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, however the world-famous celebs were conspicuously included in a slide presentation on social and sweepstakes casinos - the controversial websites using both complimentary casino-style games and profitable prizes, such as money, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet 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 lawsuits. In the eyes of many video gaming corporations, not to mention claim plaintiffs and state regulators, sweepstakes gambling establishments act as standard gambling establishments, just without the oversight, customer defenses and tax laws. So not just can they prevent the high 24-percent federal gambling levy, however sweepstakes operators aren't based on regulative obstacles like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the company deals with allegations of unlawful sports betting in a New York lawsuit that claims VGW utilizes celebrity endorsers to 'develop a veneer of legitimacy' around its product. (See VGW's declaration listed below)

'I'm not sure" if you do not trust us, you can trust Paris Hilton" is a winning message for companies operating multibillion-dollar prohibited operations out of places 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 stars from sports betting lovers Drake and DJ Khaled to swimmer Michael Phelps, along with NBA stars Karl-Anthony Towns and Paul George - none of whom provide any differences in between standard gambling and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of many sweepstakes gambling establishments found online

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

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

Find out more

Donald Trump 'set to call NBA group owner as US ambassador to Italy'

Instead, advertisements usually focus around the social element of the casinos, while leaving out the potential for real gambling losses.

Others lure clients with promises of prizes. One such operator, Stake, ran a social networks ad revealing off Drake's vehicles, airplanes and mansions before rotating to footage of the rapper playing online casino-style games.

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

Another caption described: 'Because I never quit.'

The discrepancy in between gaming websites and social or sweepstakes gambling establishments is a bit complex, however operators of the latter insist they're not included with the previous.

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), described its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA data, many of the gamers on social-sweepstakes gambling establishments are sports betting free.

'Most social sweeps consumers never ever buy,' the SPGA spokesperson told DailyMail.com. 'The minority of customers 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 chance to play casino-style video games with good friends. Players have the option to buy valueless currency typically described as 'gold coins,' which can not be exchanged genuine money, however can be utilized to unlock numerous functions within the games.

But within the world of social gambling establishments exists sweepstakes video gaming, enabling customers to obtain other currency called 'sweeps coins' that can be exchanged for cash or other prizes.

And therein lies the potential for monetary losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York City. One player informed 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 value.

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

Social sweeps gambling establishment Stake ran an advertisement revealing off Drake's cars, aircrafts and mansions

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 helped to sustain the popularity of sweepstakes casinos.

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

Many sites, like the crypto-compatible Stake, enable customers to send mail-in ask for complimentary sweeps coins, provided the players follow painfully particular guidelines. What's more, gamers are often rewarded with sweeps coins merely for signing up, thus offering them a factor to try their hands at any number of casino video games for a possibility to win - or lose - genuine cash.

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

According to the stakeholders, their product is the totally free casino-style video gaming, and the real-stakes competition is just a method of promoting their bread and butter.

'Social sweepstakes video games are just a type of online entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is required to play at social casinos with sweepstakes prizes. Consumers never need to pay for a chance to win prizes. That lack of a purchase requirement - or" consideration" - is a crucial distinction between social sweeps and standard online gambling websites like gambling establishments.'

Consider the way that McDonald's utilizes its annual Monopoly video game to promote its food: Customers aren't paying to gamble, however rather they're buying hamburgers and french fries that provide them the chance to win rewarding rewards, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the video game itself does not fulfill the meaning of gambling in the US.

'Sweepstakes are a long-standing method for promoting all kinds of everyday companies in the United States, everything from hamburgers to publication memberships to coffee and home improvement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are routinely used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of gambling industry experts, that argument doesn't cut it.

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

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

'The sweepstakes [casinos] have none of the qualities commonly associated with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments provide" casino-like" payouts, normally 80 percent or more of revenues, whereas the normal payout percentage for a momentary marketing sweepstakes is an insignificant share of the income made by the company [generally less than one percent]'

Wallach fasts to compare the online social sweeps casinos to the internet coffee shops that emerged in Florida, providing customers the chance to play casino-style games for real rewards. Many of those brick-and-mortar facilities have given that been shuttered over accusations of prohibited sports betting.

DJ Khaled is among a number of celebrity spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps gambling establishments ought to face comparable examination.

'These distinctions are not approximate,' Wallach stated of social sweeps gambling establishments. 'They have repeatedly been pointed out by courts and state attorney general of the United States as key factors in identifying that a sweepstakes promo remained in reality a guise for prohibited gaming.'

Among the gambling establishment market's leading trade organizations, the American Gaming Association, is now pressing lawmakers to investigate sweepstakes operators and, in some cases, enact brand-new legislation on the issue.

'Consumers are being deprived of protections and states are forgoing significant tax and income chances as this gambling changes that carried out through regulated channels,' read a well-circulated AGA memo.

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

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, saying the settlement was made to prevent legal costs and continued lawsuits.

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

In the newest suit, which is mostly comparable to its predecessors, New York state citizens 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 'prohibited gaming business. '

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

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

'We have full confidence in our compliance with all laws and policies where we run, and remain positive about the future,' the representative continued. 'We continue to offer our free-to-play games throughout many of The United States and Canada, as we have for more than a decade, developing not only terrific games, user experiences and home entertainment, but also ensuring this is done securely, responsibly and at the greatest level of requirements.

'More broadly, we 'd repeat that class actions and other litigations and arbitrations are relatively common throughout the online social games market (and the US more broadly), and our basic practice is that we intend to intensely protect any claim which might be brought versus us.'

The concerns in between conventional online sports betting and sweepstakes gambling establishments 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 video gaming titans like FanDuel and DraftKings.

'It's ironic that expert athletes are hawking unlawful sports betting 'sweeps' websites while at the very same time the leagues want to predict a strong stance versus unlawful sports betting - especially when trying to tamp down the occasional gaming scandal,' Glaser told DailyMail.com.

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

Along with VGW, Apple and Google are being demanded hosting allegedly prohibited gambling sites

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

'I 'd expect that a league crackdown on professional athletes backing sweepstakes websites refers when, not if,' Glaser added.

Neither an NBA representative nor the gamers' agents reacted to DailyMail.com's ask 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 celebrity endorsers have a responsibility to explain to clients the differences and similarities in between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that needs to be done.

'We have full self-confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the representative stated. 'Some of our values 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 differently.

'Celebrities who provide their names to dubious illegal gaming websites are, at a minimum, putting their credibilities at danger along with courting civil and class actions by customers who declare harm,' Glaser said. 'There is likewise some danger that state regulators and state attorneys basic rope star endorsers into enforcement efforts for assisting in unlawful gambling.'

New YorkNBADrakeParis Hilton