VGW Reports Stellar Profits Despite Market Setbacks
Laurence Escalante’s gaming powerhouse, Virtual Gaming Worlds (VGW), has maintained its upward trajectory, booking a net profit of $492 million for the year up to 30 June. This figure represents a 30% climb from last year as the operator realized a record revenue of $6.1 billion. Despite regulatory challenges in its US market, the business remains resilient, expanding its operations and branching into new sectors.
The USA Has Proven to Be a Challenging Market
Escalante, the Perth-based billionaire founder of VGW, has capitalized on the company’s rapid growth, receiving a massive dividend of $360 million in the past year. Meanwhile, his stake in the company has cemented his status as one of Australia’s youngest billionaires, with an estimated personal wealth of nearly $4 billion.
VGW’s remarkable success rests on the company’s popular digital poker and slot games that experienced unprecedented demand during the COVID-19 pandemic. The business has opted for a sweepstakes model that complies with US laws banning traditional online gambling in many states, allowing it to thrive. VGW’s successful brands, like Luckyland Slots, Global Poker, and Chumba Casino, have further solidified its reputation.
We believe expanding our ‘brand family’ will further boost engagement with our existing players and grow new players, plus assist us with entering new markets.
Laurence Escalante
However, the company has faced increasing regulatory scrutiny. For example, the Delaware Lottery requested that VGW stop its sweepstakes activities in the state, following similar moves by Michigan, Idaho, and Washington. These states have challenged VGW’s claim that its sweepstakes model is distinct from gambling. A class-action lawsuit in Georgia has accused VGW of operating illegal gambling platforms, creating further difficulties for the business.
VGW Leadership Remains Optimistic
Despite these legal challenges and a shrinking sweepstake market share from 90% to 50%, VGW remains optimistic. The company continues its efforts to diversify, recently acquiring a 13.9% stake in British lottery service provider 99Dynamics, thus gaining a firm foothold in the lucrative lottery market. Further investments in this sector could bring significant future dividends.
Escalante emphasized that VGW was well-positioned to address the current legal challenges, stating that management did not anticipate these setbacks to have a material impact on the company’s financial position. VGW also faces taxation-related scrutiny in Australia, Malta, and the USA, heralding possible adjustments to its historical tax positions.
The investment in our people, operations, and marketing will support our ongoing expansion at an industry-leading level of practices and responsibility.
Laurence Escalante
As VGW navigates these challenges, the business has set out to enhance its corporate governance, revamp its operational structure, and build a centralized technology platform to support further expansion. Escalante expressed his confidence in VGW’s growth path, noting that all its brands recorded growth, strengthening the company’s industry-leading position and offsetting short-term challenges.
