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

No, they weren't personally in participation, but the world-famous stars were notably included in a slide presentation on social and sweepstakes casinos - the controversial sites providing both free casino-style video games and profitable rewards, such as money, present cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for complimentary,' 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 market that now finds itself besieged by suits. In the eyes of lots of gaming corporations, not to discuss suit complainants and state regulators, sweepstakes gambling establishments 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 regulative hurdles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the business deals with accusations of prohibited gambling in a New york city claim that declares 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 do not trust us, you can rely on Paris Hilton" is a winning message for business running multibillion-dollar prohibited operations out of places 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 series 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 in between standard sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among many sweepstakes gambling establishments discovered online

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

Drake has a deal with social sweeps gambling establishment, Stake, that he regularly promotes on social networks

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Instead, ads typically center around the social element of the casinos, while leaving out the capacity for real sports betting losses.

Others tempt customers with promises of prizes. One such operator, Stake, ran a social networks ad flaunting Drake's cars and trucks, planes and estates before rotating to video of the rap artist playing online casino-style games.

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

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

The discrepancy in between gaming sites and social or sweepstakes gambling establishments is a bit complicated, however operators of the latter insist they're not involved with the previous.

A spokesperson for a market trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA data, most of the gamers on social-sweepstakes casinos are sports betting complimentary.

'Most social sweeps consumers never ever buy,' the SPGA spokesperson informed DailyMail.com. 'The minority of customers who make purchases do so in amounts far smaller sized than the normal deposit or bet size at real-money online gaming sites.'

Social gambling establishments use customers an opportunity to play casino-style video games with good friends. Players have the alternative to purchase worthless currency frequently described as 'gold coins,' which can not be exchanged genuine money, but can be used to unlock different functions within the video games.

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

And therein lies the potential for financial losses, like the ones declared by plaintiffs 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 past year after continuing to buy more coins in pursuit of money and other things of worth.

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

Social sweeps gambling establishment Stake ran an advertisement showing off Drake's automobiles, planes and mansions

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

Traditional online casinos are banned in all but 7 states, which has actually helped to sustain the popularity of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes sites, which don't need typically require 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 totally free sweeps coins, supplied the gamers follow painfully specific directions. What's more, players are frequently rewarded with sweeps coins merely for registering, thereby offering them a reason to try their hands at any number of gambling establishment video games for a chance to win - or lose - real money.

So why are sweepstakes websites enabled to run in 48 states, while online casinos are banned in all however 7?

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

'Social sweepstakes games are merely a type of online home entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is required to dip into social casinos with sweepstakes rewards. Consumers never ever need to spend for a chance to win prizes. That absence of a purchase requirement - or" consideration" - is a crucial difference between social sweeps and standard online gaming sites like gambling establishments.'

Think about the method that McDonald's uses its annual Monopoly video game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and fries that offer them the opportunity to win profitable prizes, such as a $1 million prize.

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

'Sweepstakes are a long-standing method for promoting all type of everyday services in the United States, everything from burgers to magazine memberships to coffee and home improvement shops,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are frequently 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 indefinitely. Rather, it has a distinct beginning and end, thereby recommending the sweepstakes is not the fast-food giant's main item. 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 normally not connected to casino-style video games of chance,' Wallach told DailyMail.com. 'They're simply money free gifts.

'The sweepstakes [casinos] have none of the qualities typically connected with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments use" casino-like" payouts, usually 80 percent or more of incomes, whereas the common payout percentage for a temporary promotional sweepstakes is a minor share of the income made by the business [generally less than one percent]'

Wallach is fast to liken the online social sweeps casinos to the internet coffee shops that sprang up in Florida, offering consumers the chance to play casino-style video games for genuine rewards. A lot of those brick-and-mortar facilities have actually considering that been shuttered over allegations of unlawful sports betting.

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

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

'These differences are not approximate,' Wallach stated of social sweeps casinos. 'They have actually repeatedly been pointed out by courts and state attorney generals as crucial consider determining that a sweepstakes promotion remained in fact a guise for unlawful gambling.'

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

'Consumers are being deprived of defenses and states are giving up considerable tax and income chances as this gambling replaces that carried out through regulated channels,' read a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in four different cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action claim, 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 most recent claim, which is mainly similar to its predecessors, New york city state homeowners 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 enterprise. '

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

'We usually do not talk about matters before the courts,' a VGW representative informed DailyMail.com by means of email. 'However, we note that this claim has actually only simply been submitted with the court and VGW has actually not been officially served.

'We have complete confidence in our compliance with all laws and regulations where we operate, and stay confident about the future,' the representative continued. 'We continue to offer our free-to-play video games across the majority of North America, as we have for more than a decade, creating not just terrific games, user experiences and home entertainment, but also ensuring this is done safely, responsibly and at the highest level of requirements.

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

The issues between traditional online gaming and sweepstakes gambling establishments could prove bothersome 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 conventional gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking illegal sports betting 'sweeps' websites while at the exact same time the leagues wish to project a strong position versus illegal sports betting - especially when trying to tamp down the periodic sports betting scandal,' Glaser informed DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter got a life time ban from the NBA over claims he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes casinos.

Along with VGW, Apple and Google are being demanded hosting presumably unlawful sports betting sites

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 endorsing sweepstakes websites is a matter of when, not if,' Glaser included.

Neither an NBA spokesman nor the gamers' agents reacted to DailyMail.com's demands for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise ignored to react to DailyMail.com e-mails.

Asked if their celeb endorsers have a responsibility to describe to consumers the differences and resemblances in between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that requires to be done.

'We have full confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the representative said. 'A few of our worths are" our gamers come first" and" we do what's right", and we put our values at the core of everything we do.'

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

'Celebrities who lend their names to dubious unlawful sports betting sites are, at a minimum, putting their track records at threat along with courting civil and class actions by customers who allege harm,' Glaser stated. 'There is likewise some threat that state regulators and state chief law officers rope celebrity endorsers into enforcement efforts for assisting in unlawful gaming.'

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