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

No, they weren't personally in attendance, but the world-famous celebs were notably consisted of in a slide discussion on social and sweepstakes casinos - the controversial websites using both complimentary casino-style games and rewarding rewards, such as cash, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are simply 2 cogs in the multibillion-dollar market that now discovers itself besieged by suits. In the eyes of lots of gaming corporations, not to mention lawsuit plaintiffs and state regulators, sweepstakes casinos function as standard gambling establishments, only without the oversight, consumer defenses and tax laws. So not just can they avoid the steep 24-percent federal sports betting levy, however sweepstakes operators aren't subject to regulative difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the company faces accusations of unlawful sports betting in a New york city lawsuit that claims VGW uses celeb endorsers to 'produce a veneer of legitimacy' around its product. (See VGW's statement listed below)

'I'm not exactly sure" if you do not trust us, you can trust Paris Hilton" is a winning message for business running multibillion-dollar unlawful operations out of places 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 celebrities 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 use any differences between conventional 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 dip into Chumba Casino, where lots of - however not all - games are totally free

Drake has a handle social sweeps casino, Stake, that he routinely touts on social media

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Instead, advertisements typically focus around the social aspect of the gambling establishments, while omitting the capacity for actual gambling losses.

Others tempt clients with pledges of rewards. One such operator, Stake, ran a social networks ad displaying Drake's cars and trucks, airplanes and mansions before rotating to video footage of the rap artist playing online casino-style video games.

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

Another caption described: 'Because I never ever offered up.'

The discrepancy in between sports betting sites and social or sweepstakes casinos is a bit intricate, but operators of the latter insist they're not included with the former.

A spokesperson for an industry 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, many of the gamers on social-sweepstakes gambling establishments are sports betting free.

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

Social casinos use clients an opportunity to play casino-style games with buddies. Players have the choice to buy valueless currency often described as 'gold coins,' which can not be exchanged genuine cash, however can be utilized to unlock various features within the video games.

But within the world of social casinos exists sweepstakes gaming, allowing consumers to get other currency referred to as 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the potential for monetary losses, like the ones declared by plaintiffs in Florida, Georgia, New Jersey and New York City. 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 cash and other things of worth.

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

Social sweeps casino Stake ran an advertisement displaying Drake's cars, planes 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 fuel the popularity of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, enable customers to send mail-in demands for complimentary sweeps coins, provided the gamers follow painfully specific guidelines. What's more, gamers are frequently rewarded with sweeps coins simply for registering, thereby providing a factor to attempt their hands at any variety of casino games for a possibility to win - or lose - real cash.

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

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

'Social sweepstakes games are just a type of online home entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is needed to play at social casinos with sweepstakes prizes. Consumers never need to spend for an opportunity to win prizes. That absence of a purchase requirement - or" consideration" - is a crucial distinction between social sweeps and standard online gaming websites like casinos.'

Think of the method that McDonald's uses its yearly Monopoly video game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and french fries that use them the opportunity to win rewarding rewards, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the game itself doesn't fulfill the definition of gambling in the US.

'Sweepstakes are a long-standing approach for promoting all sort of daily services in the United States, whatever from burgers to publication subscriptions to coffee and home improvement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are regularly used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous sports betting market insiders, that argument doesn't cut it.

For starters, video gaming lawyer Daniel Wallach points out, McDonald's Monopoly game does not run forever. Rather, it has a distinct start and end, consequently suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being used to promote genuine items like fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're normally not connected to casino-style games of opportunity,' Wallach told DailyMail.com. 'They're just money giveaways.

'The sweepstakes [gambling establishments] possess none of the qualities typically associated with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in all time, the sweepstakes casinos use" casino-like" payouts, generally 80 percent or more of earnings, whereas the common payout percentage for a short-term promotional sweepstakes is a trivial share of the profits made by the company [normally less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the web cafes that emerged in Florida, offering customers the chance to play casino-style video games for genuine rewards. A number of those brick-and-mortar establishments have given that been shuttered over claims of illegal sports betting.

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

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

'These distinctions are not approximate,' Wallach stated of social sweeps casinos. 'They have actually consistently been pointed out by courts and state lawyer generals as crucial consider determining that a sweepstakes promo remained in reality a guise for unlawful sports betting.'

Among the gambling establishment market's leading trade companies, the American Gaming Association, is now pressing legislators to investigate sweepstakes operators and, sometimes, enact brand-new legislation on the issue.

'Consumers are being deprived of protections and states are forgoing significant tax and income opportunities as this sports betting changes that conducted through regulated channels,' checked out a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in 4 separate cases in Kentucky without admitting any wrongdoing, according to the Washington Post. Meanwhile VGW agreed to pay $11.75 million in one class-action claim, stating the settlement was made to prevent legal expenses and continued lawsuits.

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

In the most recent suit, which is mostly similar to its predecessors, New York state locals Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is described in the filing as an 'illegal gambling enterprise. '

Apple and Google have likewise been called as defendants in claims for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for comment.

'We normally don't discuss matters before the courts,' a VGW spokesperson informed DailyMail.com by means of email. 'However, we keep in mind that this claim has actually only just been submitted with the court and VGW has not been officially served.

'We have complete self-confidence in our compliance with all laws and policies where we operate, and stay positive about the future,' the representative continued. 'We continue to provide our free-to-play games throughout most of North America, as we have for more than a decade, producing not only excellent games, user experiences and home entertainment, however likewise ensuring this is done safely, responsibly and at the highest level of requirements.

'More broadly, we 'd restate that class actions and other litigations and arbitrations are fairly typical throughout the online social video games market (and the US more broadly), and our standard practice is that we mean to vigorously protect any claim which may be brought versus us.'

The issues in between standard online gaming and sweepstakes casinos might show bothersome 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 standard gaming titans like FanDuel and DraftKings.

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

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

Along with VGW, Apple and Google are being sued for hosting supposedly unlawful gambling sites

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

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

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

Asked if their star endorsers have an obligation to explain to clients the distinctions and similarities between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that needs to be done.

'We have full confidence in our influencer and ambassadorial collaborations, and our business practices more broadly,' the representative said. 'Some of our values are" our players precede" and" we do what's right", and we put our worths 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 illegal gambling sites are, at a minimum, putting their track records at risk along with courting civil and class actions by customers who allege damage,' Glaser said. 'There is also some danger that state regulators and state chief law officers rope star endorsers into enforcement efforts for assisting in illegal gambling.'

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