Louisiana has stepped up its war on online sweepstakes casinos, having announced it is suing two flagship brands, Virtual Gaming Worlds (VGW) and WOW Vegas, for a combined $44 million in unpaid state sales taxes, interest, and penalties.
The move marks a further escalation of the state’s willingness to use tax enforcement in its regulatory crackdown on sweepstakes gaming operators in the state. While VGW bore the brunt of the penalties, with the Louisiana Department of Revenue issuing $32.5 million in fines, WOW Vegas was hit for $13.6 million.
The latest lawsuits out of the Pelican State follow its regulators issuing cease-and-desist letters to more than 40 operators in June.
Nonetheless, Louisiana isn’t alone here, as the elevation of its legislative actions reflects a continuing trend nationwide, which has sparked renewed fears among investors of the longer-term sustainability of the sweepstakes casino sector.
VGW & WOW Vegas forced to adapt
Fully aware of the mounting pressure from state regulators, VGW has already undertaken proactive remodelling of its operations. These include applying sales taxes to virtual currency purchases in certain states, and in the case of California, forming a compact with the Kletsel Dehe Wintun Nation of the Cortina Rancheria tribe to skirt around the existing prohibited measures.
For WOW Vegas, it has been reported that they were forced to cease their Louisiana operations in July following the state’s enforcement actions; however, the state maintains that they still owe a significant amount in unpaid taxes. A consequence of which showcases that even compliance changes will not protect sweepstake casino operators from their backdated liabilities.
Louisiana and California leading the charge to outlaw sweeps casinos
The challenges for gaming operators extend beyond Louisiana, with California unanimously passing AB 831 earlier this week, a bill designed to ban dual-currency sweepstakes casinos entirely.
Despite the bill still needing to pass through the Assembly and seek final sign-off from Governor Gavin Newsom, industry titans, including Pragmatic Play and Playtech (LSE: PTEC), abruptly left the Californian market following the news in anticipation of a likely ban on all sweepstake platforms in the state.
In fact, across the U.S., sweepstake operators face a disjointed wave of compliance rules and regulations, which includes total bans in Montana, Connecticut, and New Jersey. This thoroughly fragmented landscape across the country has ultimately led to many firms’ revenue projections becoming increasingly vulnerable to state-by-state oversight changes.
| Sweepstake Operator: | Action Taken: | Reason: |
| Playtech | Withdrawn all U.S. sweepstakes casinos | Focusing on regulated markets |
| Pragmatic Play | Exited the Sweepstake’s market entirely | Regulatory bans and sector uncertainty |
| High 5 Casino | Blocked California players | Announcement of passing of AB 831 |
| Evolution | Removed games portfolio from Stake.US for Californians | Named in California lawsuit |
| LuckyLand Slots | Withdrew from New Jersey (and other jurisdictions) ahead of bans | Anticipatory exit because of looming state bans |
A look at some of the key companies that have withdrawn from specific markets in the USA.
It’s a fascinating period for gambling in the USA, as alternative platforms like Kalshi and Polymarket, which operate prediction markets, have been able to operate at a federal level despite considerable consternation from individual states.
From an investor’s perspective, the ongoing crusade against the industry continues to highlight the lucrative but highly volatile nature of the sweepstakes gaming sector. However, that being said, should more states follow suit, industry backers will be forced to opt for stricter risk assessments if they are to continue investing in sweepstakes operators.
