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

No, they weren't personally in participation, but the world-famous celebs were notably consisted of in a slide discussion on social and sweepstakes casinos - the questionable websites offering both totally free casino-style video games and lucrative rewards, such as money, present 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 2 cogs in the multibillion-dollar market that now discovers itself besieged by claims. In the eyes of lots of gaming corporations, not to discuss claim complainants and state regulators, sweepstakes gambling establishments serve as traditional casinos, just without the oversight, customer defenses and tax laws. So not only can they prevent the high 24-percent federal gaming levy, but sweepstakes operators aren't subject to regulative obstacles like anti-money laundering and responsible-gaming protections.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in profits in 2015 alone. Now the company deals with allegations of illegal sports betting in a New York claim that declares VGW utilizes celebrity endorsers to 'develop a veneer of authenticity' around its product. (See VGW's statement listed below)

'I'm uncertain" if you do not trust us, you can trust Paris Hilton" is a winning message for companies operating multibillion-dollar prohibited operations out of locations like Malta, Isle of Man, or US mail drops,' Friday's presenter, Howard Glaser of video gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers consist of a variety of celebrities 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 offer any distinctions in between standard gaming and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among many sweepstakes casinos 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 gambling establishment, Stake, that he routinely promotes on social media

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Instead, advertisements usually focus around the social aspect of the gambling establishments, while leaving out the capacity for actual gambling losses.

Others tempt customers with promises of rewards. One such operator, Stake, ran a social networks ad showing off Drake's cars, 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 very first caption on the screen.

Another caption described: 'Because I never ever quit.'

The discrepancy between sports betting sites and social or sweepstakes casinos is a bit complicated, however operators of the latter insist they're not included with the former.

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competitors with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, the majority of the gamers on social-sweepstakes gambling establishments are sports betting complimentary.

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

Social casinos provide consumers an opportunity to play casino-style video games with buddies. Players have the option to purchase valueless currency typically referred to as 'gold coins,' which can not be exchanged genuine cash, however can be utilized to open numerous functions within the games.

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

And therein lies the potential for financial losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York. 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 occasion

Social sweeps casino Stake ran an advertisement revealing off Drake's cars and trucks, airplanes and estates

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

Traditional online casinos are banned in all however 7 states, which has helped to sustain the popularity of sweepstakes gambling establishments.

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

Many websites, like the crypto-compatible Stake, permit customers to send mail-in demands for free sweeps coins, provided the gamers follow painfully particular guidelines. What's more, players are often rewarded with sweeps coins merely for registering, thus offering them a factor to attempt their hands at any variety of gambling establishment games for an opportunity to win - or lose - real money.

So why are sweepstakes sites permitted to run in 48 states, while online casinos are banned in all but 7?

According to the stakeholders, their product is the complimentary casino-style video gaming, and the real-stakes competition is just a means 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 needed to play at social casinos with sweepstakes prizes. Consumers never have to spend for a chance to win prizes. That lack of a purchase requirement - or" consideration" - is an essential distinction between social sweeps and traditional online gaming websites like gambling establishments.'

Consider the manner in which McDonald's utilizes its annual Monopoly game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and fries that use them the possibility to win rewarding prizes, such as a $1 million prize.

And without a purchase requirement, or 'consideration', the game itself does not satisfy the definition of gaming in the US.

'Sweepstakes are a long-standing technique for promoting all type of everyday organizations in the United States, whatever from hamburgers to magazine memberships to coffee and home enhancement stores,' the SPGA representative told DailyMail.com. 'Sweepstakes promotions are regularly used by a who's who of household 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 starters, video gaming lawyer Daniel Wallach points out, McDonald's Monopoly video game doesn't run forever. Rather, it has a well-defined start and end, thereby recommending the sweepstakes is not the fast-food giant's primary item. Instead, the sweepstakes is being used to promote real items like fries, shakes, and the Filet-O-Fish.

'They don't last permanently and they're generally not tied to casino-style games of opportunity,' Wallach informed DailyMail.com. 'They're simply money giveaways.

'The sweepstakes [gambling establishments] possess none of the qualities commonly associated with McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes casinos provide" casino-like" payouts, normally 80 percent or more of incomes, whereas the common payout portion for a short-term advertising sweepstakes is a minor share of the profits earned by the company [typically less than one percent]'

Wallach is quick to compare the online social sweeps gambling establishments to the web coffee shops that emerged in Florida, using customers the possibility to play casino-style games for genuine rewards. A lot of those brick-and-mortar facilities have because been shuttered over claims of illegal gambling.

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

Now, Wallach argues, social sweeps casinos should face similar examination.

'These differences are not approximate,' Wallach said of social sweeps casinos. 'They have consistently been pointed out by courts and state lawyer generals as essential consider identifying that a sweepstakes promotion remained in fact a guise for unlawful gambling.'

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

'Consumers are being deprived of securities and states are passing up substantial tax and profits chances as this gaming changes that carried out through regulated channels,' read a well-circulated AGA memo.

And then there are the complainants who have sued social casinos in more than a lots states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in 4 separate cases in Kentucky without confessing any misbehavior, 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 actually signed a handle the VGW Group, which owns Global Poker

In the most recent claim, which is mostly similar to its predecessors, New York state homeowners 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 business. '

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

'We normally do not talk about matters before the courts,' a VGW representative told DailyMail.com by means of 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 regulations where we operate, and remain confident about the future,' the spokesperson continued. 'We continue to use our free-to-play video games across most of North America, as we have for more than a years, developing not only excellent games, user experiences and entertainment, but also guaranteeing this is done securely, properly and at the greatest level of standards.

'More broadly, we 'd restate that class actions and other lawsuits and arbitrations are fairly typical across the online social games market (and the US more broadly), and our standard practice is that we mean to intensely protect any claim which might be brought versus us.'

The issues between standard online gambling and sweepstakes gambling establishments might 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 video gaming titans like FanDuel and DraftKings.

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

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

Together with VGW, Apple and Google are being sued for hosting presumably prohibited sports betting sites

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

'I 'd expect that a league crackdown on professional 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 requests for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also ignored to react to DailyMail.com emails.

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

'We have complete confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the representative said. 'A few of our values are" our gamers come first" and" we do what's right", and we put our values at the core of whatever we do.'

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

'Celebrities who provide their names to shady prohibited gambling websites are, at a minimum, putting their reputations at threat along with courting civil and class actions by consumers who allege harm,' Glaser stated. 'There is likewise some danger that state regulators and state attorneys basic rope celeb endorsers into enforcement efforts for assisting in unlawful gaming.'

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