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

No, they weren't personally in presence, however the world-famous celebrities were notably included in a slide presentation on social and sweepstakes gambling establishments - the controversial sites providing both totally free casino-style video games and lucrative prizes, such as cash, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are simply two cogs in the multibillion-dollar industry that now discovers itself besieged by suits. In the eyes of many video gaming corporations, not to mention claim complainants and state regulators, sweepstakes casinos function as traditional gambling establishments, only without the oversight, consumer protections and tax laws. So not only can they avoid the steep 24-percent federal gambling levy, however sweepstakes operators aren't subject to regulative hurdles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the company deals with allegations of illegal gambling in a New york city lawsuit that claims VGW utilizes star endorsers to 'produce a veneer of authenticity' around its product. (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 operating multibillion-dollar prohibited operations out of places like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers include a series of celebs 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 standard gaming and sweepstakes play.

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

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

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

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Instead, ads typically center around the social aspect of the gambling establishments, while leaving out the potential for actual sports betting losses.

Others tempt consumers with pledges of rewards. One such operator, Stake, ran a social networks advertisement displaying Drake's automobiles, airplanes and mansions before rotating to video of the rap artist playing online casino-style video games.

'Daddy, why do we have so much cash?' read the first caption on the screen.

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

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

A spokesperson for a market trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, the majority of the players on social-sweepstakes gambling establishments are sports betting complimentary.

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

Social casinos provide customers a possibility to play casino-style video games with buddies. Players have the choice to purchase worthless currency typically referred to as 'gold coins,' which can not be exchanged for genuine cash, but can be utilized to open various functions within the games.

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

And therein lies the potential for monetary losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York. One player informed 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 cash and other things of worth.

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

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

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 but seven states, which has assisted to sustain the appeal of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes websites, which don't need usually need identification. However, sites like Chumba will ask for IDs from players attempting to withdraw any funds.

Many websites, like the crypto-compatible Stake, enable customers to send mail-in requests for free sweeps coins, offered the players follow painfully particular directions. What's more, gamers are often rewarded with sweeps coins just for signing up, thereby providing a factor to attempt their hands at any variety of gambling establishment video games for a chance to win - or lose - real cash.

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

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

'Social sweepstakes games are simply a kind of online entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is required to play at social gambling establishments with sweepstakes prizes. Consumers never need to spend for an opportunity to win rewards. That absence of a purchase requirement - or" consideration" - is an important distinction in between social sweeps and traditional online gaming websites like casinos.'

Think about the method that McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to gamble, but rather they're buying hamburgers and french fries that use them the chance to win financially rewarding rewards, such as a $1 million jackpot.

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

'Sweepstakes are a long-standing technique for promoting all kinds of daily companies 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 frequently used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting industry experts, that argument doesn't cut it.

For starters, video gaming lawyer Daniel Wallach points out, McDonald's Monopoly video game doesn't run forever. Rather, it has a well-defined start and end, thereby suggesting the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being used to promote real items like fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're normally not tied to casino-style games of possibility,' Wallach informed DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [gambling establishments] have none of the attributes commonly connected with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos offer" casino-like" payouts, generally 80 percent or more of revenues, whereas the common payment percentage for a short-term promotional sweepstakes is an insignificant share of the profits earned by the company [generally less than one percent]'

Wallach is fast to compare the online social sweeps casinos to the internet cafes that sprang up in Florida, providing customers the possibility to play casino-style games for genuine prizes. Many of those brick-and-mortar establishments have actually given that been shuttered over allegations of unlawful sports betting.

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

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

'These distinctions are not arbitrary,' Wallach stated of social sweeps casinos. 'They have repeatedly been pointed out by courts and state lawyer generals as key consider identifying that a sweepstakes promotion was in truth a guise for illegal gaming.'

One of the casino market's leading trade companies, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, in some cases, enact brand-new legislation on the concern.

'Consumers are being deprived of securities and states are forgoing significant tax and earnings opportunities as this gambling changes that performed through controlled channels,' checked out a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 different cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW concurred 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 an offer with the VGW Group, which owns Global Poker

In the most recent suit, which is mostly comparable to its predecessors, New York state citizens Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is described in the filing as an 'illegal gaming business. '

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

'We usually don't comment on matters before the courts,' a VGW representative told DailyMail.com through e-mail. 'However, we keep in mind that this claim has actually only simply been submitted with the court and VGW has not been formally served.

'We have complete self-confidence in our compliance with all laws and regulations where we operate, and remain positive about the future,' the representative continued. 'We continue to use our free-to-play video games throughout the majority of North America, as we have for more than a decade, producing not just great games, user experiences and home entertainment, however also ensuring this is done safely, responsibly and at the greatest level of requirements.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are relatively typical throughout the online social games industry (and the US more broadly), and our standard practice is that we plan to strongly protect any claim which may be brought versus us.'

The concerns between traditional online gaming and sweepstakes casinos could prove problematic for some celeb 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 video gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking unlawful sports betting wagering 'sweeps' websites while at the same time the leagues desire to project a strong stance versus illegal gaming - especially when attempting to tamp down the occasional gaming scandal,' Glaser told DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter got a lifetime restriction from the NBA over allegations he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes casinos.

In addition to VGW, Apple and Google are being sued for hosting presumably illegal gambling websites

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

'I 'd anticipate that a league crackdown on professional athletes endorsing sweepstakes websites refers when, not if,' Glaser included.

Neither an NBA representative nor the gamers' agents reacted to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise neglected to react to DailyMail.com emails.

Asked if their celebrity endorsers have an obligation to discuss to clients the differences and resemblances between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that needs to be done.

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

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

'Celebrities who provide their names to dubious illegal sports betting websites are, at a minimum, putting their reputations at threat as well as courting civil and class actions by customers who declare damage,' Glaser stated. 'There is also some danger that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for helping with prohibited sports betting.'

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