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

No, they weren't personally in participation, however the world-famous celebs were conspicuously included in a slide presentation on social and sweepstakes casinos - the controversial sites offering both complimentary casino-style games and financially rewarding rewards, such as cash, present cards or cryptocurrency. In one advertisement, 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 sites are just 2 cogs in the multibillion-dollar market that now discovers itself besieged by suits. In the eyes of numerous gaming corporations, not to point out lawsuit plaintiffs and state regulators, sweepstakes casinos function as conventional casinos, just without the oversight, consumer securities and tax laws. So not just can they prevent the steep 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 earnings in 2015 alone. Now the company deals with allegations of unlawful gaming in a New York claim that declares VGW utilizes celeb endorsers to 'create a veneer of authenticity' around its item. (See VGW's declaration below)

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

Sweepstakes endorsers consist of a variety of celebs from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, as well as 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 advises fans to dip into Chumba Casino, where numerous - however not all - video games are totally free

Drake has a handle social sweeps casino, Stake, that he frequently touts on social networks

Read More

Donald Trump 'set to name NBA team owner as US ambassador to Italy'

Instead, ads typically focus around the social element of the casinos, while omitting the capacity for real gaming losses.

Others lure clients with pledges of prizes. One such operator, Stake, ran a social networks advertisement revealing off Drake's automobiles, aircrafts 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 very first caption on the screen.

Another caption described: 'Because I never quit.'

The disparity in between gambling websites 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 an industry trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA data, the majority of the gamers on social-sweepstakes casinos are playing for free.

'Most social sweeps consumers never ever buy,' the SPGA spokesperson informed DailyMail.com. 'The minority of customers who make purchases do so in amounts far smaller than the typical deposit or wager size at real-money online gaming websites.'

Social casinos provide customers an opportunity to play casino-style video games with buddies. Players have the alternative to purchase valueless currency typically described as 'gold coins,' which can not be exchanged genuine cash, however can be used to open different functions within the video games.

But within the world of social gambling establishments exists sweepstakes gaming, permitting customers to get other currency referred to as 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the capacity for financial losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York. One player told 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 money and other things of worth.

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

Social sweeps gambling establishment Stake ran an advertisement revealing off Drake's cars, aircrafts and mansions

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 seven states, which has actually helped to fuel the appeal of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, enable consumers to submit mail-in demands for free sweeps coins, supplied the gamers follow painfully particular guidelines. What's more, players are typically rewarded with sweeps coins merely for registering, thereby giving them a reason to try their hands at any number of gambling establishment video games for a possibility to win - or lose - genuine cash.

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

According to the stakeholders, their item is the complimentary casino-style video gaming, and the real-stakes competitors is merely a way of promoting their support.

'Social sweepstakes video games are simply a type of online entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is needed to dip into social gambling establishments with sweepstakes prizes. Consumers never need to spend for a chance to win rewards. That lack of a purchase requirement - or" factor to consider" - is an important difference in between social sweeps and conventional online gaming sites like casinos.'

Think of the manner in which McDonald's utilizes its yearly Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and fries that offer them the opportunity to win financially rewarding prizes, such as a $1 million prize.

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

'Sweepstakes are a long-standing method for promoting all kinds of everyday businesses in the United States, whatever from burgers to magazine subscriptions to coffee and home improvement stores,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are frequently 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 insiders, that argument doesn't cut it.

For starters, video gaming lawyer Daniel Wallach mentions, McDonald's Monopoly video game doesn't run forever. Rather, it has a distinct start and end, thus recommending the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being utilized to promote genuine items like french fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're usually not connected to casino-style video games of chance,' Wallach told DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [casinos] possess none of the attributes typically associated with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos use" casino-like" payouts, normally 80 percent or more of revenues, whereas the typical payment percentage for a short-lived promotional sweepstakes is a minor share of the earnings made by the company [typically less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the internet coffee shops that emerged in Florida, offering customers the opportunity to play casino-style games for real rewards. A lot of those brick-and-mortar facilities have since been shuttered over claims of illegal gaming.

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

Now, Wallach argues, social sweeps gambling establishments ought to deal with comparable scrutiny.

'These distinctions are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have actually consistently been mentioned by courts and state lawyer generals as key aspects in identifying that a sweepstakes promotion was in fact a guise for illegal gaming.'

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

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

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

Sweepstakes casino operators paid a combined $14.2 million in 4 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, saying the settlement was made to prevent legal costs and continued lawsuits.

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

In the most recent lawsuit, which is mainly comparable to its predecessors, New York state citizens Lamar Prater and Rebecca Pratt both declare to have lost well over $1,000 to VGW, which is explained in the filing as an 'illegal sports betting enterprise. '

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

'We normally don't talk about matters before the courts,' a VGW representative told DailyMail.com through e-mail. 'However, we keep in mind that this claim has actually only just 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 regulations where we operate, and stay positive about the future,' the spokesperson continued. 'We continue to provide our free-to-play video games throughout many of North America, as we have for more than a years, producing not only excellent video games, user experiences and home entertainment, however likewise ensuring this is done safely, properly and at the highest level of standards.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are fairly common throughout the online social games industry (and the US more broadly), and our standard practice is that we mean to intensely defend any claim which may be brought versus us.'

The issues in between traditional online sports betting and sweepstakes gambling establishments might prove troublesome for some celeb 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 same time the leagues want to project a strong position against prohibited sports betting - specifically when trying to tamp down the periodic gambling scandal,' Glaser told DailyMail.com.

It was simply eight months ago that Toronto Raptors forward Jontay Porter received a life time ban from the NBA over accusations he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes casinos.

Along with VGW, Apple and Google are being sued for hosting supposedly unlawful sports betting websites

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

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

Neither an NBA spokesman nor the gamers' representatives responded 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 responsibility to discuss to customers the distinctions and resemblances in between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that requires to be done.

'We have full self-confidence in our influencer and ambassadorial collaborations, and our service 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 values at the core of everything we do.'

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

'Celebrities who provide their names to shady illegal gaming sites are, at a minimum, putting their credibilities at danger as well as courting civil and class actions by consumers who declare damage,' Glaser stated. 'There is likewise some threat that state regulators and state lawyers general rope star endorsers into enforcement efforts for facilitating prohibited gambling.'

New YorkNBADrakeParis Hilton