Louisiana Secretary of Revenue Richard Nelson
Two major online sweepstakes casino operators have been sued for tens of millions of dollars in back taxes, penalties and interest by the head of Louisiana’s Department of Revenue.
The lawsuits against VGW Holdings and WOW Vegas, which were filed in the 19th Judicial District Court in East Baton Rouge Parish, follow the publication in July of an opinion by Attorney General Liz Murrill concluding the gaming activities the companies provided to Louisiana residents in recent years were illegal.
Sweepstakes casinos use virtual currencies, and players purchase coins that can enhance players’ gaming experience and can be used to win various prizes, including cash.
Earlier this year, the Legislature passed a measure, Senate Bill 181, that would have banned online sweepstakes casinos outright. But Gov. Jeff Landry vetoed the measure, arguing the bill was unnecessary since secondary online gambling activities are already prohibited in the state.
“... This bill is a solution in search of a problem that is already being solved by our current system, and some of the language in this bill is overly broad and could be interpreted in an adverse manner which may harm or impede our current enforcement actions taken against these bad actors,” Landry’s veto message said.
The governor also said the Louisiana Gaming Control Board, Attorney General’s Office and the State Police Gaming Enforcement Division are working to eliminate “corrupt influences on Louisiana’s gaming industry.”
A VGW spokesman said the company does not typically comment on litigation and would not do so in this instance.
The Department of Revenue’s secretary, Richard Nelson, is suing VGW for nearly $30.5 million, including interest and penalties, according to a lawsuit filed in July. A similar lawsuit filed in August seeks more than $13.5 million from WOW Vegas, which is also known as MW Services, a company with offices in Gibraltar, a British territory.
VGW’s sales in Louisiana through its player app have been estimated at about $250,000 per month, according to the secretary’s lawsuit, while WOW Vegas had sales in the state of nearly $157,000 per month from January 2021 until December 2024. The complaints against the companies argue that the online casinos had an obligation to pay Louisiana sales taxes on digital goods.
Murrill also brought up the issue of tax liabilities of sweepstakes casinos operating in Louisiana.
“... 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,” the attorney general’s opinion says. “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.”
Although the defendants have recognized the state’s regulatory orders and actions, they have not registered with the department to collect or remit any Louisiana sales tax, according to the lawsuits.
“Defendant (WOW Vegas) markets itself as a ‘social casino’ and sold Louisiana residents both ‘WOW Coins’ and ‘Sweeps Coins …” the complaint against WOW Vegas states. “Users could redeem their virtual currency for cash or gift cards.”
