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

No, they weren't personally in attendance, however the world-famous celebrities were conspicuously consisted of in a slide discussion on social and sweepstakes casinos - the controversial sites offering both totally free casino-style video games and financially rewarding rewards, such as money, present cards or cryptocurrency. In one ad, 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 websites are just 2 cogs in the multibillion-dollar market that now finds itself besieged by claims. In the eyes of lots of video gaming corporations, not to discuss suit complainants and state regulators, sweepstakes gambling establishments serve as traditional casinos, just without the oversight, customer protections and tax laws. So not just can they avoid the high 24-percent federal gaming levy, but 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 business faces accusations of unlawful sports betting in a New york city suit that declares VGW uses star endorsers to 'develop a veneer of legitimacy' around its item. (See VGW's declaration below)

'I'm uncertain" if you don't trust us, you can rely on Paris Hilton" is a winning message for companies operating multibillion-dollar illegal operations out of places like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of video gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers include a series of stars 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 sports betting and sweepstakes play.

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

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

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

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Instead, advertisements generally center around the social aspect of the gambling establishments, while omitting the potential for real gambling losses.

Others lure consumers with guarantees of prizes. One such operator, Stake, ran a social media ad showing off Drake's vehicles, airplanes and estates before pivoting to footage of the rapper playing online casino-style games.

'Daddy, why do we have a lot money?' check out the very first caption on the screen.

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

The inconsistency between gambling sites and social or sweepstakes casinos is a bit complicated, but operators of the latter insist they're not included with the previous.

A representative 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, most of the gamers on social-sweepstakes gambling establishments are playing for free.

'Most social sweeps consumers never ever purchase,' the SPGA representative told DailyMail.com. 'The minority of customers who make purchases do so in quantities far smaller sized than the common deposit or wager size at real-money online gambling sites.'

Social casinos provide clients a chance to play casino-style video games with good friends. Players have the alternative to buy worthless currency typically described as 'gold coins,' which can not be exchanged for genuine money, however can be utilized to open different functions within the video games.

But within the world of social gambling establishments exists sweepstakes video gaming, permitting consumers to get other currency known as 'sweeps coins' that can be exchanged for cash or other rewards.

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

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

Social sweeps gambling establishment Stake ran an ad flaunting Drake's automobiles, planes and mansions

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

Traditional online casinos are prohibited in all but seven states, which has helped to fuel the popularity of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, permit clients to send mail-in demands for free sweeps coins, offered the players follow painfully specific directions. What's more, players are often rewarded with sweeps coins merely for signing up, consequently providing a factor to attempt their hands at any variety of casino video games for a chance to win - or lose - real cash.

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

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

'Social sweepstakes games are just a form of online home entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is needed to play at social gambling establishments with sweepstakes prizes. Consumers never need to spend for a chance to win prizes. That absence of a purchase requirement - or" factor to consider" - is an essential distinction in between social sweeps and standard online sports betting websites like gambling establishments.'

Think of the method that McDonald's uses its yearly Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and fries that offer them the possibility to win profitable 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 an enduring technique for promoting all kinds of daily businesses in the United States, everything from hamburgers to publication subscriptions to coffee and home improvement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are frequently used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of gambling market insiders, that argument does not cut it.

For beginners, gaming attorney Daniel Wallach explains, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a distinct beginning and end, thus 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 permanently and they're generally not tied to casino-style video games of chance,' Wallach told DailyMail.com. 'They're simply cash free gifts.

'The sweepstakes [gambling establishments] possess none of the characteristics commonly associated with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes casinos offer" casino-like" payouts, generally 80 percent or more of earnings, whereas the common payment percentage for a short-lived promotional sweepstakes is a minor share of the income earned by the business [normally less than one percent]'

Wallach is quick to compare the online social sweeps gambling establishments to the web coffee shops that sprang up in Florida, providing customers the possibility to play casino-style video games for genuine rewards. A lot of those brick-and-mortar establishments have because been shuttered over claims of prohibited gaming.

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

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

'These differences are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have actually consistently been cited by courts and state attorney general of the United States as crucial elements in figuring out that a sweepstakes promotion was in reality a guise for prohibited 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, in many cases, enact brand-new legislation on the concern.

'Consumers are being denied of defenses and states are giving up substantial tax and profits chances as this gaming changes that carried out through managed channels,' checked out a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in four different cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action suit, stating 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 latest claim, which is mainly similar to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'unlawful gambling business. '

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

'We normally do not talk about matters before the courts,' a VGW representative told DailyMail.com by means of email. 'However, we keep in mind that this claim has only simply been filed with the court and VGW has not been formally served.

'We have complete self-confidence in our compliance with all laws and policies where we run, and remain confident about the future,' the spokesperson continued. 'We continue to provide our free-to-play games throughout most of The United States and Canada, as we have for more than a years, creating not just fantastic video games, user experiences and entertainment, but also ensuring this is done safely, responsibly and at the greatest level of requirements.

'More broadly, we 'd repeat that class actions and other lawsuits and arbitrations are reasonably typical throughout the online social games market (and the US more broadly), and our standard practice is that we intend to intensely defend any claim which might be brought against us.'

The issues between traditional online gaming and sweepstakes casinos might prove problematic for some celebrity 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 gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking illegal sports betting 'sweeps' sites while at the same time the leagues wish to predict a strong stance versus prohibited gambling - specifically when trying to tamp down the periodic sports betting scandal,' Glaser told DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter got 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 casinos.

Together with VGW, Apple and Google are being sued for hosting supposedly unlawful 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 websites refers when, not if,' Glaser included.

Neither an NBA spokesperson nor the players' agents responded to DailyMail.com's demands for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise neglected to react to DailyMail.com e-mails.

Asked if their celebrity endorsers have a duty to describe to customers the distinctions and similarities in between iGaming and sweepstakes casinos, VGW insisted there is nothing more that needs to be done.

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

Glaser, an outspoken opponent of sweepstakes websites, sees things in a different way.

'Celebrities who lend their names to shady prohibited gaming sites are, at a minimum, putting their track records at risk in addition to courting civil and class actions by consumers who declare harm,' Glaser said. 'There is also some danger that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for facilitating illegal sports betting.'

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