The Louisiana Department of Revenue is suing Virtual Gaming Worlds and MW Services Limited, claiming the sweepstakes casino operators owe $44 million in unpaid sales taxes, interest and penalties.
The move intensifies the state’s battle with sweeps operators, as the lawsuit is preceded by an ultimately-vetoed bill to ban dual-currency casinos and a cease-and-desist letter sent to dozens of companies.
In the filings with the 19th Judicial District Court, the state says VGW, which operates Chumba Casino, LuckyLand Slots and Global Poker, and MW Services, operator of WOW Vegas, failed to collect and remit tax on the sales of virtual currency in Louisiana.
VGW owes about $30.5 million and MW Services about $13.6 million, according to the lawsuit.
The state calculated the figures using base tax amounts of $16.7 million for VGW and $7.5 million for MW, plus interest accrued through Dec. 2024 and penalties, Casino Industry News reported.
Those figures translate to about $159 million and $71.4 million in revenue, respectively, based on sales tax rates in Louisiana and East Baton Rouge Parish, where the suit was filed.
Louisiana’s ongoing battle with sweeps casinos
In April, Louisiana state Senator Adam Bass introduced SB 181, legislation intended to ban sweepstakes casinos. The bill flew unanimously through both houses but was vetoed in June by Gov. Jeff Landry, who called it overly broad and unnecessary.
Gov. Landry stressed online casino gambling was already illegal in the state and that regulation over the industry falls under the jurisdiction of the Louisiana Gaming Control Board. The legislation, he argued, would have disrupted the state’s ability to enforce the current law.
Less than a week later, on June 17, the Gaming Control Board, in coordination with the Attorney General’s office and Police Gaming Enforcement Division, issued 42 cease-and-desist letters to online sweeps operators and offshore gambling sites, accusing them of “circumventing Louisiana gaming laws” by operating as unlicensed casinos and sportsbooks (Mississippi sent C&D’s to 10 operators on the same day).
In a formal opinion on July 2, Louisiana AG Liz Murrill wrote, “Online businesses offering casino-style games – purporting to be sweepstakes or social gaming platforms – are operating in violation of Louisiana law. These activities constitute illegal gambling and illegal gambling by computer under multiple provisions.”
Ramifications of Louisiana’s lawsuit
With 40+ companies being shown the door in Louisiana, VGW and WOW Vegas may be the first of many to get hit with an unexpected tax bill, gaming attorney Daniel Wallach surmises.
Sweeps casinos are facing numerous legal and regulatory roadblocks, and while they are still permitted to operate in 42 states, the addressable market in the US appears to be shrinking.
Bans have been enacted in Montana, Connecticut and New Jersey, a similar bill in New York awaits Gov. Kathy Hochul’s signature, and AB 831 is nearing the goal line in California. Several other states, including Nevada, Michigan and Arizona, have stepped up enforcement against these companies.
By going after unpaid taxes, Louisiana could be demonstrating a potential new tactic for these states.
