The Louisiana Department of Revenue (LDR) has filed lawsuits against VGW (Chumba, LuckyLand Slots, Global Poker) and MW Services (WOW Vegas) for failing to pay sales tax on virtual coins sold to state residents.
In the case of VGW, the LDR is chasing around $30.48m, which includes tax, penalties, and interest. Similarly, MW Services is being sued for around $13.55m.
Virtual Gaming Worlds (VGW) is the original sweepstakes casino operator, having launched Chumba Casino in 2012. VGW’s parent company is based in Australia, but subsidiaries are also held in Malta and the US. MW Services, which operates the WOW Vegas platform, is incorporated in Gibraltar.
For both businesses, exposure to US corporate income tax is limited. However, such companies can remain subject to tax obligations if a connection with US customers is established, and this is precisely why Louisiana’s Department of Revenue is pursuing the lawsuits.
Sweepstakes casinos function by offering free play with Gold Coins (or an equivalent) and promotional play with Sweepstakes Coins (or an equivalent). Sweepstakes Coins are generally redeemable for real cash prizes once any playthrough requirements have been met, and players can purchase Gold Coins, with Sweepstakes Coins usually bundled in, for free.
Until now, sales tax has not been widely collected on virtual coin purchases by sweepstakes casinos, if at all. Now, by classifying these virtual coins as taxable digital goods and asserting that both VGW and MW Services have sufficient economic nexus with the state, Louisiana aims to collect millions in unpaid sales taxes.
The lawsuits filed by the LDR cite various local laws that define which goods are eligible for sales tax. The LDR also argues that despite the operation of the sweepstakes casinos within the state being illegal, sales tax is still applicable.
Louisiana Takes Multi-Pronged Approach Against Sweepstakes Casinos in 2025
There’s been a lot of action out of Louisiana in relation to sweepstakes casinos in 2025. In June, anti-sweepstakes bill SB181 was passed by the state legislature, but it was ultimately vetoed by governor Jeff Landry, who argued that the state already had laws in place that made the format illegal.
In his veto letter, Landry stated:
“The Board [Louisiana Gaming Control Board] and its regulatory partners will take further action as deemed necessary to enforce state gaming laws, protect patrons and bettors, and maintain the integrity of Louisiana’s gaming industry.”
It wasn’t long before those words were proven true. Within the same month, the Louisiana Gaming Control Board issued cease and desist letters to more than 40 online gambling platforms, including VGW, MW Services, and other operators.
Then in early July, the Louisiana Attorney General Liz Murrill issued a legal opinion stating that sweepstakes casinos constituted illegal gambling under Louisiana law. By the end of the month, WOW Vegas had exited the Pelican State and VGW had restricted sweeps play, essentially only offering a purely free-to-play platform with Gold Coins there.
Despite the two companies no longer operating in Louisiana, the state is pressing forward with these lawsuits to recover past-due sales tax, interest, and penalties. It’s likely part of Louisiana’s broader effort to discourage sweepstakes casinos from operating in the state. By targeting two of the most popular and profitable companies, the state is sending a clear message while also seeking to recoup revenue.
VGW Started Collecting Voluntary Sales Tax in July
It’s also worth noting that in July, VGW became the first sweepstakes operator to collect a voluntary sales tax on virtual coin purchases. Precise details are still unclear, but the move is widely seen as a goodwill gesture, signaling to lawmakers nationwide that the sweeps industry is willing to engage with regulation and taxation similar to that governing traditional iGaming. Paying sales tax and submitting to a regulated framework is far more preferable for sweeps operators than the outright bans that have emerged in various states this year.
In a way, Louisiana is now calling VGW’s bluff on sales tax, and dating the sales retroactively, plus penalties and interest. The VGW lawsuit states:
“In spite of the Defendants’ newfound desire to become compliant with state sales tax laws, the Defendants have thus far failed to register with the Department or collect and/or remit any state or local sales tax from its operations in Louisiana. Moreover, the Defendants have taken no actions to resolve their state and local sales tax liability with respect to their taxable sales to Louisiana residents from January 1, 2019 to the present.”
Following the filings, VGW and MW Services will have an opportunity to respond and may challenge the lawsuits on legal or jurisdictional grounds. It will be interesting to follow both cases, as state-level taxation of sweepstakes casinos remains largely uncharted territory.
It marks a new strategy by a state that is plainly hostile to the sweepstakes vertical, and if successful, it could be copied by other states, requiring a major adjustment to sweepstakes business operations.
For MW Services, VGW, and its founder Laurence Escalante, this is one more headache in an already difficult year.
Author: Joseph Allen
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