Notable Sweepstakes Casinos Begin Charging Sales Tax

Virtual Gaming Worlds (VGW) is arguably the most notable company in the sweepstakes casino industry, running platforms like Chumba Casino, Luckyland Slots, and Global Poker. 

After numerous cemented and pending changes in legislation, VGW is trying to stay ahead of the curve and in the good graces of various states as they contemplate banning these platforms. 

As of Wednesday, July 9, VGW outlets began charging sales tax on Gold Coin purchases across several US states. 

VGW Provides Comment

Speaking with Sweepsy, a VGW spokesperson had this to say about the change:

“We acknowledge this is a change for some of our players, but as the legal framework has evolved over time, we’ve determined it is the appropriate time to take this action,” the spokesperson told Sweepsy. “This is part of our commitment to upholding the highest standards of integrity and compliance, and our focus now is on ensuring players are well informed and supported as required.”

There's now a new clause in their terms and conditions with clause 25.4, which now states: 

"Under certain state laws, Gold Coin purchases may be subject to certain taxes, depending on your location. You agree your purchase of Gold Coins is made with the understanding that such tax will be added at the time of purchase. In jurisdictions where tax is not added by us at the time of purchase, you are solely responsible for any taxes applicable from your Participation, including transaction taxes (e.g. sales/use tax, value added taxes or digital sales taxes) applicable to your jurisdiction. Additionally, you are solely responsible for reporting any income and income taxes associated with winning valuable prizes."

The only known states to be hit with the sales tax are those in Kentucky, Illinois, Arkansas, Pennsylvania, and Hawaii, but more have likely received it, too. 

For players and those states and beyond, they received the following message: 

“Please be advised that purchases may be subject to tax depending on your location. Any applicable tax will not be counted toward your purchase limit.

“Sales tax is common in the US and helps state governments raise revenue, but differs across the country,” the VGW spokesperson said. “Some states don’t have sales tax, while in other states that do, the tax rates can vary. Local governments may also have additional taxes. As such, the total rate paid by players following this decision is dependent on their location.”

VGW "Happy" To Pay Sales Tax in California

This change by VGW comes after it said it would be "happy" to pay sales tax in California earlier this month. 

A California anti-sweepstakes bill, Assembly Bill 831, aims to get rid of sweepstakes casinos and VGW is seemingly attempting to do what it can to stay in lawmakers good graces and continue operating. 

As part of a lobbying effort to prevent the bill from passing, VGW had this to say: 

“Rather than an outright prohibition, VGW and the social online games industry are asking that you park this rushed, gut-and-amend legislation and hear our side of the story,” a quote provided from VGW reads in a committee analysis for AB831. “We want to work collaboratively with the California Legislature on sensible legislation that creates a robust regulatory framework prioritizing consumer protection while simultaneously offering a new revenue stream for the state. The economic opportunity is significant. Based on industry projections by Eilers & Krejcik, California could generate annual revenue of $149 million through sale tax alone.

“Currently, there is no method for us to pay sales tax in California because ours is a digital product, but this is something we would be happy to do under an appropriate framework. We are also open to other potential sensible taxation frameworks and/or revenue stream to benefit the people of California.”

This past Tuesday, the bill passed in the Senate Governmental Organization Committee. 

The Senate Public Safety Committee will vote on it on July 15. 

We'll see if this change to VGW's policy can illustrate enough "good grace" ahead of the July 15 vote in California or if it'll pay dividends elsewhere. 

As we know, VGW recently updated its terms and conditions, which will impact Louisiana players after 42 cease-and-desist letters were sent out by the state, including to VGW.