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

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

The websites are just two cogs in the multibillion-dollar industry that now finds itself besieged by lawsuits. In the eyes of many gaming corporations, not to mention suit complainants and state regulators, sweepstakes casinos act as traditional gambling establishments, only without the oversight, customer protections and tax laws. So not just can they avoid the steep 24-percent federal sports betting levy, but sweepstakes operators aren't subject to regulatory 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 business faces allegations of unlawful gaming in a New york city suit that declares VGW utilizes celebrity endorsers to 'create a veneer of legitimacy' around its product. (See VGW's statement below)

'I'm unsure" if you do not trust us, you can trust 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 celebs from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom offer any distinctions in between traditional gambling and sweepstakes play.

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

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

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

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Instead, ads typically focus around the social aspect of the casinos, while leaving out the potential for real gambling losses.

Others lure customers with pledges of prizes. One such operator, Stake, ran a social media advertisement flaunting Drake's cars and trucks, planes and mansions before rotating to video of the rapper playing online casino-style games.

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

Another caption described: 'Because I never ever gave up.'

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

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 information, many of the players on social-sweepstakes gambling establishments are playing for free.

'Most social sweeps customers never buy,' the SPGA spokesperson told DailyMail.com. 'The minority of consumers who make purchases do so in quantities far smaller sized than the normal deposit or wager size at real-money online gambling websites.'

Social casinos offer clients an opportunity to play casino-style games with good friends. Players have the choice to buy valueless currency often referred to as 'gold coins,' which can not be exchanged genuine cash, however can be utilized to open different functions within the video games.

But within the world of social casinos exists sweepstakes gaming, allowing clients to get other currency called '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. One player told the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the past 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 flaunting Drake's vehicles, aircrafts and estates

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

Traditional online casinos are prohibited in all but seven states, which has assisted to sustain 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 request IDs from players trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, enable clients to submit mail-in demands for free sweeps coins, offered the gamers follow painfully specific guidelines. What's more, players are often rewarded with sweeps coins simply for signing up, therefore offering them a reason to attempt their hands at any variety of gambling establishment video games for a possibility to win - or lose - genuine money.

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

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

'Social sweepstakes video games are just a form of online home entertainment,' an SPGA spokesperson informed DailyMail.com by email. 'No purchase is required to dip into social gambling establishments with sweepstakes prizes. Consumers never have to pay for a chance to win rewards. That lack of a purchase requirement - or" factor to consider" - is a vital distinction between social sweeps and conventional online gambling sites like casinos.'

Think about the method that McDonald's utilizes its annual Monopoly game to promote its food: Customers aren't paying to bet, however rather they're purchasing hamburgers and french fries that provide 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 doesn't fulfill the meaning of gambling in the US.

'Sweepstakes are a long-standing method for promoting all kinds of daily services in the United States, whatever from hamburgers to publication subscriptions to coffee and home improvement shops,' the SPGA representative told DailyMail.com. 'Sweepstakes promos are regularly utilized by a who's who of family names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to lots of sports betting industry experts, that argument doesn't cut it.

For beginners, video gaming attorney Daniel Wallach points out, McDonald's Monopoly game does not run forever. Rather, it has a distinct beginning and end, consequently recommending the sweepstakes is not the fast-food giant's primary product. Instead, the sweepstakes is being utilized to promote real items like fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're usually not tied to casino-style video games of opportunity,' Wallach informed DailyMail.com. 'They're just money free gifts.

'The sweepstakes [gambling establishments] have none of the attributes commonly related to McDonald's-style sweepstakes promos,' Wallach continued. 'Besides running in eternity, the sweepstakes gambling establishments provide" casino-like" payouts, usually 80 percent or more of earnings, whereas the normal payment percentage for a short-term promotional sweepstakes is a minor share of the earnings made by the company [normally less than one percent]'

Wallach is fast to compare the online social sweeps casinos to the internet coffee shops that sprang up in Florida, providing consumers the chance to play casino-style video games for genuine rewards. Many of those brick-and-mortar establishments have considering that been shuttered over allegations of illegal gaming.

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

Now, Wallach argues, social sweeps gambling establishments ought to deal with comparable scrutiny.

'These distinctions are not arbitrary,' Wallach said of social sweeps casinos. 'They have actually repeatedly been mentioned by courts and state chief law officer as key consider determining 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 investigate sweepstakes operators and, in many cases, enact new legislation on the concern.

'Consumers are being denied of protections and states are giving up substantial tax and income chances as this gaming replaces that performed through managed channels,' read a well-circulated AGA memo.

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

Sweepstakes casino operators paid a combined $14.2 million in four separate cases in Kentucky without admitting any misdeed, according to the Washington Post. Meanwhile VGW consented to pay $11.75 million in one class-action suit, saying the settlement was made to prevent legal expenses and continued lawsuits.

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

In the current lawsuit, which is largely comparable to its predecessors, New york city state citizens 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 sports betting business. '

Apple and Google have also been named as accuseds in suits for hosting the sweepstakes sites. But unlike VGW, neither tech business responded to DailyMail.com's ask for remark.

'We usually do not discuss matters before the courts,' a VGW representative informed DailyMail.com via email. 'However, we note that this claim has actually only simply been submitted with the court and VGW has not been formally served.

'We have complete confidence in our compliance with all laws and regulations where we run, and stay positive about the future,' the representative continued. 'We continue to provide our free-to-play video games throughout many of The United States and Canada, as we have for more than a years, creating not only excellent games, user experiences and entertainment, however likewise ensuring this is done securely, responsibly and at the greatest level of standards.

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

The problems in between standard online gambling and sweepstakes gambling establishments could show troublesome for some celebrity endorsers.

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

'It's ironic that professional athletes are hawking unlawful sports betting 'sweeps' websites while at the exact same time the leagues wish to forecast a strong position against unlawful gaming - specifically when attempting to tamp down the occasional gaming scandal,' Glaser told DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter got a lifetime restriction from the NBA over claims he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes gambling establishments.

Together with VGW, Apple and Google are being taken legal action against for hosting supposedly illegal sports betting sites

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

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

Neither an NBA spokesman nor the gamers' representatives reacted to DailyMail.com's ask for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also neglected to react to DailyMail.com emails.

Asked if their celebrity endorsers have a duty to discuss to consumers the differences and similarities in between iGaming and sweepstakes gambling establishments, VGW insisted there is nothing more that needs to be done.

'We have complete self-confidence in our influencer and ambassadorial collaborations, and our company practices more broadly,' the spokesperson stated. 'A few of our values are" our players come first" 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 differently.

'Celebrities who provide their names to shady illegal gambling websites are, at a minimum, putting their track records at threat as well as courting civil and class actions by customers who allege damage,' Glaser stated. 'There is likewise some threat that state regulators and state attorney generals of the United States rope celebrity endorsers into enforcement efforts for assisting in prohibited gaming.'

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