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

No, they weren't personally in participation, however the world-famous celebs were notably included in a slide discussion on social and sweepstakes casinos - the controversial sites providing both complimentary casino-style games and rewarding prizes, such as money, 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 simply two cogs in the multibillion-dollar industry that now finds itself besieged by claims. In the eyes of lots of video gaming corporations, not to discuss lawsuit complainants and state regulators, sweepstakes gambling establishments function as standard casinos, only without the oversight, consumer securities and tax laws. So not just can they prevent the high 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulatory difficulties like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue in 2015 alone. Now the business deals with accusations of prohibited sports betting in a New york city lawsuit that declares VGW utilizes celeb endorsers to 'create a veneer of authenticity' around its product. (See VGW's declaration below)

'I'm unsure" if you don't trust us, you can rely on Paris Hilton" is a winning message for companies running multibillion-dollar illegal operations out of places like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers include a range of celebrities from sports betting enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom use any differences in between standard gambling and sweepstakes play.

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

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

Drake has a handle social sweeps casino, Stake, that he regularly touts on social media

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Instead, advertisements typically center around the social aspect of the casinos, while leaving out the capacity for actual gaming losses.

Others tempt customers with promises of rewards. One such operator, Stake, ran a social media ad flaunting Drake's automobiles, airplanes and mansions before pivoting to footage of the rap artist playing online casino-style video games.

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

Another caption described: 'Because I never quit.'

The inconsistency between gaming websites and social or sweepstakes casinos is a bit complicated, 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), discussed its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, the majority of the players on social-sweepstakes casinos are playing for totally free.

'Most social sweeps consumers never purchase,' the SPGA representative informed DailyMail.com. 'The minority of clients who make purchases do so in amounts far smaller than the normal deposit or bet size at real-money online sports betting websites.'

Social gambling establishments offer consumers a possibility to play casino-style video games with pals. Players have the alternative to purchase worthless currency frequently referred to as 'gold coins,' which can not be exchanged for genuine cash, however can be utilized to unlock various functions within the video games.

But within the world of social gambling establishments exists sweepstakes gaming, allowing consumers to get other currency referred to 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 plaintiffs in Florida, Georgia, New Jersey and New York. One gamer informed the Washington Post he lost more than $100,000 on sweepstakes casinos in the past year after continuing to purchase more coins in pursuit of cash and other things of value.

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

Social sweeps casino Stake ran an ad displaying Drake's vehicles, 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 seven states, which has helped to fuel the popularity of sweepstakes casinos.

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

Many websites, like the crypto-compatible Stake, enable consumers to submit mail-in ask for free sweeps coins, provided the gamers follow painfully particular instructions. What's more, players are often rewarded with sweeps coins just for registering, thereby providing them a reason to try their hands at any number of casino games for a chance to win - or lose - real cash.

So why are sweepstakes sites allowed to operate in 48 states, while online gambling establishments are banned in all but 7?

According to the stakeholders, their product is the totally free casino-style gaming, and the real-stakes competition is just a means of promoting their support.

'Social sweepstakes games are merely a kind of online entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is required to dip into social gambling establishments with sweepstakes rewards. Consumers never ever need to spend for an opportunity to win prizes. That lack of a purchase requirement - or" consideration" - is a vital distinction in between social sweeps and conventional online gambling websites like gambling establishments.'

Think about the manner in which 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 fries that use them the possibility to win financially rewarding rewards, such as a $1 million jackpot.

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

'Sweepstakes are a long-standing technique for promoting all type of everyday services in the United States, everything from hamburgers to magazine memberships to coffee and home enhancement shops,' the SPGA spokesperson told DailyMail.com. 'Sweepstakes promotions are regularly utilized by a who's who of home 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 starters, gaming lawyer Daniel Wallach explains, McDonald's Monopoly game does not run forever. Rather, it has a distinct beginning and end, thereby suggesting the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being utilized to promote genuine products like fries, shakes, and the Filet-O-Fish.

'They don't last forever and they're generally not tied to casino-style games of possibility,' Wallach told DailyMail.com. 'They're simply cash giveaways.

'The sweepstakes [casinos] have none of the attributes frequently related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes gambling establishments offer" casino-like" payments, generally 80 percent or more of earnings, whereas the normal payment portion for a short-term advertising sweepstakes is a trivial share of the profits made by the business [typically less than one percent]'

Wallach fasts to compare the online social sweeps gambling establishments to the web cafes that emerged in Florida, providing customers the opportunity to play casino-style video games for genuine rewards. Many of those brick-and-mortar facilities have considering that been shuttered over allegations of unlawful gambling.

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

Now, Wallach argues, social sweeps gambling establishments ought to face similar analysis.

'These differences are not approximate,' Wallach said of social sweeps gambling establishments. 'They have actually consistently been pointed out by courts and state lawyer generals as essential consider determining that a sweepstakes promo was in reality a guise for prohibited gaming.'

Among the gambling establishment market's leading trade companies, the American Gaming Association, is now pushing lawmakers to investigate sweepstakes operators and, in many cases, enact brand-new legislation on the concern.

'Consumers are being denied of defenses and states are giving up considerable tax and income chances as this gaming replaces that conducted through regulated channels,' read a well-circulated AGA memo.

And then there are the plaintiffs 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 wrongdoing, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action lawsuit, saying the settlement was made to avoid legal expenses and continued litigation.

Michael Phelps has actually 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 'unlawful gambling enterprise. '

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

'We generally do not comment on matters before the courts,' a VGW spokesperson informed DailyMail.com by means of e-mail. 'However, we keep in mind that this claim has actually only just been submitted with the court and VGW has not been officially served.

'We have complete self-confidence in our compliance with all laws and policies where we operate, and remain confident about the future,' the spokesperson continued. 'We continue to offer our free-to-play games across most of North America, as we have for more than a decade, developing not just excellent video games, user experiences and entertainment, however likewise guaranteeing this is done safely, properly and at the highest level of requirements.

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

The problems between traditional online sports betting and sweepstakes gambling establishments could show troublesome 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 conventional gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking prohibited sports betting wagering 'sweeps' sites while at the exact same time the leagues desire to predict a strong stance against unlawful gaming - particularly when attempting to tamp down the occasional gaming scandal,' Glaser told DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter received a life time 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 casinos.

Along with VGW, Apple and Google are being demanded hosting apparently unlawful sports betting websites

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

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

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

Asked if their celeb endorsers have an obligation to explain to customers the differences and resemblances in between iGaming and sweepstakes casinos, VGW firmly insisted there is nothing more that requires to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our business practices more broadly,' the representative said. 'Some of our values are" our gamers precede" and" we do what's right", and we put our values at the core of whatever we do.'

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

'Celebrities who provide their names to dubious unlawful gaming websites are, at a minimum, putting their reputations at danger as well as courting civil and class actions by customers who allege harm,' Glaser said. 'There is likewise some danger that state regulators and state attorneys basic rope celebrity endorsers into enforcement efforts for facilitating unlawful gambling.'

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