Sweepstakes leader VGW is facing more legal scrutiny, as a woman has filed a class action against the organization in Connecticut.
New CT state class action seeks damages from VGW
Stephanie Cox filed the suit in Connecticut Superior Court last week. She opted out of the binding arbitration element of the company’s terms and conditions, and seeks compensation for the group offering illegal gambling in the state.
Connecticut served VGW with a cease and desist earlier this year and the company pulled out of the state in August.
Within the class action claim, Cox included the most recent financial report for the parent company of brands such as Chumba, Luckyland Casino and Global Poker. The privately held company is not required to release financial information to the public, so the breakdown of financial performance during FY23-24 gave some rare insight into company performance.
VGW posted $491 million in profit last FY
According to the report, across the VGW portfolio, the company generated $6.1 billion in revenue, compared to $4.8 billion the previous year. Total profit after taxes came in at $491.6 million.
The report, which includes revenue from both social casino and the sweepstakes product, noted that paying out sweepstakes prizing cost the company $4.3 billion, up from $3.35 billion in FY22-23.
The report also noted that marketing spend was on the rise, up from $360 million to $418 million, but that cost per acquistion was relatively flat, up just 2% year-over-year.
In the past year, VGW has extended deals with Michael Phelps and Ryan Seacrest to promote the brands.
VGW paid $185 million in taxes last year
Many critics of sweepstakes sites say the companies do not pay any taxes, but the VGW balance sheet noted that the group paid $185 million in taxes last year to jurisdictions including its home country of Australia, Malta and the U.S.
“The Group takes its tax obligations seriously and operates in an industry where the tax landscape is ever evolving. The corporate review referred to above will include a review of tax positions taken by the Group in all countries the Group operates, including specifically Australia, U.S. and Malta (including all levels of government, federal, state and local taxes). It is possible that the review may identify that additional tax may be required to be paid on historical positions. At this time, the entity is unable to determine the outcome of the tax reviews and therefore cannot calculate a reliable estimate of possible outflow,” the report noted.
By comparison, regulated online gaming in the U.S. generated $6.5 billion in revenue during 2023.
While it is difficult to fully ascertain gaming revenue for VGW since social and sweepstakes gross revenues are combined, but total revenue minus sweepstakes payouts amounts to roughly $1.8 billion. That is about the same size as the New Jersey or Michigan online casino market.
