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

No, they weren't personally in participation, but the world-famous stars were conspicuously included in a slide presentation on social and sweepstakes gambling establishments - the questionable websites offering both free casino-style games and profitable rewards, such as cash, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet complimentary,' 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 industry that now finds itself besieged by lawsuits. In the eyes of numerous video gaming corporations, not to point out suit plaintiffs and state regulators, sweepstakes casinos act as standard casinos, only without the oversight, consumer protections and tax laws. So not only can they avoid the high 24-percent federal sports betting levy, but sweepstakes operators aren't based on 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 unlawful gambling in a New York lawsuit that declares VGW uses celebrity endorsers to 'produce a veneer of authenticity' around its item. (See VGW's statement listed below)

'I'm not exactly sure" if you do not trust us, you can rely on Paris Hilton" is a winning message for companies operating multibillion-dollar prohibited 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 celebs from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions 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 free

Drake has an offer with social sweeps gambling establishment, Stake, that he routinely promotes on social media

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Instead, advertisements typically center around the social element of the gambling establishments, while omitting the potential for real sports betting losses.

Others tempt clients with promises of rewards. One such operator, Stake, ran a social networks ad displaying Drake's cars, aircrafts and estates before rotating to footage of the rapper playing online casino-style games.

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

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

The inconsistency in between gaming sites and social or sweepstakes gambling establishments is a bit complicated, 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), described its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA data, many of the gamers on social-sweepstakes casinos are sports betting complimentary.

'Most social sweeps consumers never ever buy,' the SPGA representative informed DailyMail.com. 'The minority of customers who make purchases do so in amounts far smaller sized than the common deposit or wager size at real-money online gambling sites.'

Social gambling establishments offer clients an opportunity to play casino-style video games with good friends. Players have the option to purchase worthless currency frequently described as 'gold coins,' which can not be exchanged genuine cash, but can be utilized to unlock various functions within the games.

But within the world of social gambling establishments exists sweepstakes video gaming, allowing consumers to get other currency called 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the capacity for financial losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York. One gamer 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 money and other things of worth.

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

Social sweeps casino Stake ran an advertisement displaying Drake's cars and trucks, aircrafts 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 actually assisted to sustain the popularity of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, enable clients to send mail-in requests for totally free sweeps coins, supplied the players follow painfully particular guidelines. What's more, players are often rewarded with sweeps coins just for registering, therefore giving them a reason to attempt their hands at any number of gambling establishment video games for a chance to win - or lose - real money.

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

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

'Social sweepstakes video games are simply a type of online entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is required to dip into social casinos with sweepstakes rewards. Consumers never ever have to spend for an opportunity to win prizes. That absence of a purchase requirement - or" factor to consider" - is a crucial difference in between social sweeps and standard online gaming sites like casinos.'

Think of the way that McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and fries that use them the opportunity to win lucrative rewards, such as a $1 million jackpot.

And without a purchase requirement, or 'factor to consider', the game itself does not satisfy the meaning of gaming in the US.

'Sweepstakes are an enduring approach for promoting all type of daily companies in the United States, whatever from burgers to magazine subscriptions to coffee and home improvement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are frequently used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling market experts, that argument doesn't cut it.

For starters, gaming lawyer Daniel Wallach points out, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a distinct beginning and end, thereby recommending the sweepstakes is not the fast-food giant's main product. 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 tied to casino-style video games of opportunity,' Wallach informed DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [casinos] possess none of the characteristics commonly connected with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments offer" casino-like" payments, usually 80 percent or more of revenues, whereas the typical payout portion for a short-term promotional sweepstakes is an insignificant share of the profits earned by the company [generally less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the web cafes that sprang up in Florida, using clients the opportunity to play casino-style video games for genuine prizes. A number of those brick-and-mortar establishments have considering that been shuttered over claims of unlawful sports betting.

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

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

'These differences are not arbitrary,' Wallach said of social sweeps casinos. 'They have actually repeatedly been cited by courts and state attorney general of the United States as essential factors in identifying that a sweepstakes promotion was in reality a guise for prohibited gambling.'

One of the casino industry's leading trade organizations, the American Gaming Association, is now pressing legislators to investigate sweepstakes operators and, in many cases, enact brand-new legislation on the concern.

'Consumers are being denied of protections and states are passing up substantial tax and earnings opportunities as this sports betting changes that conducted through controlled channels,' checked out a well-circulated AGA memo.

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

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

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

In the most current suit, which is mainly similar to its predecessors, New York state homeowners Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited gaming business. '

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

'We generally don't comment on matters before the courts,' a VGW spokesperson informed DailyMail.com through e-mail. 'However, we keep in mind that this claim has only simply been submitted with the court and VGW has not been formally served.

'We have full self-confidence in our compliance with all laws and guidelines where we operate, and stay confident about the future,' the representative continued. 'We continue to offer our free-to-play games across the majority of North America, as we have for more than a years, developing not only fantastic video games, user experiences and entertainment, however likewise guaranteeing this is done securely, responsibly and at the greatest level of standards.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are reasonably typical throughout the online social games market (and the US more broadly), and our standard practice is that we intend to strongly protect any claim which might be brought against us.'

The issues between conventional online gaming and sweepstakes gambling establishments might prove problematic for some celeb 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 conventional video gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking illegal sports betting wagering 'sweeps' websites while at the very same time the leagues wish to predict a strong stance against illegal sports betting - specifically when attempting to tamp down the occasional gaming scandal,' Glaser informed DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter got a lifetime restriction from the NBA over accusations he conspired with gamblers. 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 apparently unlawful gambling websites

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

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

Neither an NBA spokesperson nor the players' agents reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise neglected to react to DailyMail.com emails.

Asked if their celebrity endorsers have a duty to discuss to consumers the distinctions and similarities between iGaming and sweepstakes casinos, VGW firmly 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. 'Some of our values are" our gamers 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 in a different way.

'Celebrities who lend their names to shady illegal gaming websites are, at a minimum, putting their reputations at danger in addition to courting civil and class actions by customers who declare harm,' Glaser said. 'There is also some danger that state regulators and state lawyers general rope star endorsers into enforcement efforts for assisting in unlawful gambling.'

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