Laurence Escalante’s online casino, Virtual Gaming Worlds (VGW), is expanding into the lottery business following another profitable year.
Despite facing regulatory hurdles in its key US market, the Perth-based VGW Holdings reported a 30 percent increase in net profit, reaching AU$492 million ($335.2 million) for the year ending June 30th, with record revenue of AU$6.1 billion ($4.15 billion), according to its latest financial reports.
These figures have propelled Escalante, 42, to become one of Australia’s youngest billionaires, with a net worth approaching AU$4 billion ($2.72 billion). His success has allowed him to pocket AU$360 million ($245.3 million) in dividends from VGW last year, a rise from the AU$318.9 million ($217.35 million) he received the previous year.
In a press statement, Escalante expressed satisfaction with VGW’s performance, attributing the results to the company’s ability to maintain strong engagement with players through its leading brands and social games. “VGW has once again delivered another set of strong full-year results,” he noted, citing “strong profit growth as our industry-leading brands continue to resonate with players.”
The company, which saw massive growth during the COVID-19 pandemic due to the surge in demand for its digital poker machines and card games in the US, has become one of Australia’s fastest-growing businesses. VGW’s annual revenue has skyrocketed, from AU$379 million ($258.3 million) in 2018 to a staggering AU$6.1 billion ($4.15 billion) in 2023. In the second half of the last fiscal year alone, the company generated AU$3.3 billion ($2.24 billion) in turnover.
VGW operates using a sweepstakes model under a Maltese gaming license, allowing it to navigate US laws that largely prohibit internet gambling. Customers purchase virtual gold coins to play games like Chumba Casino and Luckyland Slots, though these coins hold no actual value. However, with most gold coin packages, players also receive bonus “sweeps coins,” which can be used in the games and are redeemable for cash in the US and Canada.
While the model has proven successful, it has not been without its challenges. Several lawsuits have been filed in US states, including a recent case in Georgia, seeking to block VGW’s games on the grounds that they constitute illegal gambling. VGW has addressed these legal actions in its annual report, stating that management does not currently expect any of these proceedings to have a ‘material adverse effect’ on the company’s financial standing or operational results.
In addition to its gaming ventures, VGW has now ventured into the lottery market. The company recently purchased a 13.9 percent stake in the British lottery services firm 99Dynamics for $25 million. 99Dynamics operates the website Jackpot.com, which offers access to numerous high-dollar US lottery games. Escalante described the acquisition as an opportunity for “exposure to an attractive adjacent market, diversification, and future optionality.”
However, VGW is also facing inquiries from the Australian Taxation Office (ATO) regarding its tax obligations in Australia, the US, and Malta. The company has launched a review of its tax liabilities, acknowledging the possibility that additional taxes might be owed on historical positions. The company’s annual report noted, ‘It is possible that the review may identify that additional tax may be required to be paid.’
Alongside tax and legal challenges, VGW is reviewing its corporate governance and operational structure. The company’s board, which currently consists of three members without independent directors, is evaluating its governance practices. VGW is also investing in a new centralized tech platform to support its continued growth.
Despite rising operational costs, VGW’s expenses have remained in line with revenue growth, and Escalante emphasized that the company’s investments in its workforce, operations, and marketing will support its “prudent ongoing expansion at an industry-leading level of practices and responsibility.”
“Our balance sheet remains strong, and the future is bright, with several exciting growth opportunities,” Escalante concluded.
