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

No, they weren't personally in participation, but the world-famous celebs were notably included in a slide discussion on social and sweepstakes gambling establishments - the controversial sites using both totally free casino-style games and financially rewarding prizes, such as cash, 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 two cogs in the multibillion-dollar industry that now finds itself besieged by suits. In the eyes of lots of video gaming corporations, not to point out suit complainants and state regulators, sweepstakes gambling establishments act as conventional casinos, only without the oversight, consumer defenses and tax laws. So not only can they prevent the high 24-percent federal gaming levy, however sweepstakes operators aren't subject to regulative hurdles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the business faces accusations of prohibited gambling in a New york city lawsuit that claims VGW uses celebrity endorsers to 'produce a veneer of authenticity' around its product. (See VGW's statement below)

'I'm uncertain" if you don't trust us, you can rely on Paris Hilton" is a winning message for business running multibillion-dollar unlawful 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 stars from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom provide any distinctions between conventional gaming and sweepstakes play.

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

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

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

Find out more

Donald Trump 'set to call NBA team owner as US ambassador to Italy'

Instead, advertisements usually focus around the social element of the casinos, while omitting the capacity for real sports betting losses.

Others lure consumers with pledges of rewards. One such operator, Stake, ran a social media ad showing off Drake's automobiles, aircrafts and mansions before pivoting to video footage of the rap artist playing online casino-style games.

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

Another caption explained: 'Because I never ever offered up.'

The discrepancy in between sports betting websites and social or sweepstakes casinos is a bit complex, however operators of the latter insist they're not included with the former.

A representative 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, the majority of the players on social-sweepstakes gambling establishments are playing for complimentary.

'Most social sweeps consumers never make a purchase,' the SPGA spokesperson informed DailyMail.com. 'The minority of clients who make purchases do so in quantities far smaller than the typical deposit or wager size at real-money online sports betting sites.'

Social casinos provide clients a chance to play casino-style video games with buddies. Players have the option to buy valueless currency often referred to as 'gold coins,' which can not be exchanged genuine money, however can be used to unlock various functions within the games.

But within the world of social gambling establishments exists sweepstakes gaming, enabling clients to acquire other currency referred to as '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 gambling establishments in the past year after continuing to buy more coins in pursuit of money and other things of value.

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

Social sweeps casino Stake ran an ad flaunting Drake's automobiles, aircrafts and mansions

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

Traditional online casinos are prohibited in all but 7 states, which has actually assisted to sustain the appeal of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, enable consumers to submit mail-in demands for free sweeps coins, supplied the players follow painfully particular directions. What's more, gamers are often rewarded with sweeps coins simply for signing up, therefore giving them a factor to attempt their hands at any number of gambling establishment games for a possibility to win - or lose - real cash.

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

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

'Social sweepstakes video games are merely a form of online entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is needed to dip into social casinos with sweepstakes prizes. Consumers never have to pay for an opportunity to win prizes. That absence of a purchase requirement - or" consideration" - is a crucial difference in between social sweeps and conventional online gaming sites like gambling establishments.'

Think of 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 purchasing hamburgers and french fries that offer them the possibility to win financially rewarding rewards, such as a $1 million prize.

And without a purchase requirement, or 'factor to consider', the game itself does not meet the meaning of gambling in the US.

'Sweepstakes are an enduring method for promoting all sort of daily businesses in the United States, whatever from burgers to publication subscriptions to coffee and home enhancement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promos are frequently used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

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

'They do not last permanently and they're normally not tied to casino-style video games of possibility,' Wallach told DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [casinos] possess none of the qualities commonly connected with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos provide" casino-like" payments, generally 80 percent or more of incomes, whereas the common payout percentage for a temporary marketing sweepstakes is a minor share of the profits earned by the business [typically less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the internet coffee shops that emerged in Florida, offering customers the opportunity to play casino-style games for genuine rewards. A number of those brick-and-mortar establishments have actually considering that been shuttered over accusations of unlawful gambling.

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

Now, Wallach argues, social sweeps gambling establishments need to deal with comparable examination.

'These differences are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have repeatedly been mentioned by courts and state lawyer generals as key consider figuring out that a sweepstakes promotion was in reality a guise for prohibited gambling.'

Among 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 denied of defenses and states are forgoing considerable tax and revenue chances as this gambling changes that carried out through regulated channels,' read a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in 4 separate cases in Kentucky without admitting any misdeed, 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 costs and continued lawsuits.

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

In the most current claim, 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 described in the filing as an 'illegal sports betting business. '

Apple and Google have actually likewise been named as defendants in suits for hosting the sweepstakes sites. But unlike VGW, neither tech company responded to DailyMail.com's request for comment.

'We normally don't discuss matters before the courts,' a VGW spokesperson told DailyMail.com via e-mail. 'However, we keep in mind that this claim has actually only simply been submitted with the court and VGW has not been officially served.

'We have complete self-confidence in our compliance with all laws and regulations where we run, and stay confident about the future,' the representative continued. 'We continue to provide our free-to-play games throughout many of North America, as we have for more than a decade, producing not only excellent games, user experiences and entertainment, however likewise ensuring this is done safely, properly 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 video games industry (and the US more broadly), and our standard practice is that we plan to vigorously safeguard any claim which may be brought against us.'

The problems in between standard online gambling and sweepstakes casinos might prove bothersome for some celeb 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 traditional video gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking prohibited sports betting wagering 'sweeps' websites while at the exact same time the leagues wish to predict a strong position versus unlawful gaming - specifically when attempting to tamp down the occasional 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 claims he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes casinos.

Along with VGW, Apple and Google are being sued for hosting apparently illegal gambling sites

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

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

Neither an NBA representative nor the players' representatives responded to DailyMail.com's ask 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 celeb endorsers have a duty to explain to customers the distinctions and similarities in between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that needs to be done.

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the spokesperson said. 'A few of our values are" our gamers 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 websites, sees things in a different way.

'Celebrities who lend their names to dubious prohibited gambling websites are, at a minimum, putting their track records at risk as well as courting civil and class actions by consumers who declare damage,' Glaser said. 'There is likewise some risk that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for assisting in unlawful sports betting.'

New YorkNBADrakeParis Hilton