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

No, they weren't personally in participation, however the world-famous celebrities were notably consisted of in a slide discussion on social and sweepstakes casinos - the questionable sites providing both totally free casino-style games and lucrative prizes, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are simply 2 cogs in the multibillion-dollar industry that now finds itself besieged by lawsuits. In the eyes of numerous gaming corporations, not to discuss claim complainants and state regulators, sweepstakes casinos serve as traditional gambling establishments, only without the oversight, consumer defenses and tax laws. So not only can they prevent the steep 24-percent federal sports betting levy, but sweepstakes operators aren't based on regulative hurdles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the business faces allegations of prohibited sports betting in a New York suit that claims VGW uses star endorsers to 'produce a veneer of authenticity' around its item. (See VGW's declaration below)

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

Sweepstakes endorsers include a range 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 offer any distinctions between traditional gambling and sweepstakes play.

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

Ryan Seacrest urges fans to dip into Chumba Casino, where many - however not all - games are complimentary

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

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Instead, ads typically focus around the social element of the gambling establishments, while leaving out the capacity for real gaming losses.

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

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

Another caption explained: 'Because I never quit.'

The inconsistency in between gambling websites and social or sweepstakes gambling establishments is a bit complex, however operators of the latter insist they're not included with the previous.

A spokesperson for a market trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, many of the players on social-sweepstakes casinos are playing for totally free.

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

Social gambling establishments use customers a chance to play casino-style video games with friends. Players have the choice to buy valueless currency typically described as 'gold coins,' which can not be exchanged for real money, but can be used to open different features within the video games.

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

And therein lies the capacity for financial losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York. One player told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the previous year after continuing to purchase more coins in pursuit of cash and other things of worth.

The Philadelphia 76ers' Paul George is seen promoting a Worldwide Poker occasion

Social sweeps gambling establishment Stake ran an advertisement showing off Drake's vehicles, airplanes and estates

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

Traditional online gambling establishments are banned in all but seven states, which has helped to fuel the popularity of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, enable clients to send mail-in requests for totally free sweeps coins, supplied the gamers follow painfully specific guidelines. What's more, players are frequently rewarded with sweeps coins simply for signing up, thereby providing a factor to try their hands at any number of gambling establishment video games for an opportunity to win - or lose - real cash.

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

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

'Social sweepstakes video games are just a kind of online home entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is required to play at social casinos with sweepstakes prizes. Consumers never need to pay for an opportunity to win rewards. That lack of a purchase requirement - or" factor to consider" - is an essential difference between social sweeps and conventional online sports betting websites like gambling establishments.'

Consider 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 purchasing hamburgers and fries that offer them the chance to win profitable rewards, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the video game itself does not meet the meaning of sports betting in the US.

'Sweepstakes are an enduring method for promoting all sort of everyday businesses in the United States, whatever from hamburgers to publication memberships to coffee and home enhancement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are routinely utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

For starters, video gaming attorney Daniel Wallach points out, McDonald's Monopoly 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 fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're typically not tied to casino-style video games of chance,' Wallach informed DailyMail.com. 'They're just cash free gifts.

'The sweepstakes [casinos] have none of the attributes typically related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments provide" casino-like" payouts, generally 80 percent or more of revenues, whereas the typical payout percentage for a short-lived promotional sweepstakes is an insignificant share of the revenue earned by the business [typically less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the internet coffee shops that sprang up in Florida, providing customers the possibility to play casino-style games for real prizes. Many of those brick-and-mortar establishments have considering that been shuttered over claims of illegal gambling.

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

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

'These differences are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have repeatedly been mentioned by courts and state chief law officer as key factors in determining that a sweepstakes promo was in truth a guise for prohibited sports betting.'

Among the casino market's leading trade companies, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, in many cases, enact new legislation on the issue.

'Consumers are being denied of protections and states are giving up considerable tax and revenue opportunities as this gambling replaces that performed through regulated channels,' read a well-circulated AGA memo.

And then there are the complainants who have sued social gambling establishments in more than a dozen states.

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

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

In the latest claim, which is mostly comparable to its predecessors, New york city 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 'prohibited gaming enterprise. '

Apple and Google have likewise been named as offenders in claims for hosting the sweepstakes sites. But unlike VGW, neither tech business responded to DailyMail.com's ask for remark.

'We typically do not discuss matters before the courts,' a VGW representative informed DailyMail.com through email. 'However, we note that this claim has only just been submitted 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 run, and stay positive about the future,' the spokesperson continued. 'We continue to use our free-to-play video games across most of The United States and Canada, as we have for more than a years, developing not only fantastic video games, user experiences and home entertainment, however also ensuring this is done securely, responsibly and at the greatest level of requirements.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are relatively common 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 versus us.'

The issues in between conventional online sports betting and sweepstakes gambling establishments could prove bothersome for some celebrity endorsers.

Towns, a star center with the Knicks, and the 76ers' George both back VGW's Global Poker brand while the NBA is partnered with standard video gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking unlawful sports betting 'sweeps' sites while at the very same time the leagues desire to forecast a strong position versus illegal gaming - specifically when trying to tamp down the occasional gambling scandal,' Glaser informed DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter received a life time restriction from the NBA over claims 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 demanded hosting apparently prohibited gambling websites

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

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

Neither an NBA spokesperson nor the gamers' representatives reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to react to DailyMail.com e-mails.

Asked if their celebrity endorsers have a duty to discuss to clients the distinctions and resemblances in between iGaming and sweepstakes casinos, VGW insisted there is nothing more that needs to be done.

'We have full confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the spokesperson stated. 'Some of our values are" our players come first" and" we do what's right", and we put our worths at the core of everything we do.'

Glaser, an outspoken opponent of sweepstakes websites, sees things differently.

'Celebrities who lend their names to dubious prohibited gaming sites are, at a minimum, putting their reputations at risk along with courting civil and class actions by consumers who declare harm,' Glaser stated. 'There is also some threat that state regulators and state attorneys general rope star endorsers into enforcement efforts for facilitating illegal gambling.'

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