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

No, they weren't personally in participation, however the world-famous stars were notably included in a slide presentation on social and sweepstakes casinos - the questionable websites offering both complimentary casino-style games and financially rewarding rewards, such as money, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet 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 numerous gaming corporations, not to mention suit plaintiffs and state regulators, sweepstakes casinos function as traditional casinos, only without the oversight, consumer securities and tax laws. So not only can they avoid the high 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulative hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings last year alone. Now the business faces accusations of prohibited gaming in a New York suit that claims VGW utilizes star endorsers to 'create a veneer of legitimacy' around its product. (See VGW's declaration listed below)

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

Sweepstakes endorsers include a series of celebrities from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom provide any differences in between standard gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of lots of sweepstakes gambling establishments discovered online

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

Drake has a handle social sweeps casino, Stake, that he routinely promotes on social networks

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Instead, advertisements typically focus around the social aspect of the casinos, while leaving out the potential for actual gambling losses.

Others tempt customers with guarantees of rewards. One such operator, Stake, ran a social media ad revealing off Drake's automobiles, airplanes and estates before pivoting to footage of the rap artist playing online casino-style video games.

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

Another caption explained: 'Because I never quit.'

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

A representative 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 sports betting free.

'Most social sweeps clients never ever buy,' the SPGA spokesperson told DailyMail.com. 'The minority of consumers who make purchases do so in quantities far smaller sized than the typical deposit or wager size at real-money online gambling websites.'

Social casinos provide consumers an opportunity to play casino-style video games with buddies. Players have the alternative to buy valueless currency often referred to as 'gold coins,' which can not be exchanged for genuine cash, but can be utilized to open numerous features within the video games.

But within the world of social gambling establishments exists sweepstakes video gaming, allowing clients to obtain other currency called 'sweeps coins' that can be exchanged for money 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 purchase more coins in pursuit of money and other things of value.

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

Social sweeps casino Stake ran an advertisement revealing 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 however seven states, which has actually assisted to sustain the appeal of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes websites, which do not require normally require identification. However, websites like Chumba will ask for IDs from gamers trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, enable clients to submit mail-in ask for free sweeps coins, offered the gamers follow painfully particular directions. What's more, players are typically rewarded with sweeps coins just for signing up, thereby providing a factor to try their hands at any number of casino video games for an opportunity to win - or lose - real money.

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

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

'Social sweepstakes games are merely a type of online home entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is needed to play at social gambling establishments with sweepstakes prizes. Consumers never ever need to spend for a chance to win rewards. That absence of a purchase requirement - or" factor to consider" - is an important difference between social sweeps and standard online gaming sites like gambling establishments.'

Think of the method that McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and fries that provide them the opportunity to win rewarding prizes, such as a $1 million jackpot.

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

'Sweepstakes are a long-standing technique for promoting all sort of daily services in the United States, whatever from hamburgers to publication subscriptions to coffee and home improvement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are regularly used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous gambling industry insiders, that argument does not cut it.

For beginners, gaming attorney Daniel Wallach explains, McDonald's Monopoly video game does not run indefinitely. 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 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 chance,' Wallach informed DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [casinos] possess none of the qualities frequently connected with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes casinos use" casino-like" payouts, usually 80 percent or more of earnings, whereas the normal payout portion for a momentary marketing sweepstakes is a trivial share of the income made by the business [normally less than one percent]'

Wallach is quick to compare the online social sweeps casinos to the web cafes that sprang up in Florida, using clients the possibility to play casino-style games for genuine rewards. A number of those brick-and-mortar establishments have given that been shuttered over accusations of illegal gaming.

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

Now, Wallach argues, social sweeps casinos must deal with similar scrutiny.

'These distinctions are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have actually repeatedly been mentioned by courts and state attorney generals as key aspects in identifying that a sweepstakes promotion remained in reality a guise for unlawful gambling.'

One of the gambling establishment market's leading trade organizations, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, sometimes, enact brand-new legislation on the problem.

'Consumers are being denied of protections and states are passing up significant tax and earnings chances as this sports betting changes that conducted through controlled 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 dozen states.

Sweepstakes casino operators paid a combined $14.2 million in four different cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action suit, stating the settlement was made to avoid legal expenses and continued litigation.

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 residents Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'unlawful sports betting business. '

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

'We usually do not discuss matters before the courts,' a VGW representative told DailyMail.com via email. 'However, we keep in mind that this claim has actually only simply been submitted with the court and VGW has actually not been officially served.

'We have complete self-confidence in our compliance with all laws and guidelines where we run, and stay positive about the future,' the spokesperson continued. 'We continue to use our free-to-play games across many of North America, as we have for more than a years, producing not only terrific games, user experiences and home entertainment, however also guaranteeing this is done securely, responsibly and at the highest level of standards.

'More broadly, we 'd reiterate that class actions and other litigations and arbitrations are fairly typical throughout the online social games industry (and the US more broadly), and our standard practice is that we intend to strongly safeguard any claim which may be brought against us.'

The issues in between conventional online gaming and sweepstakes gambling establishments might prove troublesome for some celebrity endorsers.

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

'It's ironic that expert athletes are hawking prohibited sports betting wagering 'sweeps' websites while at the very same time the leagues want to predict a strong stance against unlawful gaming - particularly when trying to tamp down the periodic gambling scandal,' Glaser informed DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter received a life time restriction from the NBA over allegations he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes casinos.

In addition to VGW, Apple and Google are being sued for hosting supposedly prohibited gambling sites

Regardless, Glaser sees sweepstakes gambling establishments as a significant issue 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 spokesperson nor the gamers' agents reacted to DailyMail.com's requests 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 celebrity endorsers have a duty to explain to consumers the distinctions and resemblances in between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is absolutely nothing more that needs to be done.

'We have full confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the representative stated. 'Some of our values are" our players precede" and" we do what's right", and we put our worths at the core of everything we do.'

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

'Celebrities who provide their names to dubious illegal gaming sites are, at a minimum, putting their credibilities at danger along with courting civil and class actions by customers who declare harm,' Glaser said. 'There is likewise some danger that state regulators and state lawyers general rope celebrity endorsers into enforcement efforts for facilitating prohibited gaming.'

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