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

No, they weren't personally in participation, however the world-famous stars were conspicuously included in a slide discussion on social and sweepstakes casinos - the controversial websites using both complimentary casino-style games and rewarding rewards, such as cash, present cards or cryptocurrency. In one ad, 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 sites are just 2 cogs in the multibillion-dollar industry that now finds itself besieged by suits. In the eyes of numerous video gaming corporations, not to point out lawsuit plaintiffs and state regulators, sweepstakes gambling establishments serve as traditional gambling establishments, only without the oversight, consumer defenses and tax laws. So not just can they prevent the high 24-percent federal gambling levy, but sweepstakes operators aren't based on regulatory hurdles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in income last year alone. Now the company faces accusations of prohibited gaming in a New York claim that claims VGW utilizes celeb endorsers to 'create a veneer of authenticity' around its product. (See VGW's declaration listed below)

'I'm uncertain" if you do not 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 speaker, Howard Glaser of gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a variety of celebs from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom provide any distinctions between conventional sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of lots of sweepstakes casinos found online

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

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

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Instead, ads generally focus around the social element of the gambling establishments, while omitting the potential for real gaming losses.

Others tempt clients with promises of rewards. One such operator, Stake, ran a social media ad revealing off Drake's cars and trucks, aircrafts and mansions before pivoting to video 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 explained: 'Because I never offered up.'

The discrepancy between gaming websites and social or sweepstakes casinos is a bit complicated, however operators of the latter insist they're not involved with the former.

A representative 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, most of the players on social-sweepstakes gambling establishments are playing for free.

'Most social sweeps clients never purchase,' the SPGA representative told DailyMail.com. 'The minority of clients who make purchases do so in amounts far smaller sized than the common deposit or wager size at real-money online sports betting sites.'

Social casinos provide consumers an opportunity to play casino-style video games with good friends. Players have the alternative to buy worthless currency frequently described as 'gold coins,' which can not be exchanged genuine cash, however can be utilized to open various functions within the video games.

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

And therein lies the capacity for monetary losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York City. One gamer told the Washington Post he lost more than $100,000 on sweepstakes casinos in the previous year after continuing to purchase more coins in pursuit of money and other things of worth.

The Philadelphia 76ers' Paul George is seen promoting an International Poker occasion

Social sweeps casino Stake ran an ad displaying Drake's cars, aircrafts and mansions

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

Traditional online gambling establishments are prohibited in all however 7 states, which has helped to fuel the appeal of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes websites, which do not need usually need identification. However, websites like Chumba will request IDs from gamers attempting to withdraw any funds.

Many sites, like the crypto-compatible Stake, enable consumers to send mail-in ask for free sweeps coins, provided the gamers follow painfully specific guidelines. What's more, gamers are typically rewarded with sweeps coins simply for registering, consequently providing a reason to attempt their hands at any number of gambling establishment games for a chance to win - or lose - real money.

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

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

'Social sweepstakes video games are simply a type of online entertainment,' an SPGA representative told DailyMail.com by email. 'No purchase is needed to dip into social gambling establishments with sweepstakes prizes. Consumers never ever need to spend for an opportunity to win rewards. That absence of a purchase requirement - or" factor to consider" - is a crucial distinction between social sweeps and conventional online gaming websites like gambling establishments.'

Think about the manner in which McDonald's uses its yearly Monopoly video game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and fries that provide them the possibility to win profitable prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'factor to consider', the game itself does not satisfy the meaning of gambling in the US.

'Sweepstakes are an enduring technique for promoting all sort of daily services in the United States, everything from hamburgers to magazine subscriptions to coffee and home enhancement shops,' the SPGA spokesperson informed 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 sports betting market experts, that argument doesn't cut it.

For beginners, video gaming lawyer Daniel Wallach explains, McDonald's Monopoly game doesn't run forever. Rather, it has a distinct beginning and end, thereby suggesting the sweepstakes is not the fast-food giant's primary 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 usually not tied to casino-style video games of chance,' Wallach told DailyMail.com. 'They're just money giveaways.

'The sweepstakes [gambling establishments] have none of the characteristics typically associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments use" casino-like" payments, typically 80 percent or more of revenues, whereas the typical payout percentage for a short-term promotional sweepstakes is an unimportant share of the income made by the business [typically less than one percent]'

Wallach is quick to compare the online social sweeps casinos to the web cafes that emerged in Florida, offering consumers the opportunity to play casino-style video games for genuine prizes. A number of those brick-and-mortar establishments have actually given that been shuttered over allegations of unlawful gaming.

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

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

'These distinctions are not arbitrary,' Wallach said of social sweeps gambling establishments. 'They have actually repeatedly been mentioned by courts and state chief law officer as crucial aspects in determining that a sweepstakes promo remained in reality a guise for prohibited sports betting.'

One of the casino industry's leading trade companies, the American Gaming Association, is now pressing legislators 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 considerable tax and profits chances as this sports betting changes that performed 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 4 separate cases in Kentucky without confessing any misdeed, according to the Washington Post. Meanwhile VGW concurred to 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 an offer with the VGW Group, which owns Global Poker

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

Apple and Google have actually likewise been called as accuseds in lawsuits for hosting the sweepstakes sites. But unlike VGW, neither tech business responded to DailyMail.com's ask for comment.

'We typically do not comment on matters before the courts,' a VGW spokesperson told DailyMail.com through e-mail. 'However, we note that this claim has actually only just been submitted with the court and VGW has not been formally served.

'We have complete self-confidence in our compliance with all laws and policies where we operate, and remain positive about the future,' the spokesperson continued. 'We continue to provide our free-to-play video games throughout many of North America, as we have for more than a decade, creating not just terrific games, user experiences and entertainment, but likewise guaranteeing this is done safely, responsibly and at the highest level of standards.

'More broadly, we 'd reiterate 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 mean to vigorously defend any claim which might be brought against us.'

The problems in between conventional online gaming and sweepstakes casinos could prove troublesome for some celebrity endorsers.

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

'It's ironic that expert athletes are hawking unlawful sports betting 'sweeps' sites while at the exact same time the leagues wish to predict a strong position against illegal gambling - specifically when attempting to tamp down the periodic sports betting scandal,' Glaser informed DailyMail.com.

It was just 8 months ago that Toronto Raptors forward Jontay Porter got 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 casinos.

Together with VGW, Apple and Google are being demanded hosting allegedly unlawful gambling sites

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

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

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

Asked if their star endorsers have an obligation to describe to customers the differences and similarities between iGaming and sweepstakes gambling establishments, VGW firmly insisted there is nothing more that needs to be done.

'We have full confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the spokesperson said. 'A few of our worths are" our players come first" 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 lend their names to dubious illegal gambling sites are, at a minimum, putting their reputations at threat as well as courting civil and class actions by consumers who declare damage,' Glaser stated. 'There is likewise some threat that state regulators and state chief law officers rope celebrity endorsers into enforcement efforts for facilitating illegal sports betting.'

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