Popular sweepstakes site, Chumba Casino will soon end promotional play in the state of Louisiana.
The platform, operated by Australia-based Virtual Gaming Worlds (VGW), has stated that free play with Gold Coins (GC) will remain, but residents of the Pelican State will lose the ability to play with Sweeps Coins (SC). This means no more prize redemptions, effectively turning Chumba into a pure social casino in Louisiana. Other states are unaffected in this way, though VGW announced similar changes in NJ a month after SweepsKings reported the LA news.
Why Is Chumba Ending Sweepstakes Play in Louisiana?
From July 17, Chumba players will no longer be able to obtain Sweeps Coins in any way, and from August 15, players will no longer be able to play using Sweeps Coins.
If you want to make a redemption request from Louisiana, we suggest you do it as soon as possible to avoid disappointment.
The VGW news was broken to Louisiana players last week in an email which read:
“We understand this news may be disappointing, and want to assure you that this decision wasn’t made lightly – it was carefully considered based on several business factors.”
It doesn’t take much guesswork to figure out that this move is in response to recent developments in Louisiana, namely the Louisiana Gaming Control Board (LGCB) issuing cease and desist letters to multiple sweeps platforms. Chumba, along with sister sites LuckyLand Slots and Global Poker, was on that list of recipients, and we can assume that all three sites will be free play only from August 17.
In fact, an anti-sweeps bill was passed in both chambers of the Louisiana legislature in June, but it was eventually vetoed by Governor Jeff Landry. Landry stated in his explanation that the state was already doing enough to remove the sweepstakes vertical from the state; he emphasized sweeps are something that he considers illegal in the first place. Then shortly after, the cease and desist blitz came.
Then, a legal opinion from Attorney General Liz Murrill made things crystal clear:
“Following a review of applicable Louisiana statutes and legal precedent, it is the opinion of this office that online businesses offering casino style games—purporting to be sweepstakes or social gaming platforms—are operating in violation of Louisiana law.”
Louisiana seems intent on making its jurisdiction a hostile environment for sweepstakes casinos, but it’s far from the only state involved in the debate.
The California legislature is considering its own version of an anti-sweeps bill in the form of AB831, and as a bigger market, a ban in the Golden State could have a much wider impact on sweeps casinos and the industry as a whole.
Backed by the tribal casinos, who have an exclusive right to offer gambling in California, commentators give AB831 a good chance of passing. It gets its second legislative hearing on July 15 before the Senate Public Safety Committee, but it seems VGW is already preparing for a worst case scenario in CA.
Changes in California and New Sales Tax Policy in Select States
VGW recently revised its user terms for California residents by introducing text that removes certain legal protections granted under state law. Under the new clause, users are required to waive the right to pursue potential future claims against the company. It’s an adjustment that, according to some legal analysts, may protect VGW from class action litigation down the line.
Plaintiffs wouldn’t be able to sue VGW retroactively if AB831 was signed into law, but users can sue over things that were already illegal under existing law if a court or regulator later finds the model to have violated it. VGW is basically protecting itself in every way possible, as it often finds itself on the receiving end of lawsuits (although none have proven the dual-currency business model illegal yet).
Then finally, the last piece of VGW-related news is that sales tax is now being charged on Gold Coin purchases in some states. There’s no official word on which states have been affected yet, but some reports suggest changes in Kentucky, Illinois, Arkansas, Pennsylvania, and Hawaii across all VGW sister sites.
This means that players will have to pay the local sales tax rate, which varies from around 3-7.25% depending on the jurisdiction. Once again, this move seems to be prompted by the ongoing legal debate around the sweeps format, with VGW showing they are willing to contribute back into local economies.
It’s worth noting that, as a digital product, Gold Coin bundles don’t require sales tax to be levied, but VGW appears to be adopting tax practices to position itself as compliant amid all the scrutiny.
One of the arguments often leveled against the sweepstakes industry is that it doesn’t pay the same higher taxes that traditional and online casinos pay, but it’s fairly clear that sweepstakes casinos would favor higher taxes and full regulation over an outright ban on their product.
For now, that unfortunately seems unlikely, with multiple states forging ahead with anti-sweepstakes legislation. Montana, Connecticut, Nevada, and New York have all passed such bills this year, with NY’s still waiting for a sign off from the governor.
It’s a trying time for the sweepstakes industry in general, and for players who could potentially lose access to their favorite sweepstakes casino. SweepsKings will continue to keep you updated with all the developments that players need to know about.
Author: Joseph Allen
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