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 presence, but the world-famous celebs were conspicuously consisted of in a slide discussion on social and sweepstakes casinos - the controversial websites providing both free casino-style video games and lucrative prizes, such as cash, 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 discovers itself besieged by claims. In the eyes of many video gaming corporations, not to discuss lawsuit plaintiffs and state regulators, sweepstakes casinos serve as standard casinos, just without the oversight, consumer defenses and tax laws. So not just can they avoid the steep 24-percent federal sports betting levy, however sweepstakes operators aren't subject to regulative hurdles like anti-money laundering and responsible-gaming protections.

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 item. (See VGW's statement listed below)

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

Sweepstakes endorsers consist of a series of celebs from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions in between conventional sports betting and sweepstakes play.

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

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

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

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

Others tempt clients with pledges of rewards. One such operator, Stake, ran a social media ad flaunting Drake's vehicles, aircrafts and mansions before rotating to footage of the rap artist playing online casino-style games.

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

Another caption discussed: 'Because I never gave up.'

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

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

'Most social sweeps consumers never buy,' the SPGA representative told DailyMail.com. 'The minority of clients who make purchases do so in amounts far smaller than the typical deposit or bet size at real-money online gambling sites.'

Social casinos use consumers a chance to play casino-style games with buddies. Players have the choice to purchase valueless currency often referred to as 'gold coins,' which can not be exchanged genuine cash, however can be utilized to unlock different functions within the games.

But within the world of social gambling establishments exists sweepstakes gaming, permitting consumers to acquire other currency called 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the capacity for financial losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York. One gamer informed the Washington Post he lost more than $100,000 on sweepstakes casinos in the past year after continuing to purchase more coins in pursuit of money and other things of value.

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

Social sweeps gambling establishment Stake ran an ad displaying 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 casinos are prohibited in all however 7 states, which has helped to sustain the appeal 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 ask for IDs from players trying to withdraw any funds.

Many websites, like the crypto-compatible Stake, enable customers to submit mail-in ask for free sweeps coins, provided the players follow painfully specific directions. What's more, gamers are frequently rewarded with sweeps coins just for registering, consequently providing them a factor to try their hands at any variety of casino video games for a chance to win - or lose - real money.

So why are sweepstakes sites allowed to operate in 48 states, while online casinos are prohibited in all however 7?

According to the stakeholders, their item is the free casino-style gaming, and the real-stakes competitors is just a way of promoting their bread and butter.

'Social sweepstakes games are just a type of online home entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is required to play at social gambling establishments with sweepstakes rewards. Consumers never ever need to spend for a chance to win prizes. That absence of a purchase requirement - or" consideration" - is an important distinction between social sweeps and standard online sports betting sites like casinos.'

Consider the method that McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and fries that provide them the opportunity to win financially rewarding prizes, such as a $1 million jackpot.

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

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

But to lots of sports betting industry experts, that argument does not cut it.

For starters, gaming attorney Daniel Wallach points out, McDonald's Monopoly game doesn't run forever. Rather, it has a distinct start and end, consequently recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote real products like fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're typically not connected to casino-style video games of chance,' Wallach informed DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [casinos] have none of the characteristics typically associated with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments offer" casino-like" payouts, typically 80 percent or more of earnings, whereas the common payment percentage for a short-lived advertising sweepstakes is a trivial share of the revenue earned by the business [normally less than one percent]'

Wallach is quick to liken the online social sweeps casinos to the internet coffee shops that emerged in Florida, providing customers the chance to play casino-style video games for genuine prizes. Much of those brick-and-mortar facilities have given that been shuttered over allegations of prohibited gaming.

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

Now, Wallach argues, social sweeps casinos need to face comparable scrutiny.

'These distinctions are not approximate,' Wallach said of social sweeps gambling establishments. 'They have repeatedly been cited by courts and state chief law officer as crucial consider determining that a sweepstakes promo was in truth a guise for unlawful gaming.'

Among the casino 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 deprived of protections and states are passing up considerable tax and profits opportunities as this sports betting changes that conducted through managed channels,' read a well-circulated AGA memo.

And then there are the complainants who have taken legal action against social casinos in more than a dozen states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action suit, saying the settlement was made to avoid legal expenses and continued litigation.

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

In the most current lawsuit, which is largely comparable to its predecessors, New york city state locals Lamar Prater and Rebecca Pratt both claim 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 called as accuseds in suits for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's demand for remark.

'We normally don't discuss matters before the courts,' a VGW spokesperson told DailyMail.com by means of email. 'However, we keep in mind that this claim has actually only simply been filed with the court and VGW has not been officially served.

'We have complete confidence in our compliance with all laws and policies where we run, and remain confident about the future,' the spokesperson continued. 'We continue to offer our free-to-play video games throughout the majority of The United States and Canada, as we have for more than a years, creating not just excellent games, user experiences and home entertainment, however also ensuring this is done safely, properly and at the greatest level of standards.

'More broadly, we 'd restate that class actions and other lawsuits 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 vigorously protect any claim which might be brought against us.'

The issues in between standard online sports betting and sweepstakes gambling establishments could prove troublesome for some star 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 gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking illegal sports betting 'sweeps' websites while at the very same time the leagues wish to forecast a strong stance against prohibited sports betting - specifically when attempting 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 life time restriction from the NBA over claims he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes casinos.

Together with VGW, Apple and Google are being taken legal action against for hosting presumably prohibited gambling sites

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

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

Neither an NBA spokesman nor the players' representatives responded to DailyMail.com's requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also overlooked to react to DailyMail.com e-mails.

Asked if their celeb endorsers have an obligation to describe to consumers the distinctions and similarities in between iGaming and sweepstakes casinos, VGW insisted there is nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the spokesperson said. 'Some of our worths are" our players come initially" 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 in a different way.

'Celebrities who provide their names to dubious unlawful sports betting websites are, at a minimum, putting their credibilities at risk as well as courting civil and class actions by customers who declare harm,' Glaser stated. 'There is also some danger that state regulators and state attorney generals of the United States rope celeb endorsers into enforcement efforts for assisting in unlawful sports betting.'

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