Poker Writer
The Louisiana Department of Revenue has sued the owners of Global Poker and WOW Vegas for $44 million in unpaid taxes. Also included were interest and penalties based on the estimated sales of the sweepstakes’ sites virtual currency to in-state residents.
The petitions break down the exact numbers that each operator owes:
[For VGW] The Louisiana Department of Revenue now seeks to collect the amounts due through this lawsuit. The total amount of liability owed and due is currently estimated to be $30,477,891.57. [For WOW Vegas]… $13,551,351.36
The petition states that both operators had a duty to collect and remit sales tax, but failed to do so.
Set Up For Lawsuit
Months ago in June, Louisiana Gov. Jeff Landry vetoed a state Senate bill that would have formally banned online sweepstakes casinos. He reasoned that state law already prohibited sweepstakes casinos. He believed the bill was redundant, saying it “attempts to criminalize certain secondary gambling activities on the internet that are already prohibited in Louisiana.”
The state’s attorney general, Liz Murrill sent cease-and-desist letters to as many as 40 operators, stating that their products constitute illegal gambling under current law.
Several sweepstakes operators pulled out of the state, including VGW’s brands Chumba Casino, Luckyland Slots, and Global Poker.
Despite their exit, the Attorney General has gone after the operators for back taxes.
Furthermore, 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 Services and the Louisiana Department of Revenue, as well as other agencies or actions.
State court documents claim the defendants were aware of their duty to collect and remit sales tax on their sales made through various platforms. In response to the growing backlash against sweeps, VGW proactively began charging sales tax in states such as Kentucky, Pennsylvania, and Illinois. Most states’ tax codes were written before the idea of purely digital purchases existed, so in-app content may be either tax-free or of an ambiguous status.
However, that adaptation came in the same month as Louisiana sent out its cease-and-desists, forcing VGW to leave. It therefore came too late, as the lawsuit says VGW, during the time it operated in Louisiana, failed to register with the department or collect any state or local taxes:
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 1st, 2019 to present. Upon information and belief, the Defendants have also failed to register with any local tax collectors in Louisiana or the Use Tax Commission For Remote Sellers.
This sweepstakes casino saga in Louisiana goes hand-in-hand with battles in other states such California where a bill recently advanced through Committee to Senate floor. New Jersey notably banned sweepstakes poker and gambling sites.
