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

No, they weren't personally in participation, but the world-famous celebs were notably consisted of in a slide discussion on social and sweepstakes casinos - the questionable websites using both free casino-style video games and lucrative prizes, such as cash, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anybody can 'bet complimentary,' 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 industry that now discovers itself besieged by claims. In the eyes of numerous gaming corporations, not to mention claim complainants and state regulators, sweepstakes casinos function as traditional casinos, only without the oversight, consumer defenses and tax laws. So not only can they avoid the high 24-percent federal sports betting levy, but sweepstakes operators aren't subject to regulative obstacles 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 deals with allegations of prohibited gaming in a New York lawsuit that claims VGW uses celebrity endorsers to 'develop a veneer of authenticity' around its item. (See VGW's declaration listed below)

'I'm not sure" 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 places like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers include a range of stars from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions in between conventional sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of many sweepstakes casinos discovered online

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

Drake has a handle social sweeps casino, Stake, that he routinely 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 sports betting losses.

Others lure consumers with pledges of prizes. One such operator, Stake, ran a social networks advertisement flaunting Drake's vehicles, airplanes and estates before pivoting to video of the rapper playing online casino-style games.

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

Another caption described: 'Because I never provided up.'

The disparity between sports betting websites and social or sweepstakes gambling establishments is a bit complicated, 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), described its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA information, most of the gamers on social-sweepstakes casinos are sports betting complimentary.

'Most social sweeps clients never ever buy,' the SPGA representative told DailyMail.com. 'The minority of consumers who make purchases do so in quantities far smaller than the normal deposit or wager size at real-money online gaming websites.'

Social gambling establishments use consumers an opportunity to play casino-style games with buddies. Players have the alternative to purchase valueless currency frequently described as 'gold coins,' which can not be exchanged genuine cash, however can be used to open numerous features within the games.

But within the world of social casinos exists sweepstakes video gaming, allowing clients to acquire other currency known as 'sweeps coins' that can be exchanged for money or other prizes.

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 past year after continuing to buy more coins in pursuit of money and other things of worth.

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

Social sweeps gambling establishment Stake ran an advertisement flaunting Drake's cars, planes and estates

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

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

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

Many sites, like the crypto-compatible Stake, permit consumers to send mail-in ask for totally free sweeps coins, provided the gamers follow painfully particular directions. What's more, players are typically rewarded with sweeps coins just for signing up, therefore providing a factor to try their hands at any number of gambling establishment video games for an opportunity to win - or lose - genuine cash.

So why are sweepstakes websites permitted to run in 48 states, while online casinos are prohibited in all however 7?

According to the stakeholders, their item is the complimentary casino-style video gaming, and the real-stakes competition is simply a method of promoting their support.

'Social sweepstakes games are simply a form of online home entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is required to play at social casinos with sweepstakes prizes. Consumers never ever have to pay for an opportunity to win prizes. That absence of a purchase requirement - or" factor to consider" - is an important distinction between social sweeps and conventional online sports betting sites like casinos.'

Consider the method that McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and french fries that use them the possibility to win profitable prizes, such as a $1 million prize.

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

'Sweepstakes are an enduring technique for promoting all type of daily services in the United States, everything from hamburgers to publication memberships to coffee and home enhancement shops,' 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 doesn't cut it.

For beginners, video gaming attorney Daniel Wallach mentions, McDonald's Monopoly video game doesn't run forever. Rather, it has a distinct beginning and end, thereby suggesting the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote genuine items like fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're normally not connected to casino-style video games of chance,' Wallach informed DailyMail.com. 'They're just money giveaways.

'The sweepstakes [casinos] possess none of the attributes commonly related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments offer" casino-like" payouts, usually 80 percent or more of earnings, whereas the typical payout percentage for a momentary marketing sweepstakes is an insignificant share of the earnings earned by the company [usually less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the internet coffee shops that sprang up in Florida, providing customers the opportunity to play casino-style games for genuine rewards. Much of those brick-and-mortar establishments have because been shuttered over allegations of unlawful sports betting.

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

Now, Wallach argues, social sweeps casinos need to face comparable examination.

'These distinctions are not approximate,' Wallach said of social sweeps casinos. 'They have repeatedly been cited by courts and state chief law officer as essential consider identifying that a sweepstakes promo remained in truth a guise for prohibited gambling.'

One of the gambling establishment industry'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 giving up significant tax and revenue opportunities as this gaming changes that conducted through managed channels,' read a well-circulated AGA memo.

And then there are the plaintiffs who have taken legal action against social casinos in more than a dozen states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 different cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, stating the settlement was made to avoid legal expenses and continued lawsuits.

Michael Phelps has actually signed a deal with the VGW Group, which owns Global Poker

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

Apple and Google have also been called as defendants in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's ask for remark.

'We typically don't talk about matters before the courts,' a VGW representative informed DailyMail.com via e-mail. 'However, we keep in mind that this claim has only simply been filed 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 run, and remain confident about the future,' the spokesperson continued. 'We continue to provide our free-to-play video games across most of The United States and Canada, as we have for more than a years, developing not just excellent games, user experiences and entertainment, however likewise ensuring this is done safely, properly and at the greatest level of standards.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are relatively common across the online social video games industry (and the US more broadly), and our standard practice is that we intend to vigorously defend any claim which might be brought versus us.'

The concerns between conventional online gambling and sweepstakes gambling establishments might prove bothersome for some star 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 traditional video gaming titans like FanDuel and DraftKings.

'It's ironic that professional athletes are hawking prohibited sports betting wagering 'sweeps' websites while at the very same time the leagues want to predict a strong stance against prohibited sports betting - especially when trying to tamp down the periodic sports betting scandal,' Glaser informed DailyMail.com.

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

Together with VGW, Apple and Google are being taken legal action against for hosting supposedly illegal gambling websites

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

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

Neither an NBA spokesperson nor the players' 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 celeb endorsers have a duty to describe to consumers the distinctions and similarities in between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial collaborations, and our service practices more broadly,' the spokesperson said. 'Some of our worths are" our players 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 lend their names to dubious unlawful gaming sites are, at a minimum, putting their reputations at danger along with courting civil and class actions by customers who allege harm,' Glaser said. 'There is likewise some risk that state regulators and state lawyers general rope celeb endorsers into enforcement efforts for assisting in illegal sports betting.'

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