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

No, they weren't personally in participation, but the world-famous stars were conspicuously consisted of in a slide presentation on social and sweepstakes gambling establishments - the controversial websites providing both free casino-style video games and financially rewarding prizes, such as money, present cards or cryptocurrency. In one ad, 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 simply two cogs in the multibillion-dollar industry that now discovers itself besieged by lawsuits. In the eyes of numerous video gaming corporations, not to discuss lawsuit complainants and state regulators, sweepstakes gambling establishments serve as conventional gambling establishments, just without the oversight, consumer securities and tax laws. So not only can they avoid the high 24-percent federal sports betting levy, but sweepstakes operators aren't subject to regulatory difficulties like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the company deals with accusations of illegal gaming in a New York lawsuit that declares VGW uses celebrity endorsers to 'develop a veneer of legitimacy' around its product. (See VGW's statement listed below)

'I'm unsure" if you don't trust us, you can rely on Paris Hilton" is a winning message for companies running multibillion-dollar prohibited 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 stars 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 use any differences in between standard gambling and sweepstakes play.

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

Ryan Seacrest prompts fans to dip into Chumba Casino, where lots of - but not all - games are totally free

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

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Instead, ads typically center around the social element of the gambling establishments, while leaving out the potential for real gaming losses.

Others lure customers with guarantees of rewards. One such operator, Stake, ran a social media advertisement displaying Drake's cars and trucks, planes and mansions before rotating to video footage of the rap artist playing online casino-style video games.

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

Another caption explained: 'Because I never quit.'

The inconsistency in between gaming websites and social or sweepstakes gambling establishments is a bit complicated, however operators of the latter insist they're not included 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 data, the majority of the players on social-sweepstakes gambling establishments are playing for totally free.

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

Social gambling establishments provide customers a possibility to play casino-style games with buddies. Players have the alternative to buy worthless currency frequently described as 'gold coins,' which can not be exchanged for genuine money, however can be utilized to open numerous functions within the video games.

But within the world of social gambling establishments exists sweepstakes gaming, permitting clients to acquire other currency referred to as 'sweeps coins' that can be exchanged for cash 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 player informed 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 value.

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

Social sweeps casino Stake ran an ad displaying Drake's cars, 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 banned in all but 7 states, which has actually assisted to fuel the popularity of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, enable consumers to send mail-in demands for totally free sweeps coins, supplied the gamers follow painfully particular directions. What's more, players are typically rewarded with sweeps coins just for signing up, thus offering them a factor to attempt their hands at any variety of gambling establishment video games for an opportunity to win - or lose - real cash.

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

According to the stakeholders, their product is the free casino-style video gaming, and the real-stakes competitors is merely a way of promoting their bread and butter.

'Social sweepstakes video games are simply a kind of online home entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is needed to play at social gambling establishments with sweepstakes prizes. Consumers never ever need to spend for an opportunity to win rewards. That absence of a purchase requirement - or" factor to consider" - is an essential distinction in between social sweeps and standard online sports betting sites like gambling establishments.'

Consider the manner in which McDonald's utilizes its annual Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and french fries that use them the chance to win profitable rewards, such as a $1 million prize.

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

'Sweepstakes are an enduring approach for promoting all type of everyday organizations in the United States, whatever from burgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are regularly utilized by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous sports betting market experts, that argument does not cut it.

For beginners, gaming lawyer Daniel Wallach points out, McDonald's Monopoly game does not run indefinitely. Rather, it has a distinct beginning and end, consequently suggesting the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being utilized to promote genuine items like french fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're generally not tied to casino-style games of opportunity,' Wallach told DailyMail.com. 'They're just cash free gifts.

'The sweepstakes [casinos] possess none of the characteristics frequently related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments offer" casino-like" payments, usually 80 percent or more of incomes, whereas the normal payment percentage for a short-lived marketing sweepstakes is a minor share of the earnings earned by the business [generally less than one percent]'

Wallach fasts to liken the online social sweeps casinos to the internet coffee shops that sprang up in Florida, offering clients the chance to play casino-style games for real rewards. Much of those brick-and-mortar establishments have actually given that been shuttered over claims of illegal sports betting.

DJ Khaled is amongst numerous celebrity spokespeople for VGW's Global Poker brand name

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

'These differences are not approximate,' Wallach stated of social sweeps casinos. 'They have actually consistently been mentioned by courts and state attorney general of the United States as essential consider figuring out that a sweepstakes promotion remained in reality a guise for illegal sports betting.'

Among the casino 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 issue.

'Consumers are being deprived of defenses and states are passing up significant tax and income opportunities as this gaming replaces that performed through regulated channels,' checked out a well-circulated AGA memo.

And after that there are the complainants who have actually taken legal action against social casinos in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in four separate cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action lawsuit, saying the settlement was made to avoid legal expenses and continued lawsuits.

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

In the latest suit, which is largely comparable to its predecessors, New York state residents 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 gaming business. '

Apple and Google have likewise been named as offenders in suits for hosting the sweepstakes websites. But unlike VGW, neither tech company responded to DailyMail.com's ask for comment.

'We normally don't talk about matters before the courts,' a VGW representative told DailyMail.com by means of email. 'However, we note that this claim has actually only just been filed with the court and VGW has not been officially served.

'We have full self-confidence in our compliance with all laws and guidelines where we run, and stay confident about the future,' the spokesperson continued. 'We continue to provide our free-to-play games throughout the majority of North America, as we have for more than a decade, creating not just excellent games, user experiences and home entertainment, however likewise guaranteeing this is done securely, responsibly and at the greatest level of standards.

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

The concerns between standard online gambling and sweepstakes gambling establishments might prove problematic for some celebrity endorsers.

Towns, a star center with the Knicks, and the 76ers' George both endorse VGW's Global Poker brand while the NBA is partnered with traditional gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking unlawful sports betting 'sweeps' sites while at the very same time the leagues wish to forecast a strong position against illegal gambling - especially when attempting to tamp down the periodic gaming scandal,' Glaser told DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter received a lifetime ban from the NBA over accusations he conspired with gamblers. However, to be clear, Porter's scandal is unrelated to anything including social or sweepstakes gambling establishments.

In addition to VGW, Apple and Google are being demanded hosting apparently illegal gambling sites

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

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

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

Asked if their star endorsers have a responsibility to explain to consumers the differences and resemblances between iGaming and sweepstakes gambling establishments, VGW firmly 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 spokesperson stated. 'A few of our values are" our gamers come first" and" we do what's right", and we put our values at the core of whatever we do.'

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

'Celebrities who lend their names to shady unlawful sports betting websites are, at a minimum, putting their track records at risk along with courting civil and class actions by customers who declare harm,' Glaser stated. 'There is also some threat that state regulators and state attorneys general rope star endorsers into enforcement efforts for helping with illegal sports betting.'

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