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

No, they weren't personally in participation, however the world-famous celebs were conspicuously included in a slide discussion on social and sweepstakes casinos - the controversial sites providing both free casino-style video games and rewarding prizes, such as money, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for totally 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 many video gaming corporations, not to discuss claim complainants and state regulators, sweepstakes casinos function as traditional casinos, only without the oversight, consumer defenses and tax laws. So not only can they avoid the high 24-percent federal sports betting levy, but sweepstakes operators aren't based on regulatory difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income last year alone. Now the business faces accusations of illegal gaming in a New York claim that declares VGW uses celebrity endorsers to 'develop a veneer of authenticity' around its product. (See VGW's declaration below)

'I'm unsure" if you don't trust us, you can trust Paris Hilton" is a winning message for companies running multibillion-dollar illegal operations out of places like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of video gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of 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 differences in between standard gambling and sweepstakes play.

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

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

Drake has an offer with social sweeps casino, Stake, that he regularly touts on social networks

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Instead, ads typically center around the social element of the gambling establishments, while leaving out the capacity for actual sports betting losses.

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

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

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

The disparity between gaming sites and social or sweepstakes gambling establishments is a bit complicated, but operators of the latter insist they're not included with the former.

A spokesperson for an industry 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 playing for totally free.

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

Social gambling establishments provide customers an opportunity to play casino-style games with pals. Players have the choice to buy valueless currency frequently described as 'gold coins,' which can not be exchanged for genuine cash, however can be utilized to open various functions within the 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 money 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 gamer 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 an International Poker event

Social sweeps gambling establishment Stake ran an ad showing off Drake's cars and trucks, planes 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 7 states, which has assisted to sustain the popularity of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, allow consumers to submit mail-in requests for free sweeps coins, offered the gamers follow painfully specific guidelines. What's more, gamers are frequently rewarded with sweeps coins simply for registering, therefore providing a reason to try their hands at any number of casino 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 product is the free casino-style video gaming, and the real-stakes competition is merely a method of promoting their support.

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

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

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

'Sweepstakes are an enduring approach for promoting all type of everyday companies in the United States, everything from burgers to publication memberships to coffee and home improvement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are routinely utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of gambling industry experts, that argument doesn't cut it.

For starters, gaming attorney Daniel Wallach mentions, McDonald's Monopoly game doesn't run forever. Rather, it has a distinct beginning and end, consequently recommending the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being used to promote genuine items like french fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [gambling establishments] possess none of the attributes typically related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos offer" casino-like" payments, normally 80 percent or more of incomes, whereas the common payment percentage for a short-term promotional sweepstakes is a minor share of the earnings earned by the company [generally less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the internet coffee shops that sprang up in Florida, using clients the possibility to play casino-style games for genuine rewards. Much of those brick-and-mortar establishments have considering that been shuttered over accusations of unlawful gambling.

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

Now, Wallach argues, social sweeps gambling establishments ought to face comparable scrutiny.

'These distinctions are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been pointed out by courts and state attorney general of the United States as key consider identifying that a sweepstakes promo was in truth a guise for prohibited gambling.'

One of the casino industry's leading trade organizations, the American Gaming Association, is now pushing legislators to examine sweepstakes operators and, in some cases, enact new legislation on the issue.

'Consumers are being deprived of protections and states are giving up considerable tax and earnings chances as this sports betting changes that conducted through regulated channels,' checked out 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 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 lawsuit, saying 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 lawsuit, 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 described in the filing as an 'illegal gaming business. '

Apple and Google have actually also been named as offenders in claims for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for remark.

'We typically don't talk about matters before the courts,' a VGW spokesperson informed DailyMail.com through e-mail. 'However, we keep in mind that this claim has actually only simply been submitted with the court and VGW has not been formally served.

'We have full self-confidence in our compliance with all laws and guidelines where we run, and remain confident about the future,' the representative continued. 'We continue to provide our free-to-play video games across the majority of The United States and Canada, as we have for more than a years, developing not only excellent games, user experiences and entertainment, but also ensuring this is done safely, responsibly and at the greatest level of standards.

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

The issues in between traditional online gambling and sweepstakes casinos could show troublesome for some celeb 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 standard gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking prohibited sports betting 'sweeps' websites while at the very same time the leagues wish to project a strong stance against unlawful sports betting - particularly when trying to tamp down the periodic sports betting scandal,' Glaser told DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter received a lifetime ban from the NBA over claims he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes gambling establishments.

Together with VGW, Apple and Google are being taken legal action against for hosting apparently illegal sports betting websites

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

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

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

Asked if their celeb endorsers have a duty to describe to clients the distinctions and similarities between iGaming and sweepstakes casinos, VGW firmly insisted there is absolutely nothing more that needs to be done.

'We have full confidence in our influencer and ambassadorial partnerships, and our business 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 whatever we do.'

Glaser, an outspoken opponent of sweepstakes sites, sees things in a different way.

'Celebrities who provide their names to shady prohibited gaming sites are, at a minimum, putting their track records at danger in addition to courting civil and class actions by consumers who declare damage,' Glaser said. 'There is also some danger that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for assisting in illegal gaming.'

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