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

No, they weren't personally in presence, however the world-famous celebs were conspicuously included in a slide discussion on social and sweepstakes gambling establishments - the controversial sites providing both free casino-style video 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 'play for free,' 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 many video gaming corporations, not to point out lawsuit complainants and state regulators, sweepstakes gambling establishments function as standard gambling establishments, just without the oversight, consumer defenses and tax laws. So not only can they avoid the steep 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulative difficulties like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits last year alone. Now the company faces allegations of prohibited gaming in a New york city lawsuit that claims VGW utilizes celebrity endorsers to 'develop a veneer of legitimacy' around its product. (See VGW's statement listed below)

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

Sweepstakes endorsers consist of a variety of celebs from gambling 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 differences between conventional gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of lots of sweepstakes gambling establishments found online

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

Drake has a handle social sweeps casino, Stake, that he frequently touts on social networks

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Instead, ads generally focus around the social aspect of the casinos, while omitting the potential for actual gaming losses.

Others lure clients with guarantees of prizes. One such operator, Stake, ran a social media advertisement flaunting Drake's cars, aircrafts and mansions before rotating to video footage of the rapper playing online casino-style video games.

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

Another caption described: 'Because I never ever quit.'

The disparity between sports betting websites and social or sweepstakes gambling establishments is a bit complex, but 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), described its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, many of the gamers on social-sweepstakes casinos are sports betting totally free.

'Most social sweeps customers never make a purchase,' the SPGA representative informed DailyMail.com. 'The minority of customers who make purchases do so in amounts far smaller than the common deposit or wager size at real-money online sports betting websites.'

Social gambling establishments use customers a possibility to play casino-style games with good friends. Players have the choice to purchase worthless currency frequently described as 'gold coins,' which can not be exchanged for real money, however can be used to open various features within the video games.

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

And therein lies the capacity for monetary losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York. One gamer informed the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the past 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 casino Stake ran an ad flaunting Drake's cars, 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 but 7 states, which has assisted to sustain the popularity of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, allow clients to submit mail-in ask for complimentary sweeps coins, offered the gamers follow painfully particular instructions. What's more, gamers are often rewarded with sweeps coins merely for signing up, thereby providing a factor to try their hands at any variety of gambling establishment video games for a chance to win - or lose - real cash.

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

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

'Social sweepstakes video games are simply a form of online home entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is required to dip into social casinos with sweepstakes prizes. Consumers never have to spend for a chance to win rewards. That absence of a purchase requirement - or" factor to consider" - is an essential distinction in between social sweeps and standard online gaming websites like casinos.'

Think of the manner in which McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and fries that provide them the chance to win rewarding prizes, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the game itself doesn't satisfy the definition of gaming in the US.

'Sweepstakes are an enduring technique for promoting all kinds of daily companies in the United States, whatever from burgers to publication subscriptions to coffee and home enhancement shops,' 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 many gambling industry insiders, that argument does not cut it.

For beginners, gaming lawyer Daniel Wallach points out, McDonald's Monopoly video game does not run indefinitely. Rather, it has a distinct beginning and end, thus suggesting the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being used to promote real products like fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [gambling establishments] have none of the characteristics commonly related to McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments offer" casino-like" payments, typically 80 percent or more of profits, whereas the typical payment percentage for a temporary marketing sweepstakes is a trivial share of the revenue earned by the business [generally less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the web cafes that emerged in Florida, providing customers the possibility to play casino-style video games for genuine rewards. A lot of those brick-and-mortar facilities have because been shuttered over accusations of illegal gambling.

DJ Khaled is among a number of star spokespeople for VGW's Global Poker brand name

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

'These differences are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have consistently been mentioned by courts and state attorney general of the United States as essential elements in identifying that a sweepstakes promo remained in fact a guise for illegal gaming.'

One of the gambling establishment market's leading trade companies, the American Gaming Association, is now pressing legislators to examine sweepstakes operators and, sometimes, enact brand-new legislation on the concern.

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

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

Sweepstakes casino operators paid a combined $14.2 million in four separate cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action suit, saying the settlement was made to prevent legal costs and continued lawsuits.

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

In the current suit, which is mostly similar to its predecessors, New York state locals 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 also been called as defendants in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's demand for comment.

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

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

'More broadly, we 'd restate that class actions and other litigations and arbitrations are relatively typical across the online social video games industry (and the US more broadly), and our basic practice is that we plan to vigorously defend any claim which may be brought against us.'

The issues in between conventional online gambling and sweepstakes gambling establishments might show problematic for some celebrity 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 traditional video gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking unlawful sports betting wagering 'sweeps' websites while at the very same time the leagues wish to predict a strong position against illegal gambling - especially when trying to tamp down the periodic gaming scandal,' Glaser informed DailyMail.com.

It was simply eight months ago that Toronto Raptors forward Jontay Porter received a lifetime ban 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 taken legal action against for hosting allegedly illegal gambling sites

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

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

Neither an NBA representative 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 disregarded to react to DailyMail.com e-mails.

Asked if their star endorsers have a responsibility to describe to customers the differences and similarities in between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our organization 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 values at the core of everything we do.'

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

'Celebrities who provide their names to dubious prohibited gambling sites are, at a minimum, putting their credibilities at threat as well as courting civil and class actions by customers who declare damage,' Glaser stated. 'There is likewise some danger that state regulators and state chief law officers rope celebrity endorsers into enforcement efforts for facilitating illegal gaming.'

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