to tamp down the occasional gaming scandal,' Glaser informed DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter received a lifetime restriction from the NBA over accusations he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes gambling establishments.

Along with VGW, Apple and Google are being sued for hosting supposedly prohibited sports betting sites

Regardless, Glaser sees sweepstakes casinos as a significant issue for leagues such as the NBA.

'I 'd anticipate that a league crackdown on professional athletes endorsing sweepstakes websites refers when, not if,' Glaser added.

Neither an NBA spokesperson nor the gamers' representatives responded to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also disregarded to react to DailyMail.com emails.

Asked if their celebrity endorsers have a responsibility to explain to clients 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 partnerships, and our company practices more broadly,' the spokesperson said. 'A few of our values 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 lend their names to shady prohibited gaming websites are, at a minimum, putting their credibilities at risk along with courting civil and class actions by consumers who declare harm,' Glaser stated. 'There is likewise some risk that state regulators and state chief law officers rope celeb endorsers into enforcement efforts for facilitating prohibited sports betting.'

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