VGW Owner Laurence Escalante Pushing To Grab 100% Ownership

Laurence Escalante, the founder and CEO of Virtual Gaming Worlds (VGW), whose company operates three of the biggest sweepstakes casinos on the market—Chumba Casino, Luckyland Slots, and Global Poker—is seeking to buy out investors who own 30% of the company and regain 100% ownership.

Escalante's ambition comes as sweepstakes have been somewhat under scrutiny in the United States. Montana's SB555 will effectively ban sweepstakes casinos, effective Oct. 1, and Connecticut, Nevada, and Louisiana have legislation headed to their respective governors to also do away with them.

With Escalante wanting to do this, those who own shares have the option to receive $5.05 per share in Australian currency or take shares in a "special purpose bid vehicle," which is basically a shell company that Escalante controls.

This could give VGW a valuation of about $3.3 billion Australian ($2.14 billion USD).

VGW Board Supports Buyout Plan

This offer originates from Lance East Office (LEO), which established a "special purpose bid vehicle" to facilitate this transaction. The VGW board established an Independent Board Committee (IBC), led by Director Mike Symons, to review the deal.

The initial offer of $3.5 to $4 AUD was rejected in January for undervaluing the company

Eventually, it was raised to $5.05 along with the option to exchange for shares in the "special purpose bid vehicle."

Now, the VGW Independent Directors, which include Symons and Mats Johnson, support the proposal. They say that the buyout provides "certainty of value" and "access to full liquidity" in a market that they refer to as "rapidly evolving regulatory developments and increasing industry competition.”

Not only that, but the $5.05 price tag is about 3x EBITDA for the 12-month period ending Dec. 31, 2024.

Despite Changing Market, VGW Still Profitable

VGW reported $6.13 billion in revenue and $491.6 million in profit for the fiscal year ending June 2024. Of course, despite the revenue and profit figures, there are regulations and laws being passed in the United States.

VGW has already left the markets mentioned above, including Montana, Connecticut, Nevada, and Louisiana

There was a bill in New Jersey briefly to perhaps regulate and legalize them, but it was withdrawn quickly.

There have also been cease-and-desist orders sent to sweepstakes casinos and an uptick in lawsuits against them on behalf of disgruntled players.

For example, a California judge recently sent a lawsuit against Stake.us to arbitration, and Connecticut and High 5 agreed to a $1.5 million settlement.

In an effort to "conform," VGW increased its minimum player age to 21

They also left New York and launched the Social Games Leadership Association to lobby in favor of the sweepstakes casino industry.

The SGLA isn't the only industry group to lobby on behalf of the sweepstakes casino industry. The Social & Promotional Games Association has also recently come out with statements condemning Montana's SB555 to ban sweepstakes casinos.

Escalante's bid has drawn criticism, though

This deal would involve moving VGW's base of operations to Guernsey and funding part of the buyout with VGW's own assets. This is a move some investors may view as consolidating Escalante's control under financial strain.

We'll see what happens in the ever-evolving sweepstakes casino industry.