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

No, they weren't personally in presence, but the world-famous celebs were notably included in a slide discussion on social and sweepstakes gambling establishments - the questionable sites using both totally free casino-style video games and 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 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 market that now discovers itself besieged by claims. In the eyes of lots of video gaming corporations, not to point out claim plaintiffs and state regulators, sweepstakes gambling establishments serve as traditional gambling establishments, just without the oversight, customer defenses and tax laws. So not only can they prevent the high 24-percent federal sports betting levy, but sweepstakes operators aren't based on regulative 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 company deals with allegations of unlawful gaming in a New york city lawsuit that declares VGW uses celeb endorsers to 'create a veneer of authenticity' around its product. (See VGW's statement below)

'I'm unsure" 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 locations like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers consist of a series of celebs from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom offer any differences between standard gaming and sweepstakes play.

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

Ryan Seacrest prompts fans to dip into Chumba Casino, where numerous - but not all - video games are free

Drake has an offer with social sweeps casino, Stake, that he frequently touts on social networks

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

Others lure clients with pledges of prizes. One such operator, Stake, ran a social networks advertisement revealing off Drake's cars and trucks, airplanes and mansions before rotating to footage of the rap artist playing online casino-style games.

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

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

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

A spokesperson 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 information, the majority of the gamers on social-sweepstakes casinos are playing for complimentary.

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

Social casinos use customers a chance to play casino-style video games with buddies. Players have the choice to purchase valueless currency frequently described as 'gold coins,' which can not be exchanged for genuine cash, but can be used to unlock numerous features within the games.

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

And therein lies the potential for monetary losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York City. One gamer informed the Washington Post he lost more than $100,000 on sweepstakes casinos 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 a Worldwide Poker event

Social sweeps gambling establishment Stake ran an advertisement displaying Drake's vehicles, airplanes and mansions

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

Traditional online gambling establishments are prohibited in all however 7 states, which has actually helped to sustain the popularity of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, permit consumers to send mail-in demands for free sweeps coins, provided the gamers follow painfully specific directions. What's more, players are often rewarded with sweeps coins just for signing up, thereby offering them a factor to try their hands at any number of gambling establishment video games for a chance to win - or lose - real cash.

So why are sweepstakes sites allowed to run in 48 states, while online casinos are banned in all but 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 bread and butter.

'Social sweepstakes video games are simply a form of online entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is required to dip into social gambling establishments with sweepstakes rewards. Consumers never need to spend for a chance to win rewards. That lack of a purchase requirement - or" consideration" - is an important difference between social sweeps and standard online sports betting websites like casinos.'

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

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

'Sweepstakes are an enduring method for promoting all sort of daily services in the United States, everything from hamburgers to magazine subscriptions to coffee and home improvement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are routinely used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

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

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

'They don't last permanently and they're usually not connected to casino-style games of possibility,' Wallach informed DailyMail.com. 'They're simply money free gifts.

'The sweepstakes [casinos] have none of the characteristics commonly connected with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos provide" casino-like" payments, typically 80 percent or more of revenues, whereas the common payment portion for a temporary advertising sweepstakes is a trivial share of the profits earned by the company [usually less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the web coffee shops that emerged in Florida, providing clients the possibility to play casino-style video games for real prizes. A number of those brick-and-mortar establishments have considering that been shuttered over allegations of unlawful gaming.

DJ Khaled is amongst several celeb spokespeople for VGW's Global Poker brand

Now, Wallach argues, social sweeps gambling establishments need to face comparable analysis.

'These distinctions are not arbitrary,' Wallach stated of social sweeps casinos. 'They have actually consistently been cited by courts and state chief law officer as key consider figuring out that a sweepstakes promotion remained in reality a guise for unlawful gaming.'

One of the gambling establishment industry's leading trade companies, the American Gaming Association, is now pushing legislators to examine sweepstakes operators and, in some cases, enact brand-new legislation on the issue.

'Consumers are being deprived of defenses and states are passing up substantial tax and earnings opportunities as this gaming changes that performed through managed channels,' read a well-circulated AGA memo.

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

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

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

In the most recent suit, which is largely similar to its predecessors, New york city 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 sports betting business. '

Apple and Google have likewise been called as accuseds in suits for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for remark.

'We normally don't talk about matters before the courts,' a VGW spokesperson informed DailyMail.com via e-mail. 'However, we note that this claim has only just been filed with the court and VGW has not been officially served.

'We have complete confidence in our compliance with all laws and guidelines where we operate, and stay confident about the future,' the spokesperson continued. 'We continue to use our free-to-play games throughout many of The United States and Canada, as we have for more than a years, developing not just excellent video games, user experiences and home entertainment, but likewise ensuring this is done safely, responsibly and at the highest level of standards.

'More broadly, we 'd restate that class actions and other litigations and arbitrations are reasonably common across the online social video games market (and the US more broadly), and our basic practice is that we plan to vigorously safeguard any claim which may be brought against us.'

The issues between standard online sports betting and sweepstakes casinos could prove troublesome 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 paradoxical that professional athletes are hawking prohibited sports betting wagering 'sweeps' websites while at the very same time the leagues want to predict a strong position against illegal gambling - particularly when attempting to tamp down the periodic gaming 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 accusations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes gambling establishments.

Along with VGW, Apple and Google are being sued for hosting allegedly prohibited 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 added.

Neither an NBA spokesman nor the players' agents reacted to DailyMail.com's requests for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to respond to DailyMail.com e-mails.

Asked if their celeb endorsers have a responsibility to describe to clients the distinctions and similarities in between iGaming and sweepstakes casinos, VGW firmly insisted there is absolutely nothing more that needs to be done.

'We have full self-confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the spokesperson said. 'Some of our worths are" our gamers precede" and" we do what's right", and we put our values at the core of everything we do.'

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

'Celebrities who provide their names to shady unlawful sports betting websites are, at a minimum, putting their reputations at danger along with courting civil and class actions by customers who allege damage,' Glaser said. 'There is likewise some threat that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for assisting in unlawful gambling.'

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