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

No, they weren't personally in participation, however the world-famous stars were conspicuously consisted of in a slide discussion on social and sweepstakes casinos - the questionable sites offering both totally free casino-style video games and lucrative prizes, such as cash, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet complimentary,' 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 market that now discovers itself besieged by lawsuits. In the eyes of many gaming corporations, not to mention suit complainants and state regulators, sweepstakes casinos act as standard gambling establishments, just without the oversight, customer defenses and tax laws. So not just can they prevent the steep 24-percent federal gaming levy, however sweepstakes operators aren't subject to regulatory hurdles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the business faces accusations of unlawful gaming in a New York suit that declares VGW uses star endorsers to 'produce a veneer of authenticity' around its item. (See VGW's declaration below)

'I'm unsure" if you don't trust us, you can rely on Paris Hilton" is a winning message for companies running multibillion-dollar prohibited 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 include a range of celebrities from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions in between standard gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of numerous sweepstakes casinos found online

Ryan Seacrest advises fans to play at Chumba Casino, where numerous - however not all - video games are free

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

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Instead, advertisements normally center around the social element of the gambling establishments, while leaving out the capacity for real sports betting losses.

Others lure consumers with pledges of prizes. One such operator, Stake, ran a social networks advertisement showing off Drake's automobiles, planes and estates before pivoting to video 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 discussed: 'Because I never ever offered up.'

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

A representative for an industry trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA data, the majority of the gamers on social-sweepstakes gambling establishments are playing for complimentary.

'Most social sweeps clients never ever purchase,' the SPGA representative told DailyMail.com. 'The minority of consumers who make purchases do so in amounts far smaller sized than the common deposit or wager size at real-money online gaming sites.'

Social casinos use consumers a possibility to play casino-style games with pals. Players have the alternative to purchase valueless currency often described as 'gold coins,' which can not be exchanged for real money, however can be used to open different functions within the video games.

But within the world of social casinos exists sweepstakes gaming, allowing clients to acquire other currency known as 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the capacity for financial losses, like the ones claimed by plaintiffs 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 past year after continuing to buy more coins in pursuit of cash and other things of value.

The Philadelphia 76ers' Paul George is seen promoting an International Poker event

Social sweeps casino Stake ran an ad showing off Drake's cars, planes and mansions

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 helped to sustain the appeal of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes sites, which don't need usually require recognition. However, websites like Chumba will ask for IDs from gamers trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, allow clients to submit mail-in ask for totally free sweeps coins, supplied the gamers follow painfully particular guidelines. What's more, players are often rewarded with sweeps coins just for signing up, consequently providing a reason to attempt their hands at any number of casino video games for an opportunity to win - or lose - genuine money.

So why are sweepstakes sites allowed to operate in 48 states, while online gambling establishments are prohibited in all however 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 video games are just a kind of online home entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is needed to play at social casinos with sweepstakes rewards. Consumers never have to pay for an opportunity to win rewards. That lack of a purchase requirement - or" factor to consider" - is an important difference between social sweeps and conventional online gaming websites like casinos.'

Think about the method that McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're buying hamburgers and french fries that use them the possibility to win profitable rewards, such as a $1 million jackpot.

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

'Sweepstakes are an enduring approach for promoting all type of everyday businesses in the United States, whatever from burgers to magazine subscriptions to coffee and home improvement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are frequently utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling market experts, that argument doesn't cut it.

For starters, video gaming lawyer Daniel Wallach points out, McDonald's Monopoly video game does not run indefinitely. Rather, it has a well-defined beginning and end, therefore recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote genuine items like fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're generally not tied to casino-style games of chance,' Wallach informed DailyMail.com. 'They're just money giveaways.

'The sweepstakes [casinos] have none of the characteristics frequently associated with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos offer" casino-like" payouts, typically 80 percent or more of revenues, whereas the typical payment portion for a temporary marketing sweepstakes is a minor share of the earnings made by the business [generally less than one percent]'

Wallach is fast to liken the online social sweeps gambling establishments to the internet cafes that sprang up in Florida, using customers the chance to play casino-style games for real rewards. Many of those brick-and-mortar facilities have because been shuttered over accusations of illegal sports betting.

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

Now, Wallach argues, social sweeps casinos must deal with comparable examination.

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

Among the casino industry's leading trade organizations, the American Gaming Association, is now pressing legislators to investigate sweepstakes operators and, in many cases, enact brand-new legislation on the concern.

'Consumers are being deprived of protections and states are forgoing significant tax and income opportunities as this gaming changes that conducted through managed channels,' checked out a well-circulated AGA memo.

And after that there are the plaintiffs who have actually sued social casinos in more than a lots states.

Sweepstakes casino operators paid a combined $14.2 million in 4 different cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW consented 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 signed a deal with the VGW Group, which owns Global Poker

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

Apple and Google have actually likewise been called as accuseds in suits for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's request for remark.

'We usually don't talk about matters before the courts,' a VGW representative told DailyMail.com by means of email. '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 confidence in our compliance with all laws and regulations where we run, and remain positive about the future,' the spokesperson continued. 'We continue to use our free-to-play games across the majority of North America, as we have for more than a years, developing not just fantastic games, user experiences and entertainment, but likewise ensuring this is done securely, responsibly and at the highest level of requirements.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are relatively typical throughout the online social games market (and the US more broadly), and our basic practice is that we intend to strongly safeguard any claim which might be brought versus us.'

The issues in between standard online gambling and sweepstakes casinos might show problematic for some celebrity endorsers.

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

'It's ironic that expert athletes are hawking unlawful sports betting wagering 'sweeps' sites while at the same time the leagues wish to forecast a strong stance versus unlawful sports betting - particularly when trying to tamp down the periodic sports betting scandal,' Glaser told DailyMail.com.

It was simply eight months ago that Toronto Raptors forward Jontay Porter got a lifetime restriction from the NBA over accusations he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes casinos.

Together with VGW, Apple and Google are being demanded hosting apparently illegal 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 athletes backing sweepstakes websites is a matter of when, not if,' Glaser added.

Neither an NBA spokesman nor the gamers' representatives reacted to DailyMail.com's requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise ignored to react to DailyMail.com emails.

Asked if their celebrity endorsers have a responsibility to discuss to clients the differences and resemblances in between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that requires to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the representative stated. 'Some of our worths are" our gamers precede" and" we do what's right", and we put our worths at the core of everything we do.'

Glaser, an outspoken challenger of sweepstakes websites, sees things in a different way.

'Celebrities who lend their names to shady prohibited gambling websites are, at a minimum, putting their reputations at risk along with courting civil and class actions by consumers who declare damage,' Glaser said. 'There is likewise some danger that state regulators and state attorneys general rope star endorsers into enforcement efforts for helping with unlawful gambling.'

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