The smiling faces of Paris Hilton and Ryan Seacrest made surprise appearances 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 notably consisted of in a slide discussion on social and sweepstakes casinos - the controversial websites providing both free casino-style games and rewarding prizes, such as cash, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are simply two cogs in the multibillion-dollar industry that now discovers itself besieged by claims. In the eyes of many video gaming corporations, not to point out suit plaintiffs and state regulators, sweepstakes casinos serve as conventional casinos, just without the oversight, customer securities and tax laws. So not just can they prevent the high 24-percent federal gaming levy, however 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 income in 2015 alone. Now the company deals with accusations of illegal sports betting in a New york city suit that claims VGW uses star endorsers to 'create a veneer of authenticity' 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 companies operating multibillion-dollar illegal operations out of places like Malta, Isle of Man, or US mail drops,' Friday's speaker, 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, along with NBA stars Karl-Anthony Towns and Paul George - none of whom offer any differences between conventional sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among numerous sweepstakes gambling establishments found online

Ryan Seacrest prompts fans to dip into Chumba Casino, where lots of - however not all - games are complimentary

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

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Instead, advertisements usually focus around the social element of the casinos, while leaving out the potential for real sports betting losses.

Others tempt customers with guarantees of prizes. One such operator, Stake, ran a social networks ad flaunting Drake's vehicles, aircrafts and mansions before rotating to video of the rapper playing online casino-style video games.

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

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

The discrepancy in between sports betting websites and social or sweepstakes casinos is a bit complicated, however 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), described its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, the majority of the gamers on social-sweepstakes gambling establishments are sports betting complimentary.

'Most social sweeps clients never ever purchase,' the SPGA spokesperson told DailyMail.com. 'The minority of customers who make purchases do so in amounts far smaller sized than the common deposit or bet size at real-money online gaming websites.'

Social gambling establishments provide clients an opportunity to play casino-style games with good friends. Players have the alternative to purchase valueless currency typically described as 'gold coins,' which can not be exchanged for real cash, however can be utilized to unlock numerous functions within the games.

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

And therein lies the potential for financial 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 past year after continuing to buy 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 displaying Drake's automobiles, aircrafts and mansions

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

Traditional online casinos are banned in all however seven states, which has actually helped to sustain the popularity of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes sites, which don't need normally need recognition. However, websites like Chumba will ask for IDs from players trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, allow consumers to submit mail-in ask for free sweeps coins, provided the players follow painfully specific directions. What's more, players are typically rewarded with sweeps coins just for registering, thus offering them a factor 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 websites permitted to run in 48 states, while online gambling establishments are banned in all however 7?

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

'Social sweepstakes video games are just a type of online entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is needed to dip into social casinos with sweepstakes prizes. Consumers never have to pay for an opportunity to win prizes. That lack of a purchase requirement - or" factor to consider" - is a vital distinction between social sweeps and conventional online sports betting sites like gambling establishments.'

Think of the manner in which McDonald's uses its yearly Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and french 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 does not fulfill the meaning of gaming in the US.

'Sweepstakes are an enduring technique for promoting all sort of daily companies in the United States, whatever from hamburgers to publication subscriptions to coffee and home improvement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are frequently 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 industry insiders, that argument does not cut it.

For starters, gaming attorney Daniel Wallach points out, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a distinct start and end, thus recommending the sweepstakes is not the fast-food giant's primary 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 connected to casino-style video games of possibility,' Wallach told DailyMail.com. 'They're simply money free gifts.

'The sweepstakes [casinos] possess none of the qualities commonly associated with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments offer" casino-like" payments, usually 80 percent or more of profits, whereas the typical payout percentage for a temporary advertising sweepstakes is a minor share of the revenue made by the company [generally less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the internet coffee shops that emerged in Florida, providing customers the opportunity to play casino-style games for real rewards. A lot of those brick-and-mortar establishments have actually because been shuttered over allegations of illegal sports betting.

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

Now, Wallach argues, social sweeps gambling establishments need to face similar examination.

'These distinctions are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have repeatedly been cited by courts and state chief law officer as key consider identifying that a sweepstakes promo remained in truth a guise for illegal sports betting.'

Among the casino industry's leading trade companies, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, sometimes, enact brand-new legislation on the concern.

'Consumers are being denied of protections and states are forgoing substantial tax and revenue chances as this gambling changes that performed through managed channels,' checked out a well-circulated AGA memo.

And then there are the complainants who have sued social casinos in more than a lots states.

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

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

In the most recent suit, which is largely similar to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is described in the filing as an 'illegal sports betting business. '

Apple and Google have actually likewise been called as accuseds in suits for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's ask for comment.

'We typically don't talk about matters before the courts,' a VGW representative informed DailyMail.com by means of e-mail. 'However, we note that this claim has only simply been submitted with the court and VGW has not been officially served.

'We have complete self-confidence in our compliance with all laws and policies where we run, and stay confident about the future,' the representative continued. 'We continue to provide our free-to-play video games across the majority of North America, as we have for more than a years, producing not only excellent video games, user experiences and home entertainment, however likewise guaranteeing this is done safely, properly and at the greatest level of requirements.

'More broadly, we 'd reiterate 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 plan to intensely protect any claim which may be brought against us.'

The concerns between standard online sports betting and sweepstakes casinos might prove troublesome 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 illegal sports betting 'sweeps' websites while at the exact same time the leagues wish to forecast a strong position against illegal sports betting - especially when trying to tamp down the occasional gaming scandal,' Glaser informed DailyMail.com.

It was simply eight months ago that Toronto Raptors forward Jontay Porter received a life time restriction from the NBA over allegations he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes casinos.

Along with VGW, Apple and Google are being sued for hosting presumably illegal gambling websites

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

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

Neither an NBA spokesperson nor the gamers' agents responded to DailyMail.com's requests 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 a duty to explain to consumers the differences and similarities between iGaming and sweepstakes casinos, VGW insisted there is nothing more that needs to be done.

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our service practices more broadly,' the representative stated. 'A few of our worths are" our players precede" and" we do what's right", and we put our values at the core of everything we do.'

Glaser, an outspoken challenger of sweepstakes websites, sees things in a different way.

'Celebrities who provide their names to shady prohibited sports betting sites are, at a minimum, putting their credibilities at threat as well as courting civil and class actions by customers who declare harm,' Glaser stated. 'There is also some risk that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for helping with illegal gaming.'

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