Louisiana Department Of Revenue Sues VGW, WOW Vegas

The Louisiana Department of Revenue has sued online sweepstakes casino operators VGW and MW Services, which does business as WOW Vegas, seeking a total of $44.4 million in taxes, interest, and unpaid penalties for offering digital gaming in the Pelican State.

Daniel Wallach was the first to report on the lawsuit on his X account.

Online casino gaming is illegal in Louisiana per a written opinion in July from state Attorney General Liz Murrill. She provided the opinion in response to a lawmaker query after Louisiana Gov. Jeff Landry vetoed SB 181, which banned online sweepstakes casinos and had unanimous support in both houses of legislature. State Sen. Adam Bass’ bill called for fines ranging from $10,000 to $100,000 along with a potential prison sentence of up to five years.

The bill also would have made it “unlawful for any applicant, licensed, or permitted entity, geolocation provider, gaming manufacturer, gaming supplier, platform provider, promoter, or media affiliate to provide support for the operation, conduct, or promotion of illegal gambling by computer, including illegal online sweepstakes games as described in this Section within the state.”

Hunting for tax revenue

Murrill’s opinion allows for the Department of Revenue to pursue missing tax revenue from sweeps operators:

“as these businesses have been operating in and profiting from their operations in Louisiana, albeit illegally, they are still subject to Federal and State tax laws and liabilities.

Therefore, they may be subject to litigation and enforcement of tax liabilities by the Internal Revenue Service and the Louisiana Department of Revenue, as well as other agencies or actions.”

The Department of Revenue filed the lawsuit because both operators sold over $100,000 of “tangible personal property, including specifically, digital goods, to Louisiana citizens … which constitutes doing business in this State.”

VGW and WOW Vegas are two of the biggest online casino sweepstakes operators nationwide, and VGW is one of the founders of the Social Gaming Leadership Alliance. That group, along with the Social and Promotional Games Association, have spent much of the year in multiple state legislatures across the country trying to stop lawmakers from enacting bans on their gaming activity.

While they did get a reprieve in Louisiana when Landry vetoed SB 181, the Department of Revenue wasted little time in filing a lawsuit against VGW. Its filing was dated July 18, less than three weeks after Murrill wrote her opinion. Its lawsuit against MW Services was filed Aug. 22 per the time stamp of the Deputy of the Court Clerk for the East Baton Rouge Parish.

Seeking $30.9 million from VGW

The Louisiana Department of Revenue broke out the amounts in taxes and penalties it is seeking VGW to remit, with taxes the largest chunk at nearly $16.7 million. The interest calculated from Jan. 1, 2019 through December 2024 is slightly more than $5 million, while there is a $4.2 million delinquent filing penalty, a $3.3 million accuracy-related penalty, and $1.7 million understatement of tax penalty.

In its lawsuit, the Department of Revenue alleged that VGW and its holdings “specifically target each state within which they do business to structure its offerings to the state’s residents based on that state’s laws and regulations.” It cited VGW shutting down its Luckyland casino platform in Delaware in April and withdrawing its sweepstakes operations in New York while continuing to offer free-to-play games.

The department noted VGW sent an email to players “specifically to Louisiana residents who play Chumba” that detailed a change in the terms and conditions for Chumba in which VGW said it was “phasing out Promotional Play (Sweeps Coins) in the state of Louisiana.” At the bottom of the email, it told players “you’ll still be able to enjoy all your favorite game in Standard Play using Gold Coins.”

The lawsuit also mentions VGW’s efforts in trying to make California a state where sweeps would be regulated, which is at stake with AB 831 looking to ban such operators in the Golden State. The Department of Revenue noted VGW’s willingness to pay taxes in California and “with tax revenues totaling in the hundreds of millions annually, there is little doubt that its revenues from doing business in the State of Louisiana far exceed the $100,000 threshold.”

The state agency has estimated VGW generating at least $250,000 monthly in Louisiana since July 2019, which leads to the tax figure of $16.7 million. The Department of Revenue warned that it “reserves the right to amend the numbers in the event that additional information is provided and/or obtained.”

It also took a direct shot at VGW’s willingness to pay taxes on its products, noting that “In spite of the Defendants’ newfound desire to become compliant with state 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.”

Seeking $13.5 million from MW Services

More than half of the total remittance the Department of Revenue seeks from MW Services is current taxes owed, totaling $7.5 million dating to January 2021. Accruing interest had reached nearly $1.9 million as of December 2024, and penalties make up the remaining $4.1 million balance.

The state agency’s lawsuit is similar in scope to the one filed against VGW, though MW Services stopped offering sweeps in Louisiana as of July 11 following a cease-and-desist letter issued by the Louisiana Gaming Control Board.

The email MW Services sent to players, according to the Department of Revenue, “confirms the Defendant was doing business in Louisiana and its efforts to specifically identify and target Louisiana residents for ‘business factors,’ including revenue generated by the sales of its WOW coins to Louisiana residents and to comply with the regulatory gaming laws in the State of Louisiana.”