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

No, they weren't personally in attendance, however the world-famous stars were notably included in a slide presentation on social and sweepstakes gambling establishments - the controversial websites offering both free casino-style video games and financially rewarding prizes, such as money, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are simply 2 cogs in the multibillion-dollar market that now finds itself besieged by suits. In the eyes of numerous video gaming corporations, not to mention lawsuit complainants and state regulators, sweepstakes gambling establishments serve as standard casinos, just without the oversight, consumer securities and tax laws. So not only can they prevent the steep 24-percent federal sports betting levy, however sweepstakes operators aren't subject to regulatory difficulties like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the company faces allegations of unlawful gambling in a New york city suit that declares VGW uses star endorsers to 'produce a veneer of authenticity' around its item. (See VGW's declaration listed below)

'I'm not exactly sure" if you do not trust us, you can trust Paris Hilton" is a winning message for companies running multibillion-dollar prohibited operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of 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, along with NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions in between standard sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among numerous sweepstakes casinos discovered online

Ryan Seacrest prompts fans to dip into Chumba Casino, where lots of - however not all - games are complimentary

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

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Instead, advertisements typically focus around the social element of the gambling establishments, while omitting the capacity for actual sports betting losses.

Others tempt consumers with pledges of prizes. One such operator, Stake, ran a social media advertisement showing off Drake's cars and trucks, airplanes and mansions before rotating to video footage 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 discussed: 'Because I never quit.'

The inconsistency between sports betting websites and social or sweepstakes gambling establishments is a bit complex, 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), described its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, the majority of the gamers on social-sweepstakes gambling establishments are playing for 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 than the normal deposit or wager size at real-money online gambling websites.'

Social gambling establishments use customers a chance to play casino-style games with friends. Players have the alternative to purchase valueless currency often described as 'gold coins,' which can not be exchanged for real money, however can be utilized to open various features within the video games.

But within the world of social casinos exists sweepstakes gaming, allowing customers to obtain other currency referred to as '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 told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the previous year after continuing to buy more coins in pursuit of cash and other things of value.

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

Social sweeps casino Stake ran an ad displaying Drake's vehicles, 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 prohibited in all however 7 states, which has assisted to sustain the appeal of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes sites, which don't need normally require identification. However, sites like Chumba will request IDs from players trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, permit clients to submit mail-in ask for free sweeps coins, provided the gamers follow painfully specific guidelines. What's more, players are frequently rewarded with sweeps coins simply for registering, thereby providing a factor to try their hands at any variety of casino video games for an opportunity to win - or lose - genuine cash.

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

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

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

Consider the manner in which McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and fries that offer them the chance to win rewarding rewards, such as a $1 million jackpot.

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

'Sweepstakes are a long-standing approach for promoting all type of daily services in the United States, whatever from hamburgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are routinely utilized by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many sports betting market insiders, that argument doesn't cut it.

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

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

'The sweepstakes [gambling establishments] have none of the attributes frequently related to McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes casinos offer" casino-like" payouts, generally 80 percent or more of earnings, whereas the common payout portion for a short-term marketing sweepstakes is an unimportant share of the earnings earned by the company [typically less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the web coffee shops that emerged in Florida, providing consumers the opportunity to play casino-style video games for genuine rewards. Much of those brick-and-mortar establishments have given that been shuttered over claims of unlawful gaming.

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

Now, Wallach argues, social sweeps gambling establishments must face comparable examination.

'These distinctions are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have repeatedly been mentioned by courts and state attorney general of the United States as key elements in identifying that a sweepstakes promotion remained in reality a guise for illegal sports betting.'

One of the gambling establishment industry's leading trade companies, the American Gaming Association, is now pressing legislators to examine sweepstakes operators and, in some cases, enact new legislation on the issue.

'Consumers are being denied of securities and states are giving up significant tax and profits opportunities 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 gambling establishment operators paid a combined $14.2 million in four different cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action claim, saying the settlement was made to avoid legal expenses and continued lawsuits.

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

In the current claim, which is mostly similar to its predecessors, New york city state homeowners Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is explained in the filing as an 'unlawful gaming enterprise. '

Apple and Google have actually also been named as defendants in claims for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's ask for remark.

'We normally don't comment on matters before the courts,' a VGW spokesperson told DailyMail.com through email. 'However, we note that this claim has actually only simply been filed with the court and VGW has actually not been officially served.

'We have complete confidence in our compliance with all laws and guidelines where we operate, and remain positive about the future,' the spokesperson continued. 'We continue to use our free-to-play video games across many of The United States and Canada, as we have for more than a decade, developing not only excellent video games, user experiences and home entertainment, however likewise guaranteeing this is done safely, responsibly and at the highest level of standards.

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

The concerns between traditional online gaming and sweepstakes casinos could 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 professional athletes are hawking prohibited sports betting 'sweeps' sites while at the exact same time the leagues want to forecast a strong stance versus illegal gambling - particularly when attempting to tamp down the periodic sports betting scandal,' Glaser told 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 bettors. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes casinos.

In addition to VGW, Apple and Google are being demanded hosting apparently unlawful gambling websites

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

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

Neither an NBA spokesman 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 neglected to react to DailyMail.com e-mails.

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

'We have complete confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the representative said. 'Some of our worths are" our players come first" and" we do what's right", and we put our worths at the core of whatever we do.'

Glaser, an outspoken opponent of sweepstakes websites, sees things in a different way.

'Celebrities who lend their names to dubious prohibited sports betting sites are, at a minimum, putting their reputations at risk along with courting civil and class actions by consumers who allege damage,' Glaser said. 'There is also some threat that state regulators and state chief law officers rope celebrity endorsers into enforcement efforts for assisting in illegal gambling.'

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