Sweepstakes casino company Virtual Gaming Worlds (VGW) added a sales tax on gold coin purchases, which started on Thursday, July 10, a company spokesperson confirmed.
The company determined that it was an “appropriate time” to add the tax to gold coins, which do not normally come with sales taxes.
Key Takeaways
- The sales tax rate will depend on the player’s location
- Several states recently outlawed sweepstakes casinos
- VGW could offer the sales tax money to state governments as a negotiating tool
VGW’s statement did not confirm in which states the sales tax was implemented. It also said that the rate paid by players will vary in accordance with their state’s sales tax laws.
There are 45 states and Washington D.C. that have sales taxes. California has the highest state-level sales tax (7.25 percent), while Colorado has the lowest non-zero amount (2.9 percent).
“Some states don’t have sales tax, while in other states that do, the tax rates can vary,” the spokesperson said. “Local governments may also have additional taxes. As such, the total rate paid by players following this decision is dependent on their location.”
Sweepstakes casinos are dual-currency based platforms that allow customers to use sweeps coins and gold coins to fund their games. These casinos do not require purchases and do not award cash prizes, but instead offer more coins, gift cards, and prizes.
Although not required, gold coin purchases allow customers to play more games and unlock more opportunities.
Constant change
There is widespread debate over the legality of sweepstakes casinos. They are not required to obtain licensing from states, although many regulators and lawmakers have responded by banning these platforms either through cease-and-desist orders or bills.
Several states already outlawed sweepstakes casinos, the latest of those being Louisiana this week after the attorney general overruled a gubernatorial veto.
The California Senate this week also passed a bill to ban sweepstakes casinos just one week after attorney general Rob Bonta (D) issued an opinion that daily fantasy sports platforms were illegal.
The gambling industry as a whole is also experiencing rapid change in America. The sports betting boom has reached 39 states, online casinos are becoming a hot topic, and prediction platforms have emerged as a potentially viable challenger to legal sportsbooks.
With an uncertain future ahead, VGW determined it was time to roll out its new tax.
“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 said. “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.”
Bargaining power?
VGW recently testified at a California Senate Governmental Organization Committee hearing for the anti-sweepstakes bill that was approved by the Senate.
The company previously said it would be willing to offer tax payments to state governments, similar to how licensed casinos and sportsbooks pay revenue or handle taxes.
