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

No, they weren't personally in presence, but the world-famous celebs were conspicuously consisted of in a slide presentation on social and sweepstakes casinos - the controversial websites offering both free casino-style video games and profitable prizes, such as money, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for 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 suits. In the eyes of lots of video gaming corporations, not to mention lawsuit complainants and state regulators, sweepstakes gambling establishments serve as traditional gambling establishments, just without the oversight, consumer protections and tax laws. So not only can they avoid the high 24-percent federal gambling levy, however sweepstakes operators aren't based on regulatory obstacles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings last year alone. Now the company deals with accusations of unlawful gambling in a New york city lawsuit that claims VGW uses star endorsers to 'produce a veneer of authenticity' around its product. (See VGW's statement below)

'I'm unsure" if you don't trust us, you can rely on Paris Hilton" is a winning message for business running multibillion-dollar prohibited 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 celebs from gambling enthusiasts 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 traditional gambling and sweepstakes play.

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

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

Drake has a handle social sweeps gambling establishment, Stake, that he regularly promotes on social media

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Instead, ads normally focus around the social element of the gambling establishments, while leaving out the potential for actual sports betting losses.

Others tempt consumers with pledges of prizes. One such operator, Stake, ran a social media advertisement displaying Drake's vehicles, aircrafts and mansions before rotating to video footage of the rapper playing online casino-style games.

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

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

The disparity in between sports betting sites and social or sweepstakes casinos is a bit complicated, but operators of the latter insist they're not involved with the former.

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

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

Social gambling establishments use clients a chance to play casino-style video games with pals. Players have the choice to purchase valueless currency typically described as 'gold coins,' which can not be exchanged for genuine cash, however can be used to unlock numerous functions within the games.

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

And therein lies the capacity for financial losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York City. 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 a Global Poker event

Social sweeps gambling establishment Stake ran an advertisement revealing off Drake's automobiles, airplanes and mansions

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

Traditional online casinos are prohibited in all but seven states, which has assisted to fuel the appeal of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes websites, which don't require generally need recognition. However, websites like Chumba will request for IDs from players attempting to withdraw any funds.

Many sites, like the crypto-compatible Stake, allow customers to send mail-in requests for complimentary sweeps coins, offered the gamers follow painfully particular directions. What's more, gamers are frequently rewarded with sweeps coins just for signing up, thereby providing a factor to try their hands at any number of casino games for a chance to win - or lose - genuine cash.

So why are sweepstakes websites enabled to run in 48 states, while online gambling establishments are prohibited in all but 7?

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

'Social sweepstakes games are just a type of online entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is required to play at social casinos with sweepstakes prizes. Consumers never have to pay for an opportunity to win prizes. That absence of a purchase requirement - or" factor to consider" - is an important difference in between social sweeps and conventional online gambling websites like gambling establishments.'

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

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

'Sweepstakes are an enduring method for promoting all sort of everyday companies in the United States, everything from burgers to magazine subscriptions to coffee and home enhancement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are routinely utilized by a who's who of household 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, video gaming lawyer Daniel Wallach points out, McDonald's Monopoly video game does not run forever. Rather, it has a distinct start and end, thereby recommending the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being used to promote genuine products like french fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're usually not tied to casino-style games of possibility,' Wallach informed DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [gambling establishments] possess none of the attributes frequently associated with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos provide" casino-like" payouts, generally 80 percent or more of incomes, whereas the typical payment portion for a short-lived marketing sweepstakes is an unimportant share of the income earned by the company [generally less than one percent]'

Wallach is quick to liken the online social sweeps casinos to the internet cafes that emerged in Florida, providing clients the chance to play casino-style games for real prizes. Much of those brick-and-mortar facilities have actually since been shuttered over accusations of unlawful sports betting.

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

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

'These differences are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have actually repeatedly been pointed out by courts and state attorney general of the United States as crucial consider figuring out that a sweepstakes promotion was in reality a guise for prohibited sports betting.'

Among the casino industry's leading trade companies, the American Gaming Association, is now pressing lawmakers to investigate sweepstakes operators and, in some cases, enact brand-new legislation on the problem.

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

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in four separate cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action claim, saying the settlement was made to prevent legal costs and continued litigation.

Michael Phelps has actually signed a deal with the VGW Group, which owns Global Poker

In the current lawsuit, which is largely similar to its predecessors, New York state citizens Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'illegal gaming business. '

Apple and Google have actually also been called as offenders in lawsuits for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's demand for comment.

'We generally do not discuss matters before the courts,' a VGW representative told DailyMail.com via e-mail. 'However, we keep in mind that this claim has actually only just been filed with the court and VGW has actually not been officially served.

'We have complete confidence in our compliance with all laws and policies where we operate, and remain confident about the future,' the spokesperson continued. 'We continue to offer our free-to-play video games throughout many of The United States and Canada, as we have for more than a years, creating not just excellent games, user experiences and home entertainment, but also guaranteeing this is done safely, properly and at the highest level of requirements.

'More broadly, we 'd repeat 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 intensely defend any claim which may be brought versus us.'

The issues in between conventional online gambling and sweepstakes casinos could prove troublesome 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 video 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 forecast a strong stance against illegal sports betting - especially when attempting to tamp down the periodic gambling scandal,' Glaser informed DailyMail.com.

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

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

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

'I 'd anticipate that a league crackdown on professional athletes backing sweepstakes websites refers 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 respond to DailyMail.com emails.

Asked if their star endorsers have a duty to describe to consumers the differences and resemblances between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that requires to be done.

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our organization practices more broadly,' the representative stated. 'A few of our values 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 websites, sees things differently.

'Celebrities who lend their names to shady unlawful gambling sites are, at a minimum, putting their reputations at risk in addition to courting civil and class actions by consumers who declare damage,' Glaser said. 'There is likewise some danger that state regulators and state chief law officers rope star endorsers into enforcement efforts for assisting in unlawful gaming.'

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