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

No, they weren't personally in participation, however the world-famous stars were conspicuously included in a slide discussion on social and sweepstakes casinos - the questionable websites providing both complimentary casino-style games and profitable prizes, such as money, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are simply 2 cogs in the multibillion-dollar market that now finds itself besieged by lawsuits. In the eyes of lots of video gaming corporations, not to point out lawsuit complainants and state regulators, sweepstakes casinos serve as conventional gambling establishments, only without the oversight, customer protections and tax laws. So not just can they avoid the high 24-percent federal sports betting levy, however sweepstakes operators aren't based on regulatory obstacles like anti-money laundering and responsible-gaming securities.

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

'I'm not sure" if you do not trust us, you can rely on Paris Hilton" is a winning message for business operating 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 consist of a series of celebs from gambling 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 in between traditional gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of numerous sweepstakes casinos found online

Ryan Seacrest advises fans to play at Chumba Casino, where lots of - but not all - games are free

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

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Instead, ads normally focus around the social aspect of the gambling establishments, while omitting the capacity for real gambling losses.

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

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

Another caption discussed: 'Because I never ever gave up.'

The discrepancy between sports betting sites and social or sweepstakes gambling establishments is a bit complicated, however operators of the latter insist they're not involved with the former.

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, most of the gamers on social-sweepstakes casinos are playing for totally free.

'Most social sweeps consumers 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 wager size at real-money online sports betting sites.'

Social gambling establishments provide consumers a chance to play casino-style video games with friends. Players have the option to buy worthless currency typically described as 'gold coins,' which can not be exchanged for real money, however can be utilized to unlock various features within the video games.

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

And therein lies the potential 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 money and other things of worth.

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

Social sweeps gambling establishment Stake ran an ad displaying Drake's vehicles, airplanes 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 but 7 states, which has actually assisted to fuel the appeal of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, permit clients to submit mail-in ask for free sweeps coins, supplied the gamers follow painfully specific directions. What's more, players are typically rewarded with sweeps coins just for registering, thus providing them a factor to attempt their hands at any variety of casino games for a chance to win - or lose - genuine money.

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

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

'Social sweepstakes games are simply a form of online home entertainment,' an SPGA spokesperson told DailyMail.com by e-mail. 'No purchase is needed to play at social gambling establishments with sweepstakes rewards. Consumers never ever need to pay for an opportunity to win prizes. That lack of a purchase requirement - or" consideration" - is an essential difference in between social sweeps and conventional online gambling sites like gambling establishments.'

Think of the manner in which McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to gamble, but rather they're purchasing hamburgers and french fries that provide them the possibility to win lucrative prizes, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the game itself doesn't meet the meaning of sports betting in the US.

'Sweepstakes are a long-standing approach for promoting all sort of daily organizations in the United States, everything from burgers to magazine subscriptions to coffee and home improvement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promos 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 sports betting industry experts, that argument doesn't cut it.

For starters, gaming lawyer Daniel Wallach explains, McDonald's Monopoly game does not run forever. Rather, it has a well-defined beginning and end, thereby recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote real products like french fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're usually not tied to casino-style video games of possibility,' Wallach informed DailyMail.com. 'They're simply cash giveaways.

'The sweepstakes [casinos] have none of the qualities typically related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments offer" casino-like" payouts, normally 80 percent or more of revenues, whereas the common payout percentage for a temporary advertising sweepstakes is an unimportant share of the income earned by the business [typically less than one percent]'

Wallach is quick to compare the online social sweeps casinos to the internet coffee shops that emerged in Florida, providing clients the possibility to play casino-style video games for real prizes. A number of those brick-and-mortar facilities have since been shuttered over allegations of prohibited sports betting.

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

Now, Wallach argues, social sweeps casinos need to deal with comparable scrutiny.

'These differences are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have consistently been mentioned by courts and state chief law officer as essential elements in figuring out that a sweepstakes promo remained in fact a guise for illegal sports betting.'

One of the gambling establishment market's leading trade organizations, the American Gaming Association, is now pushing lawmakers to examine sweepstakes operators and, sometimes, enact new legislation on the issue.

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

And after that there are the plaintiffs who have taken legal action against social casinos in more than a lots 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 lawsuit, stating the settlement was made to prevent legal expenses and continued litigation.

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

In the current claim, which is largely comparable to its predecessors, New york city state homeowners Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited gambling business. '

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

'We typically do not discuss matters before the courts,' a VGW representative told DailyMail.com via e-mail. 'However, we keep in mind that this claim has only just been filed with the court and VGW has 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 The United States and Canada, as we have for more than a years, creating not just excellent games, user experiences and entertainment, but also ensuring this is done securely, properly and at the greatest level of standards.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are reasonably typical across the online social video games market (and the US more broadly), and our basic practice is that we plan to intensely defend any claim which may be brought versus us.'

The issues in 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 back VGW's Global Poker brand name while the NBA is partnered with conventional video 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 desire to forecast a strong stance versus prohibited gaming - especially when attempting to tamp down the periodic gaming scandal,' Glaser informed DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter received a lifetime restriction from the NBA over claims he conspired with gamblers. 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 sued for hosting supposedly illegal gambling sites

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

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

Neither an NBA spokesman nor the gamers' representatives reacted to DailyMail.com's demands for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise disregarded to react to DailyMail.com emails.

Asked if their celeb endorsers have a responsibility to describe to clients the differences and similarities in between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that requires to be done.

'We have full confidence in our influencer and ambassadorial collaborations, and our business practices more broadly,' the spokesperson said. 'Some of our values are" our players 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 sites, sees things differently.

'Celebrities who lend their names to shady illegal gambling websites are, at a minimum, putting their reputations at risk along with courting civil and class actions by consumers who declare damage,' Glaser stated. 'There is likewise some danger that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for helping with prohibited gaming.'

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