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Virtual Gaming Worlds (VGW), the online casino powerhouse founded by billionaire Laurence Escalante, is branching out into the lottery sector after reporting a robust 30% increase in profits, fueled by its successful sweepstakes model in the United States. This expansion comes as part of VGW’s strategic growth, which has been significantly profitable, particularly in regions with stringent gambling regulations.
Record profits and revenue in online betting:
In the fiscal year ending June 30, VGW achieved a record $6.13 billion in revenues, marking a 27% increase from the previous year. This financial success translated into profits rising from $377.6 million to $491.6 million. “It’s with great pride and a credit to our global team that we’ve again delivered another set of strong full-year results … the future is bright,” Mr. Escalante commented, highlighting the collective effort behind the company’s success, as Australian Financial Review (AFR) reports.
Adding to its portfolio, VGW has acquired a 13.9% stake in the lottery operator 99Dynamics, a British company that has made aggressive inroads into the U.S. market through its platform, Jackpot.com. This move is seen as a strategic diversification, with Mr. Escalante noting the acquisition provides “exposure to an attractive adjacent market, diversification, and future optionality.”
Despite its financial achievements, VGW faces considerable regulatory and legal challenges, particularly in the U.S., where it has been compelled to halt its casino-style games in several states, including Delaware and Michigan. This scrutiny is compounded by lawsuits from dissatisfied customers and ongoing inquiries from tax authorities in multiple jurisdictions. The company is actively reviewing its tax obligations and has acknowledged potential additional liabilities.
VGW’s response to regulatory and market pressures:
VGW’s market strategy includes a multi-brand approach, aiming to enhance player engagement and facilitate market expansion. This approach has helped sustain growth despite the competitive pressures that have seen VGW’s market share decrease from 90% to an anticipated 50%, according to industry analysts Eilers & Krejcik.
Looking forward, VGW is not only expanding its market presence but also undertaking a significant review of its corporate governance. The absence of independent directors on its board has raised concerns among investors, prompting a comprehensive review to align with best practices in corporate governance.
Despite these challenges, VGW’s leadership remains optimistic about the company’s direction and its ability to maintain a strong market position. Investments in technology and infrastructure, alongside strategic market expansions, are expected to drive future growth and profitability.
As VGW navigates through regulatory challenges and explores new business avenues, its journey reflects both the complexities and dynamic opportunities within the global online gaming market.
