Laurence Escalante’s Virtual Gaming Worlds rockets to another big profit

Billionaire Laurence Escalante’s online casino juggernaut Virtual Gaming Worlds is pushing into lotteries after another record-setting year.

Despite regulatory hurdles in its flagship US markets, the WA-founded VGW Holdings pulled in a 30 per cent higher net profit of $492 million in the year to June 30 on record revenue of $6.1 billion.

The privately-owned group also revealed it had bought a 13.9 per cent interest in British lottery services company 99Dynamics for $US25m. 99Dynamics operates Jackpot.com, a website that provides access to myriad lotteries.

Mr Escalante said the deal offered “exposure to an attractive adjacent market, diversification and future optionality”.

The fast car-loving Mr Escalante, the founder and executive chairman, owns more than 70 per cent of VGW and has pocketed hundreds of millions of dollars in dividends since the group took off about five years ago.

The company is one of Australia’s fastest-growing businesses, after booming demand for its digital poker machines and card games during COVID-19 restrictions in the US ignited revenues.

In 2018, VGW turned over just $173m for the same six-month period. Three years later, it was doing $1.54b. In the 12 months to the end of June, revenue jumped 27 per cent, with $3.3b of the $6.1b done in the second half.

Armed with a Maltese gaming licence, VGW uses a sweepstakes model to comply with laws banning internet gambling in most US States.

Customers buy virtual gold coins that allow them to play VGW’s games — notably Chumba Casino and Global Poker - but have no outside value.

But buyers of most gold coin packages also get bonus “sweeps coins”, which as well as being used to play the games are redeemable for cash in most of the US and Canada.

The model is not without challenges, with a number of court actions launched in the US seeking to block its games.

Mr Escalante told his investors VGW had “again delivered another set of strong full-year results”.

“Revenue increased to a record $6.1b and we’ve seen strong profit growth as our industry-leading brands and social games continue to resonate with players and generate strong engagement,” he said.

“Pleasingly, all brands grew and while group operating costs increased, this was in line with revenue growth, and the investment in our people, operations and marketing will support our 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.”