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 participation, but the world-famous celebrities were conspicuously consisted of in a slide presentation on social and sweepstakes casinos - the questionable sites providing both complimentary casino-style video games and lucrative rewards, such as money, 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 two cogs in the multibillion-dollar industry that now discovers itself besieged by claims. In the eyes of numerous gaming corporations, not to mention claim plaintiffs and state regulators, sweepstakes gambling establishments serve as standard casinos, only without the oversight, consumer securities and tax laws. So not only can they prevent the high 24-percent federal gaming levy, however sweepstakes operators aren't subject to regulatory difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the company faces accusations of unlawful gaming in a New york city suit that claims VGW utilizes celeb endorsers to 'develop a veneer of legitimacy' around its item. (See VGW's declaration below)

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

Sweepstakes endorsers include a variety 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 conventional sports betting and sweepstakes play.

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

Ryan Seacrest advises fans to dip into Chumba Casino, where numerous - however not all - video games are free

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

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Instead, advertisements usually center around the social element of the gambling establishments, while leaving out the capacity for real gaming losses.

Others tempt consumers with guarantees of rewards. One such operator, Stake, ran a social networks ad displaying Drake's cars and trucks, airplanes and mansions before pivoting to video footage of the rap artist playing online casino-style games.

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

Another caption explained: 'Because I never ever offered up.'

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

A spokesperson for an industry 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 information, many of the players on social-sweepstakes gambling establishments are sports betting complimentary.

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

Social casinos offer customers a possibility to play casino-style games with good friends. Players have the option to buy worthless currency frequently described as 'gold coins,' which can not be exchanged genuine money, however can be utilized to open different features within the games.

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

And therein lies the capacity for monetary 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 casinos in the previous year after continuing to purchase more coins in pursuit of cash and other things of worth.

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

Social sweeps casino Stake ran an advertisement displaying Drake's cars, 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 however 7 states, which has assisted to sustain the popularity of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, permit consumers to submit mail-in demands for complimentary sweeps coins, supplied the gamers follow painfully particular instructions. What's more, gamers are frequently rewarded with sweeps coins simply for signing up, thereby offering them a reason to attempt their hands at any number of gambling establishment games for a possibility to win - or lose - genuine money.

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

According to the stakeholders, their item is the free casino-style gaming, and the real-stakes competition is just a means of promoting their support.

'Social sweepstakes games are simply a type of online entertainment,' an SPGA representative informed DailyMail.com by e-mail. 'No purchase is needed to play at social gambling establishments with sweepstakes rewards. Consumers never ever have to pay for a chance to win rewards. That absence of a purchase requirement - or" factor to consider" - is a vital distinction in between social sweeps and traditional online gambling sites like gambling establishments.'

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

And without a purchase requirement, or 'consideration', the video game itself doesn't satisfy the definition of gaming in the US.

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

But to many gambling industry experts, that argument doesn't cut it.

For starters, gaming attorney Daniel Wallach explains, McDonald's Monopoly video game doesn't run indefinitely. Rather, it has a well-defined beginning and end, therefore recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote genuine products like french fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're usually not tied to casino-style video games of chance,' Wallach told DailyMail.com. 'They're just money giveaways.

'The sweepstakes [gambling establishments] have none of the characteristics typically associated with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments offer" casino-like" payouts, normally 80 percent or more of revenues, whereas the normal payment portion for a temporary advertising sweepstakes is an insignificant share of the profits earned by the business [usually less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the internet cafes that emerged in Florida, using customers the possibility to play casino-style video games for genuine rewards. A lot of those brick-and-mortar establishments have since been shuttered over accusations of unlawful gaming.

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

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

'These distinctions are not arbitrary,' Wallach said of social sweeps casinos. 'They have repeatedly been pointed out by courts and state attorney generals as key consider determining that a sweepstakes promo was in fact a guise for unlawful gambling.'

Among the casino industry's leading trade companies, the American Gaming Association, is now pushing lawmakers to examine sweepstakes operators and, sometimes, enact brand-new legislation on the issue.

'Consumers are being deprived of securities and states are passing up substantial tax and revenue chances as this gaming changes that conducted through managed channels,' checked out a well-circulated AGA memo.

And after that there are the plaintiffs who have sued social gambling establishments in more than a dozen states.

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

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

In the most current claim, which is mostly similar to its predecessors, New York 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 'unlawful sports betting enterprise. '

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

'We usually don't talk about matters before the courts,' a VGW spokesperson told DailyMail.com through email. 'However, we keep in mind that this claim has actually only simply been submitted with the court and VGW has actually not been formally served.

'We have full self-confidence in our compliance with all laws and policies where we operate, and remain positive about the future,' the representative continued. 'We continue to provide our free-to-play games throughout many of North America, as we have for more than a years, creating not only great video games, user experiences and home entertainment, but likewise guaranteeing this is done securely, responsibly and at the greatest level of requirements.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are relatively typical across the online social games industry (and the US more broadly), and our standard practice is that we intend to intensely safeguard any claim which might be brought versus us.'

The problems between conventional online gaming and sweepstakes casinos might show 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 paradoxical that expert athletes are hawking unlawful sports betting 'sweeps' sites while at the exact same time the leagues desire to project a strong stance against prohibited gambling - specifically when attempting to tamp down the occasional sports betting scandal,' Glaser told DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter received a life time 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.

Together with VGW, Apple and Google are being sued for hosting supposedly unlawful sports betting sites

Regardless, Glaser sees sweepstakes gambling establishments as a major problem for leagues such as the NBA.

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

Neither an NBA representative nor the gamers' representatives 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 star endorsers have a responsibility to explain to customers the distinctions and resemblances in between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that needs to be done.

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the representative stated. 'Some of our values are" our gamers come initially" and" we do what's right", and we put our worths at the core of whatever we do.'

Glaser, an outspoken challenger of sweepstakes sites, sees things in a different way.

'Celebrities who provide their names to shady unlawful gaming websites are, at a minimum, putting their track records at risk in addition to courting civil and class actions by consumers who allege damage,' Glaser said. 'There is likewise some risk that state regulators and state chief law officers rope celebrity endorsers into enforcement efforts for facilitating unlawful gaming.'

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