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

No, they weren't personally in presence, however the world-famous celebs were conspicuously included in a slide discussion on social and sweepstakes casinos - the questionable websites offering both totally 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 anybody can 'play for totally 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 market that now finds itself besieged by lawsuits. In the eyes of lots of video gaming corporations, not to point out claim plaintiffs and state regulators, sweepstakes casinos function as traditional gambling establishments, just without the oversight, consumer securities and tax laws. So not only can they prevent the steep 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulatory difficulties like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the business deals with allegations of illegal gambling in a New york city lawsuit that declares VGW utilizes star endorsers to 'create a veneer of authenticity' around its product. (See VGW's statement below)

'I'm unsure" if you do not trust us, you can rely on Paris Hilton" is a winning message for business running 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 include a series of celebrities from gambling lovers 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 gaming and sweepstakes play.

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

Ryan Seacrest prompts fans to play at Chumba Casino, where lots of - but not all - video games are complimentary

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

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Instead, ads generally focus around the social element of the gambling establishments, while omitting the capacity for actual gaming losses.

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

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

Another caption described: 'Because I never ever quit.'

The disparity between sports betting websites and social or sweepstakes casinos is a bit complex, but 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 competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, many of the gamers on social-sweepstakes casinos are sports betting complimentary.

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

Social casinos offer clients a possibility to play casino-style video games with buddies. Players have the option to buy valueless currency frequently referred to as 'gold coins,' which can not be exchanged for real cash, however can be utilized to unlock various features within the video games.

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

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 casinos in the previous year after continuing to purchase more coins in pursuit of money and other things of worth.

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

Social sweeps gambling establishment Stake ran an ad revealing off Drake's cars and trucks, aircrafts and estates

Karl-Anthony Towns of the New York City Knicks is another NBA star plugging VGW's Global Poker

Traditional online casinos are prohibited in all however seven states, which has actually helped to sustain the popularity of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, enable customers to send mail-in requests for free sweeps coins, supplied the players follow painfully particular directions. What's more, players are frequently rewarded with sweeps coins simply for registering, thereby providing a factor to try their hands at any number of gambling establishment games for a possibility to win - or lose - genuine cash.

So why are sweepstakes websites enabled 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 just a form of online entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is required to play at social gambling establishments with sweepstakes prizes. Consumers never ever have to spend for a chance to win prizes. That lack of a purchase requirement - or" consideration" - is a vital distinction in between social sweeps and standard online sports betting sites like casinos.'

Think about the method that McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to bet, however rather they're buying hamburgers and french fries that offer them the possibility to win rewarding rewards, such as a $1 million prize.

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 businesses in the United States, everything from hamburgers to magazine memberships to coffee and home improvement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are routinely utilized by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many sports betting industry insiders, that argument does not cut it.

For beginners, video gaming attorney Daniel Wallach mentions, McDonald's Monopoly game does not run indefinitely. Rather, it has a well-defined start and end, consequently recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote real items like french fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're normally not connected to casino-style video games of possibility,' Wallach informed DailyMail.com. 'They're just cash free gifts.

'The sweepstakes [casinos] possess none of the characteristics commonly connected with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes casinos use" casino-like" payments, generally 80 percent or more of profits, whereas the common payout portion for a momentary marketing sweepstakes is an unimportant share of the revenue made by the business [normally less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the internet coffee shops that emerged in Florida, offering clients the opportunity to play casino-style video games for real rewards. Many of those brick-and-mortar establishments have given that been shuttered over accusations of illegal gaming.

DJ Khaled is amongst a number of star spokespeople for VGW's Global Poker brand name

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

'These distinctions are not approximate,' Wallach said of social sweeps gambling establishments. 'They have repeatedly been pointed out by courts and state attorney generals as essential consider determining that a sweepstakes promotion remained in reality a guise for illegal sports betting.'

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

'Consumers are being deprived of defenses and states are passing up substantial tax and income chances as this gambling replaces that conducted through managed channels,' read a well-circulated AGA memo.

And after that there are the complainants who have sued social casinos in more than a lots states.

Sweepstakes casino operators paid a combined $14.2 million in four separate cases in Kentucky without confessing any misbehavior, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action claim, stating the settlement was made to avoid legal costs and continued litigation.

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

In the most recent suit, which is largely comparable to its predecessors, New york city state locals Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is described in the filing as an 'prohibited sports betting enterprise. '

Apple and Google have actually also been named as accuseds in suits for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's request for remark.

'We typically don't comment on matters before the courts,' a VGW representative informed DailyMail.com via email. 'However, we note that this claim has only just 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 stay confident about the future,' the spokesperson continued. 'We continue to use our free-to-play games throughout the majority of North America, as we have for more than a years, creating not just great video games, user experiences and home entertainment, but also ensuring this is done securely, properly and at the greatest level of requirements.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are fairly typical across the online social video games market (and the US more broadly), and our standard practice is that we plan to vigorously safeguard any claim which might be brought versus us.'

The problems in between standard 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 while the NBA is partnered with traditional video gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking illegal sports betting wagering 'sweeps' sites while at the same time the leagues want to forecast a strong stance versus unlawful gaming - especially when trying to tamp down the occasional gaming scandal,' Glaser told DailyMail.com.

It was simply eight months ago that Toronto Raptors forward Jontay Porter received a lifetime ban from the NBA over claims he conspired with gamblers. However, to be clear, Porter's scandal is unassociated to anything involving social or sweepstakes gambling establishments.

Together with VGW, Apple and Google are being demanded hosting apparently illegal sports betting websites

Regardless, Glaser sees sweepstakes casinos as a major concern for leagues such as the NBA.

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

Neither an NBA representative nor the players' agents responded to DailyMail.com's requests for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also overlooked to react to DailyMail.com e-mails.

Asked if their celeb endorsers have an obligation to discuss to customers the distinctions and similarities between iGaming and sweepstakes casinos, VGW insisted there is nothing more that requires to be done.

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our business practices more broadly,' the representative stated. 'A few of our values are" our gamers come initially" and" we do what's right", and we put our worths 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 sports betting sites are, at a minimum, putting their track records at threat as well as courting civil and class actions by consumers who allege damage,' Glaser said. 'There is likewise some risk that state regulators and state lawyers basic rope celebrity endorsers into enforcement efforts for facilitating unlawful sports betting.'

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