VGW and MW Services Face Millions of Tax Demands from the Revenue Department

The Louisiana Department of Revenue is now on the offensive, bringing legal action against VGW and MW Services, two well-established sweepstakes operators, which the department now expects to pay backdated taxes.

Legal Opinion Allows Department of Revenue to Go After Sweepstakes Casinos

Owing to a written opinion by Attorney General Liz Murrill, the Department can now theoretically seek as much as $44.4 million in taxes, interest, and penalties from the operators, alleging that the businesses in question have been operating and profiting from their activities, and are therefore subject to both 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 explained.

According to the Department of Revenue, the operators sold more than $100,000 of “tangible personal property, including digital goods” to state citizens, which made them eligible for tax payments.

The claim seeks $30.9 million from VGW in the first place. The Department of Revenue has also argued that VGW and its holdings have been navigating local jurisdictional laws specifically to meet regulatory demands.

The Department of Revenue cited emails from Chumba, a VGW-owned brand, that notified users in Louisiana that they would not be able to use Sweeps Coins any longer, but that they would be able to continue using Gold Coins, for example.

Doing Business Means You Have to Pay Tax

According to the Department of Revenue, VGW amassed as much as $250,000 monthly in the state alone since it launched in July 2019, owing taxes amounting to $16.7 million, plus interest that has pushed the total amount to $30.9 million.

As to MW Services, the Department of Revenue is looking for $13.5 million in total, with $7.5 million tax owed until January 2021, along with $1.9 million as of December 2024, and $4.1 million worth of penalties.

The regulator similarly argued that MW Services had been running a business operation in the state, which it acknowledged and shut down following a cease-and-desist letter.