Sweepstakes Casinos Face New Legal Front in Louisiana Over Sales Taxes

The heat on sweepstakes casinos this summer has been unprecedented. From outright bans in several jurisdictions to cease and desist letters in more than a dozen others, states increasingly have made it difficult for casinos that utilize a dual currency system to operate, but Louisiana has hit upon a slightly different approach to what it calls unlicensed and unregulated online casinos.

The irony here is almost palpable, as the Louisiana legislature spent months earlier this year getting Senate Bill 181 passed unanimously, we should point out. The bill would have made it a clear-cut crime to offer online games and contests that resemble casino games and would have hit violators with fines up to $100,000 and, in some cases, imprisonment of up to five years.

Governor Jeff Landry at first seemed to waffle and then came out against the new law once it passed, saying he didn’t believe it was needed and that it attempted to criminalize gambling activities that were already prohibited by State law.

Perhaps to emphasize his point, the Louisiana Gaming Control Board and State Attorney General Liz Murrill filed a flurry of cease and desist letters in mid-June, just a week after the Governor’s much-maligned veto, against no less than 42 sweepstakes operators and offshore sportsbooks.

A scant two weeks later, Ms. Murrill was back in the news with a formal legal opinion that all online sweepstakes casinos that offer dual currency casino-style games are in violation of state law and face potential enforcement action.

The Social and Promotional Gaming Association had spent most of the spring attempting to stop the juggernaut of SB181, with little obvious effect, by stirring up fears that the bill would affect everything from Starbucks reward programs and McDonald’s Monopoly game to credit card miles.

But in a memorable line, she dismissed the SPGA’s concerns, stating that “persistent, predatory, and profit-driven sweeps platforms bear little resemblance to these promotions.” But while her memo may have put Sweeps on notice, it certainly wasn’t a legally binding opinion and won’t have the force of law that SB181 would have carried had Gov. Landry signed it.

Murrill, who had supported SB181 and was on record calling it a valuable tool, appears to have spent the end part of the summer coming up with new and novel ways to come at the sweeps providers, and she has indeed come up with a doozy.

On September 5, the Attorney General and the Louisiana Department of Revenue (LDR) filed lawsuits in the Louisiana 19th Judicial District Court accusing Virtual Gaming World (VGW), the operator of Chumba Casino and LuckyLand Slots, as well as MW Services, which runs WOW Vegas, with failing to collect and remit sales tax to the tune of more than $42 million.

It should be noted that the LDR specifically reserved the right to amend should its ongoing investigation find the amount of uncollected taxes to be higher. Digital products were specifically included in the sales tax base beginning 1 January 2025, under Act 10 of the 3rd Louisiana Extraordinary Session in 2024, which would seem to leave the companies with little legal wiggle room.

While this filing probably portends a broadening salvo of other sales tax cases against Sweeps operators, the broader picture is that many Attorney generals, state legislatures and even state tax officials are increasingly fed up with what they see as unlicensed, unregulated businesses, and are looking for whatever means necessary to rein them in.

Many of the Sweeps, having seen the trap, though probably too late, have realized that for both public perception and to placate politicians, they are going to have to start abiding by at least some rules and pay some taxes. Perhaps believing sales tax was a good place to start, many operators had begun to collect and remit these fees at the end of July.

VGW and Wow Vegas had already departed the state, so a settlement here seems likely, but the broader implications will take months to play out on the national scene.