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, but the world-famous celebs were notably included in a slide discussion on social and sweepstakes casinos - the controversial sites offering 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 websites 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 lawsuit complainants and state regulators, sweepstakes casinos act as conventional casinos, only without the oversight, consumer securities and tax laws. So not just can they prevent the high 24-percent federal gambling levy, however sweepstakes operators aren't subject to regulative hurdles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the business faces accusations of unlawful gaming in a New York claim that claims VGW uses star endorsers to 'create a veneer of legitimacy' around its product. (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 speaker, Howard Glaser of video gaming corporation Light & Wonder, told 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 provide any distinctions in between traditional gambling and sweepstakes play.

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

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

Drake has an offer with social sweeps gambling establishment, Stake, that he frequently promotes on social media

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Instead, advertisements normally focus around the social element of the gambling establishments, while leaving out the capacity for real gaming losses.

Others tempt clients with guarantees of prizes. One such operator, Stake, ran a social media advertisement revealing off Drake's cars and trucks, airplanes and estates before pivoting to video of the rapper playing online casino-style video games.

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

Another caption discussed: 'Because I never ever offered up.'

The inconsistency between gaming websites and social or sweepstakes gambling establishments is a bit intricate, but operators of the latter insist they're not involved with the previous.

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

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

Social casinos provide customers a chance to play casino-style games with buddies. Players have the choice to purchase valueless currency typically described as 'gold coins,' which can not be exchanged genuine cash, but can be used to unlock different features within the video games.

But within the world of social gambling establishments exists sweepstakes gaming, allowing clients to get other currency understood as 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the potential for monetary losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York. 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 value.

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

Social sweeps gambling establishment Stake ran an ad flaunting Drake's vehicles, aircrafts and mansions

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

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

Anyone over the age of 18 can access the sweepstakes sites, which do not require usually need identification. However, sites like Chumba will ask for IDs from players trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, allow clients to submit mail-in ask for totally free sweeps coins, provided the players follow painfully particular instructions. What's more, players are often rewarded with sweeps coins just for registering, thereby providing a reason to attempt their hands at any variety of casino video games for a chance to win - or lose - genuine money.

So why are sweepstakes sites 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 video gaming, and the real-stakes competition is just a means of promoting their bread and butter.

'Social sweepstakes games are merely a type of online home entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is required to play at social gambling establishments with sweepstakes rewards. Consumers never need to pay for an opportunity to win rewards. That absence of a purchase requirement - or" consideration" - is a vital distinction in between social sweeps and standard online sports betting websites like gambling establishments.'

Consider the method that McDonald's uses its annual Monopoly game to promote its food: Customers aren't paying to gamble, however rather they're purchasing 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 'factor to consider', the game itself does not satisfy the definition of gaming in the US.

'Sweepstakes are an enduring approach for promoting all kinds of everyday businesses in the United States, whatever from burgers to magazine subscriptions to coffee and home enhancement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are routinely used by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to numerous sports betting market insiders, that argument doesn't cut it.

For beginners, gaming attorney Daniel Wallach explains, McDonald's Monopoly game doesn't run forever. Rather, it has a distinct start and end, thereby suggesting the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being used to promote genuine products like french fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're normally not connected to casino-style games of possibility,' Wallach told DailyMail.com. 'They're just cash giveaways.

'The sweepstakes [casinos] have none of the qualities typically associated with McDonald's-design sweepstakes promotions,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments use" casino-like" payments, generally 80 percent or more of revenues, whereas the typical payment percentage for a temporary promotional sweepstakes is an unimportant share of the income earned by the business [usually less than one percent]'

Wallach fasts to liken the online social sweeps gambling establishments to the internet coffee shops that emerged in Florida, providing consumers the chance to play casino-style video games for genuine rewards. Much of those brick-and-mortar establishments have given that been shuttered over allegations of prohibited gaming.

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

Now, Wallach argues, social sweeps gambling establishments should deal with similar scrutiny.

'These differences are not arbitrary,' Wallach said of social sweeps casinos. 'They have actually consistently been mentioned by courts and state chief law officer as crucial consider figuring out that a sweepstakes promotion remained in truth a guise for illegal sports betting.'

One of the casino market's leading trade organizations, the American Gaming Association, is now pressing legislators to examine sweepstakes operators and, in many cases, enact brand-new legislation on the issue.

'Consumers are being denied of defenses and states are forgoing significant tax and revenue opportunities as this gambling replaces that conducted through regulated channels,' checked out a well-circulated AGA memo.

And then there are the complainants who have sued social gambling establishments in more than a dozen states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in four different cases in Kentucky without admitting any misbehavior, 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 actually signed a handle the VGW Group, which owns Global Poker

In the latest claim, which is mainly comparable 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 described in the filing as an 'prohibited gambling business. '

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

'We generally don't talk about matters before the courts,' a VGW spokesperson informed DailyMail.com by means of e-mail. 'However, we keep in mind that this claim has only just been submitted with the court and VGW has actually not been formally 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 use our free-to-play games throughout the majority of The United States and Canada, as we have for more than a years, creating not just excellent games, user experiences and home entertainment, however likewise guaranteeing this is done safely, responsibly and at the greatest level of standards.

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

The problems in between standard online sports betting and sweepstakes gambling establishments might show problematic for some celebrity 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 ironic that professional athletes are hawking prohibited sports betting wagering 'sweeps' websites while at the exact same time the leagues wish to predict a strong stance versus illegal gaming - specifically when attempting to tamp down the occasional sports betting scandal,' Glaser informed DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter got a lifetime ban from the NBA over claims he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes casinos.

Together with VGW, Apple and Google are being demanded hosting apparently prohibited sports betting websites

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

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

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

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

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

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

'Celebrities who lend their names to shady illegal sports betting sites are, at a minimum, putting their reputations at risk 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 attorneys general rope celebrity endorsers into enforcement efforts for assisting in prohibited gambling.'

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