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

No, they weren't personally in presence, but the world-famous stars were notably consisted of in a slide discussion on social and sweepstakes gambling establishments - the questionable sites providing both totally free casino-style games and lucrative prizes, such as money, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are just 2 cogs in the multibillion-dollar market that now discovers itself besieged by claims. In the eyes of lots of video gaming corporations, not to mention claim plaintiffs and state regulators, sweepstakes gambling establishments act as conventional casinos, only without the oversight, consumer defenses and tax laws. So not just can they prevent the steep 24-percent federal sports betting levy, however sweepstakes operators aren't subject to regulatory hurdles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits last year alone. Now the business faces allegations of illegal gambling in a New York claim that declares VGW uses celebrity endorsers to 'create a veneer of legitimacy' around its item. (See VGW's statement listed below)

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

Sweepstakes endorsers consist of a range of stars from sports betting 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 in between traditional gambling and sweepstakes play.

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

Ryan Seacrest advises fans to play at Chumba Casino, where numerous - however not all - games are complimentary

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

Read More

Donald Trump 'set to name NBA team owner as US ambassador to Italy'

Instead, ads normally center around the social element of the casinos, while omitting the capacity for actual gaming losses.

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

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

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

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

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 players on social-sweepstakes gambling establishments are sports betting complimentary.

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

Social gambling establishments offer consumers a possibility to play casino-style video games with pals. Players have the choice to buy worthless currency often referred to as 'gold coins,' which can not be exchanged genuine money, but can be used to open various functions within the games.

But within the world of social casinos exists sweepstakes gaming, enabling consumers to acquire other currency known as 'sweeps coins' that can be exchanged for cash or other rewards.

And therein lies the capacity for monetary losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York. One gamer informed the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the previous year after continuing to purchase 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 ad flaunting Drake's cars, planes 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 seven states, which has assisted to fuel the appeal of sweepstakes gambling establishments.

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

Many sites, like the crypto-compatible Stake, enable customers to submit mail-in demands for free sweeps coins, offered the players follow painfully specific instructions. 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 casino games for a chance to win - or lose - real money.

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

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

'Social sweepstakes games are just a type of online home entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is needed to dip into social gambling establishments with sweepstakes rewards. Consumers never ever need to spend for a chance to win prizes. That lack of a purchase requirement - or" consideration" - is a crucial distinction in between social sweeps and traditional online gaming websites like casinos.'

Consider the way that McDonald's uses its yearly Monopoly video game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and fries that offer them the opportunity to win lucrative prizes, such as a $1 million jackpot.

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

'Sweepstakes are a long-standing technique for promoting all type of daily organizations in the United States, whatever from burgers to publication memberships to coffee and home improvement stores,' the SPGA representative informed DailyMail.com. 'Sweepstakes promotions are routinely used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many sports betting industry insiders, that argument doesn't cut it.

For beginners, gaming attorney Daniel Wallach points out, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a well-defined start and end, thereby recommending the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being used to promote real products like french fries, shakes, and the Filet-O-Fish.

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

'The sweepstakes [casinos] have none of the qualities commonly associated with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments provide" casino-like" payouts, generally 80 percent or more of incomes, whereas the typical payment portion for a short-term promotional sweepstakes is a minor share of the earnings earned by the business [normally less than one percent]'

Wallach is fast to liken the online social sweeps casinos to the web coffee shops that emerged in Florida, providing customers the chance to play casino-style games for real prizes. A number of those brick-and-mortar establishments have considering that been shuttered over accusations of prohibited sports betting.

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

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

'These distinctions are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have repeatedly been pointed out by courts and state lawyer generals as crucial aspects in determining that a sweepstakes promo remained in reality a guise for prohibited sports betting.'

One of the gambling establishment industry's leading trade companies, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, in some cases, enact new legislation on the problem.

'Consumers are being deprived of securities and states are giving up substantial tax and earnings opportunities as this sports betting changes that carried out through managed channels,' read a well-circulated AGA memo.

And after that there are the plaintiffs who have sued social casinos in more than a dozen states.

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

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

In the most recent suit, which is largely comparable to its predecessors, New York state citizens Lamar Prater and Rebecca Pratt both claim to have lost well over $1,000 to VGW, which is described in the filing as an 'unlawful gaming enterprise. '

Apple and Google have also been called as offenders in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech company reacted to DailyMail.com's demand for comment.

'We usually do not comment on matters before the courts,' a VGW spokesperson told DailyMail.com through 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 full self-confidence in our compliance with all laws and regulations where we operate, and remain confident about the future,' the representative continued. 'We continue to use our free-to-play games across the majority of North America, as we have for more than a decade, developing not just terrific video games, user experiences and entertainment, but also ensuring this is done securely, properly and at the highest level of standards.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are fairly typical across the online social games market (and the US more broadly), and our basic practice is that we plan to strongly safeguard any claim which might be brought against us.'

The problems in between conventional online gaming and sweepstakes gambling establishments might show bothersome for some star endorsers.

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

'It's paradoxical that expert athletes are hawking illegal sports betting 'sweeps' websites while at the same time the leagues want to forecast a strong position against prohibited gaming - specifically when attempting to tamp down the occasional gaming scandal,' Glaser informed DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter received a lifetime restriction 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.

In addition to VGW, Apple and Google are being taken legal action against for hosting apparently unlawful sports betting websites

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

'I 'd anticipate that a league crackdown on athletes backing sweepstakes websites refers when, not if,' Glaser included.

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

Asked if their star endorsers have a responsibility to explain to customers the distinctions and similarities between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is absolutely nothing more that needs to be done.

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

Glaser, an outspoken challenger of sweepstakes sites, sees things differently.

'Celebrities who provide their names to shady illegal gambling sites are, at a minimum, putting their credibilities at danger as well as courting civil and class actions by consumers who declare damage,' Glaser stated. 'There is also some threat that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for assisting in prohibited gaming.'

New YorkNBADrakeParis Hilton