Louisiana Sues Sweepstakes Operators VGW and WOW Vegas for $44 Million in Unpaid Sales Taxes

The Core of the Lawsuits: A Sales Tax on Virtual Goods

The state’s legal argument is a straightforward one, rooted in Louisiana’s tax code. The Department of Revenue contends that the “Gold Coins” and other virtual currencies sold by these platforms qualify as “digital goods,” which are subject to state sales tax.

According to the petitions filed in court, the state alleges that VGW, the operator of popular sites like Chumba Casino and Global Poker, owes over $32.4 million. The operator of WOW Vegas, MW Services, is being sued for approximately $13.5 million.

The lawsuits claim that both companies, by selling digital goods to Louisiana residents, qualify as “dealers” under state law and therefore had a legal “duty to collect and remit sales tax and failed to do so.” Because they allegedly failed to collect the tax from their customers, the state argues that the companies are now “personally liable for payment of that tax.”

A New Front in the Sweepstakes War

This tax-focused legal strategy is a new and potentially powerful weapon for states that are looking to crack down on the sweepstakes industry. It follows a recent opinion from the Louisiana Attorney General’s office that declared online sweepstakes casinos to be illegal gambling businesses.

Crucially, that opinion also included a warning that, regardless of their legal status, these operators were “still subject to Federal and State tax laws and liabilities.” The new lawsuits are the direct fulfillment of that warning.

As Wallach put it in a social media post announcing the news, “The bill has come due.”

The Broader Context: A Nationwide Crackdown

Louisiana’s move is part of a broader, nationwide trend of increasing scrutiny and enforcement against the sweepstakes casino model. States across the country are taking action on multiple fronts:

• Legislative Bans: States like New Jersey and Montana have passed laws explicitly banning sweepstakes casinos. In California, a similar bill is advancing through the legislature.
• Regulatory Enforcement: Gaming regulators in states like Michigan have issued cease-and-desist letters to numerous operators, forcing them to exit the market.
• Civil Litigation: In Los Angeles, the city attorney has filed a major lawsuit against the operator Stake.US and its suppliers, accusing them of running an illegal gambling enterprise.