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 celebs were notably consisted of in a slide discussion on social and sweepstakes gambling establishments - the questionable sites providing both totally free casino-style video games and rewarding rewards, such as cash, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'play for free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are just 2 cogs in the multibillion-dollar industry that now discovers itself besieged by claims. In the eyes of many video gaming corporations, not to point out lawsuit plaintiffs and state regulators, sweepstakes gambling establishments serve as standard casinos, only without the oversight, consumer protections and tax laws. So not just can they avoid the high 24-percent federal gaming levy, but sweepstakes operators aren't based on regulative difficulties 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 company deals with accusations of prohibited sports betting in a New york city lawsuit that declares VGW uses celebrity endorsers to 'develop a veneer of authenticity' around its item. (See VGW's statement listed below)

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

Sweepstakes endorsers include a variety of celebrities from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions between conventional gaming and sweepstakes play.

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

Ryan Seacrest prompts fans to play at Chumba Casino, where lots of - however not all - video games are free

Drake has an offer with social sweeps gambling establishment, Stake, that he frequently promotes on social media

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Instead, advertisements generally center around the social element of the casinos, while omitting the potential for real gambling losses.

Others lure consumers with promises of prizes. One such operator, Stake, ran a social media advertisement revealing off Drake's cars, planes and mansions before rotating 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 described: 'Because I never ever offered up.'

The inconsistency between sports betting websites and social or sweepstakes casinos is a bit complicated, but operators of the latter insist they're not involved with the previous.

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, the majority of the players on social-sweepstakes gambling establishments are sports betting totally free.

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

Social gambling establishments provide customers a chance to play casino-style games with good friends. Players have the option to purchase worthless currency often described as 'gold coins,' which can not be exchanged genuine cash, but can be used to unlock numerous features within the video games.

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

And therein lies the capacity for monetary losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York City. 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 cash and other things of value.

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

Social sweeps gambling establishment Stake ran an ad flaunting Drake's automobiles, planes and estates

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

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

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

Many sites, like the crypto-compatible Stake, enable clients to send mail-in demands for free sweeps coins, offered the gamers follow painfully specific directions. What's more, gamers are typically rewarded with sweeps coins merely for registering, consequently providing a reason to attempt their hands at any number of casino video games for an opportunity to win - or lose - real cash.

So why are sweepstakes sites allowed to run in 48 states, while online casinos are banned in all but 7?

According to the stakeholders, their product is the totally free casino-style video gaming, and the real-stakes competitors is merely a way of promoting their bread and butter.

'Social sweepstakes games are just a kind of online home entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is needed to play at social gambling establishments with sweepstakes prizes. Consumers never need to pay for a chance to win prizes. That lack of a purchase requirement - or" factor to consider" - is a crucial distinction in between social sweeps and conventional online gaming sites like casinos.'

Consider the manner in which McDonald's utilizes its annual Monopoly game to promote its food: Customers aren't paying to gamble, but rather they're buying hamburgers and fries that provide them the chance to win profitable rewards, such as a $1 million prize.

And without a purchase requirement, or 'factor to consider', the game itself doesn't fulfill the meaning of sports betting in the US.

'Sweepstakes are a long-standing technique for promoting all sort of daily services in the United States, everything from hamburgers to magazine subscriptions to coffee and home improvement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are regularly 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 beginners, video gaming attorney Daniel Wallach explains, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a distinct beginning and end, thus suggesting 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 forever and they're typically not tied to casino-style games of opportunity,' Wallach told DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [gambling establishments] possess none of the attributes typically associated with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments provide" casino-like" payouts, normally 80 percent or more of earnings, whereas the typical payout percentage for a momentary marketing sweepstakes is a trivial share of the revenue made by the company [generally less than one percent]'

Wallach is fast to compare the online social sweeps casinos to the internet cafes that emerged in Florida, offering customers the possibility to play casino-style games for genuine rewards. A lot of those brick-and-mortar facilities have actually because been shuttered over allegations of unlawful gaming.

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

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

'These distinctions are not approximate,' Wallach said of social sweeps casinos. 'They have actually repeatedly been pointed out by courts and state lawyer generals as crucial elements in determining that a sweepstakes promotion was in reality a guise for prohibited gaming.'

Among the casino market's leading trade companies, the American Gaming Association, is now pressing legislators to investigate sweepstakes operators and, in some cases, enact new legislation on the concern.

'Consumers are being denied of protections and states are giving up substantial tax and revenue opportunities as this gaming changes that carried out through controlled channels,' checked out a well-circulated AGA memo.

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

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

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

In the current claim, which is mostly comparable to its predecessors, New York state residents 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 gambling business. '

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

'We usually do not comment on 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 just been submitted with the court and VGW has not been formally served.

'We have complete self-confidence in our compliance with all laws and policies where we run, and remain positive about the future,' the representative continued. 'We continue to provide our free-to-play video games throughout the majority of North America, as we have for more than a decade, creating not only excellent video games, user experiences and home entertainment, but also guaranteeing this is done securely, responsibly and at the highest level of standards.

'More broadly, we 'd restate that class actions and other litigations and arbitrations are relatively common throughout the online social video games industry (and the US more broadly), and our basic practice is that we intend to strongly defend any claim which might be brought against us.'

The issues in between traditional online sports betting and sweepstakes casinos could show bothersome 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 traditional gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking prohibited sports betting 'sweeps' websites while at the exact same time the leagues want to forecast a strong position against prohibited gaming - specifically when trying to tamp down the periodic gaming scandal,' Glaser told DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter received a lifetime 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 gambling establishments.

In addition to VGW, Apple and Google are being demanded hosting apparently prohibited sports betting websites

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

'I 'd expect that a league crackdown on professional athletes endorsing sweepstakes websites is a matter of when, not if,' Glaser included.

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

Asked if their celebrity endorsers have a duty to explain to customers the distinctions and similarities 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 organization practices more broadly,' the representative said. 'Some of our worths are" our gamers precede" and" we do what's right", and we put our values at the core of whatever we do.'

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

'Celebrities who lend their names to shady illegal sports betting sites are, at a minimum, putting their credibilities at threat along with courting civil and class actions by customers who allege harm,' Glaser said. 'There is also some danger that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for facilitating prohibited sports betting.'

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