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

No, they weren't personally in participation, however the world-famous celebs were notably consisted of in a slide presentation on social and sweepstakes gambling establishments - the questionable websites using both free casino-style games and financially rewarding rewards, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are just 2 cogs in the multibillion-dollar industry that now finds itself besieged by claims. In the eyes of lots of video gaming corporations, not to discuss suit plaintiffs and state regulators, sweepstakes gambling establishments function as conventional gambling establishments, only without the oversight, customer defenses and tax laws. So not just can they avoid the steep 24-percent federal sports betting levy, but sweepstakes operators aren't subject to regulative hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the company deals with allegations of prohibited gambling in a New York claim that claims VGW uses celebrity endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's statement listed below)

'I'm not exactly sure" if you don't trust us, you can trust Paris Hilton" is a winning message for business operating multibillion-dollar prohibited operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers include a variety of celebrities from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions between traditional sports betting and sweepstakes play.

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

Ryan Seacrest urges fans to play at Chumba Casino, where lots of - but not all - games are free

Drake has a deal with social sweeps casino, Stake, that he routinely touts on social networks

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Instead, advertisements generally center around the social aspect of the gambling establishments, while leaving out the capacity for actual gaming losses.

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

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

Another caption explained: 'Because I never quit.'

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

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA information, most of the players on social-sweepstakes casinos are playing for free.

'Most social sweeps consumers never ever purchase,' the SPGA representative told DailyMail.com. 'The minority of customers who make purchases do so in quantities far smaller than the typical deposit or wager size at real-money online gambling websites.'

Social gambling establishments offer clients a possibility to play casino-style video games with buddies. Players have the option to purchase valueless currency often referred to as 'gold coins,' which can not be exchanged for genuine money, but can be utilized to unlock numerous features within the games.

But within the world of social casinos exists sweepstakes video gaming, permitting customers to get other currency called 'sweeps coins' that can be exchanged for cash or other prizes.

And therein lies the potential for monetary 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 an International Poker occasion

Social sweeps gambling establishment Stake ran an ad displaying Drake's cars, 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 however seven states, which has actually assisted to fuel the popularity of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, enable customers to send mail-in demands for complimentary sweeps coins, offered the gamers follow painfully particular instructions. What's more, gamers are typically rewarded with sweeps coins just for signing up, consequently offering them a factor to attempt their hands at any variety of casino games for an opportunity to win - or lose - real cash.

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

According to the stakeholders, their product is the free casino-style gaming, and the real-stakes competitors is just a method of promoting their support.

'Social sweepstakes games are simply a kind of online home entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is needed to play at social gambling establishments with sweepstakes rewards. Consumers never have to spend for a chance to win rewards. That absence of a purchase requirement - or" factor to consider" - is an essential difference in between social sweeps and conventional online sports betting sites like casinos.'

Consider the method that McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to gamble, however rather they're buying hamburgers and fries that offer them the opportunity to win lucrative rewards, such as a $1 million prize.

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

'Sweepstakes are a long-standing method for promoting all type of everyday businesses in the United States, whatever from hamburgers to magazine subscriptions to coffee and home improvement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are regularly utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many gambling market insiders, that argument does not cut it.

For starters, gaming attorney Daniel Wallach points out, McDonald's Monopoly video game does not run forever. Rather, it has a well-defined start and end, thereby recommending the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being used to promote real items like fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're typically not connected to casino-style games of possibility,' Wallach told DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [casinos] possess none of the attributes commonly associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments provide" casino-like" payments, generally 80 percent or more of earnings, whereas the common payment percentage for a short-term advertising sweepstakes is a trivial share of the profits earned by the company [usually less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, providing consumers the opportunity to play casino-style video games for real rewards. A number of those brick-and-mortar establishments have actually since been shuttered over claims of illegal sports betting.

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

Now, Wallach argues, social sweeps gambling establishments must face similar scrutiny.

'These distinctions are not arbitrary,' Wallach said of social sweeps casinos. 'They have actually consistently been cited by courts and state attorney general of the United States as crucial elements in determining that a sweepstakes promotion remained in fact a guise for prohibited gaming.'

One of the gambling establishment industry's leading trade companies, the American Gaming Association, is now pressing lawmakers to investigate sweepstakes operators and, in many cases, enact new legislation on the issue.

'Consumers are being deprived of protections and states are passing up significant tax and earnings opportunities as this gambling replaces that performed through managed channels,' read a well-circulated AGA memo.

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

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

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

In the current lawsuit, which is mostly comparable to its predecessors, New York state homeowners Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited gambling enterprise. '

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

'We usually don't comment on matters before the courts,' a VGW spokesperson informed DailyMail.com through e-mail. 'However, we note that this claim has only simply been filed with the court and VGW has actually not been officially served.

'We have full confidence in our compliance with all laws and regulations where we run, and remain confident about the future,' the spokesperson continued. 'We continue to use our free-to-play video games across many of The United States and Canada, as we have for more than a decade, producing not only fantastic games, user experiences and entertainment, however also guaranteeing this is done securely, properly and at the highest level of requirements.

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

The problems in between conventional online gaming and sweepstakes casinos might show troublesome 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 video gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking illegal sports betting 'sweeps' websites while at the same time the leagues desire to predict a strong position against unlawful gaming - specifically when attempting to tamp down the occasional gaming scandal,' Glaser told DailyMail.com.

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

Along with VGW, Apple and Google are being taken legal action against for hosting apparently prohibited gambling websites

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

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

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

Asked if their star endorsers have an obligation to describe to customers the distinctions and similarities in between iGaming and sweepstakes gambling establishments, VGW insisted there is absolutely nothing more that requires to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the spokesperson stated. 'A few of our values are" our players precede" and" we do what's right", and we put our worths at the core of whatever we do.'

Glaser, an outspoken challenger of sweepstakes sites, sees things differently.

'Celebrities who provide their names to shady prohibited sports betting sites are, at a minimum, putting their reputations at risk in addition to courting civil and class actions by consumers who allege harm,' Glaser said. 'There is also some danger that state regulators and state attorneys basic rope celeb endorsers into enforcement efforts for facilitating illegal sports betting.'

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