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

No, they weren't personally in attendance, however the world-famous celebs were conspicuously consisted of in a slide discussion on social and sweepstakes gambling establishments - the controversial sites offering both totally free casino-style video games and lucrative rewards, such as cash, gift cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'play for complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are just two cogs in the multibillion-dollar market that now discovers itself besieged by lawsuits. In the eyes of many gaming corporations, not to mention claim plaintiffs and state regulators, sweepstakes gambling establishments function as traditional casinos, just without the oversight, consumer defenses and tax laws. So not just can they avoid the steep 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulatory difficulties like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income in 2015 alone. Now the business faces allegations of illegal gaming in a New York lawsuit that declares VGW uses celeb endorsers to 'produce a veneer of legitimacy' around its item. (See VGW's statement below)

'I'm not sure" if you don't trust us, you can rely on Paris Hilton" is a winning message for companies operating multibillion-dollar unlawful 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 include a variety 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 offer any distinctions in between conventional gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among lots of sweepstakes gambling establishments discovered online

Ryan Seacrest advises fans to dip into Chumba Casino, where many - but not all - games are free

Drake has a deal with social sweeps casino, Stake, that he regularly promotes on social networks

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Instead, advertisements usually focus around the social element of the gambling establishments, while omitting the potential for real sports betting losses.

Others lure consumers with pledges of prizes. One such operator, Stake, ran a social networks ad revealing off Drake's cars and trucks, planes and estates 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 discussed: 'Because I never gave up.'

The disparity between gambling sites and social or sweepstakes gambling establishments is a bit intricate, but operators of the latter insist they're not included with the former.

A representative for an industry trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competition with online casinos and sportsbooks. Furthermore, according to SPGA data, the majority of the players on social-sweepstakes casinos are sports betting free.

'Most social sweeps customers never make a purchase,' the SPGA representative informed DailyMail.com. 'The minority of customers who make purchases do so in quantities far smaller sized than the typical deposit or bet size at real-money online gambling sites.'

Social gambling establishments provide clients a chance to play casino-style games with pals. Players have the choice to buy worthless currency typically referred to as 'gold coins,' which can not be exchanged genuine cash, however can be utilized to unlock numerous functions within the video games.

But within the world of social casinos exists sweepstakes gaming, enabling customers to obtain other currency understood as 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the capacity for monetary losses, like the ones claimed by complainants in Florida, Georgia, New Jersey and New York City. One player told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments 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 Worldwide Poker event

Social sweeps gambling establishment Stake ran an advertisement displaying Drake's vehicles, aircrafts and estates

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

Traditional online gambling establishments are banned in all but seven states, which has actually helped to sustain the appeal of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, enable consumers to submit mail-in requests for complimentary sweeps coins, supplied the gamers follow painfully particular instructions. What's more, players are often rewarded with sweeps coins simply for signing up, consequently providing them a factor to attempt their hands at any variety of gambling establishment games for a chance to win - or lose - real money.

So why are sweepstakes sites permitted to run in 48 states, while online gambling establishments are prohibited in all however 7?

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

'Social sweepstakes games are simply a kind of online entertainment,' an SPGA spokesperson told DailyMail.com by email. 'No purchase is needed to play at social casinos with sweepstakes rewards. Consumers never have to pay for an opportunity to win rewards. That absence of a purchase requirement - or" consideration" - is an essential difference in between social sweeps and standard online gaming sites like casinos.'

Think about 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 french fries that use them the possibility to win lucrative rewards, such as a $1 million prize.

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

'Sweepstakes are an enduring approach for promoting all sort of daily organizations in the United States, whatever from burgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promos are frequently used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting industry insiders, that argument does not cut it.

For beginners, video gaming lawyer Daniel Wallach points out, McDonald's Monopoly game doesn't run forever. Rather, it has a well-defined beginning and end, thus recommending the sweepstakes is not the fast-food giant's main item. Instead, the sweepstakes is being utilized to promote genuine products like fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're generally not tied to casino-style video games of chance,' Wallach informed DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [gambling establishments] possess none of the attributes frequently connected with McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments use" casino-like" payments, generally 80 percent or more of earnings, whereas the normal payout percentage for a momentary marketing sweepstakes is an unimportant share of the profits made by the business [generally less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the web cafes that sprang up in Florida, using customers the opportunity to play casino-style games for real prizes. Many of those brick-and-mortar establishments have actually because been shuttered over accusations of illegal gaming.

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

Now, Wallach argues, social sweeps casinos ought to deal with similar scrutiny.

'These differences are not arbitrary,' Wallach stated of social sweeps gambling establishments. 'They have actually repeatedly been pointed out by courts and state attorney general of the United States as crucial aspects in identifying that a sweepstakes promo was in truth a guise for illegal gaming.'

One of the casino market'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 denied of protections and states are passing up significant tax and earnings chances as this gaming replaces that conducted through managed channels,' read a well-circulated AGA memo.

And then there are the complainants who have actually taken legal action against social gambling establishments in more than a dozen states.

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

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

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

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

'We normally do not comment on matters before the courts,' a VGW representative told DailyMail.com via e-mail. 'However, we note that this claim has only just been filed with the court and VGW has actually not been officially served.

'We have complete self-confidence in our compliance with all laws and policies where we run, and stay confident about the future,' the spokesperson continued. 'We continue to provide our free-to-play games across the majority of The United States and Canada, as we have for more than a decade, creating not just fantastic games, user experiences and entertainment, but also guaranteeing this is done securely, responsibly and at the greatest level of requirements.

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

The issues between standard online gambling and sweepstakes casinos might prove problematic for some celeb 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 video gaming titans like FanDuel and DraftKings.

'It's paradoxical that professional athletes are hawking prohibited sports betting wagering 'sweeps' sites while at the same time the leagues wish to predict a strong position against illegal gaming - particularly when trying to tamp down the periodic gambling scandal,' Glaser informed DailyMail.com.

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

In addition to VGW, Apple and Google are being demanded hosting apparently unlawful sports betting websites

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

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

Neither an NBA spokesperson nor the players' agents reacted to DailyMail.com's ask for remark. 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 discuss to customers the distinctions and similarities between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that requires to be done.

'We have full self-confidence in our influencer and ambassadorial partnerships, and our organization practices more broadly,' the representative stated. 'Some of our worths are" our players come first" and" we do what's right", and we put our values at the core of whatever we do.'

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

'Celebrities who lend their names to dubious unlawful gaming websites are, at a minimum, putting their credibilities at threat along with courting civil and class actions by customers who declare harm,' Glaser stated. 'There is also some threat that state regulators and state attorneys basic rope star endorsers into enforcement efforts for helping with prohibited sports betting.'

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