Bid of $3.2 billion by Escalante for Full Ownership of VGW Reaches Final Stage
In a significant turn of events, Australian billionaire Laurence Escalante has put forth a $3.2 billion offer to gain full ownership of Virtual Gaming Worlds (VGW), the company behind popular online gambling sites Chumba Casino, Global Poker, and Luckyland Slots. The offer, valued at $5.05 per share, is Escalante's ultimate and best proposal, according to reports.
However, VGW is currently embroiled in a series of legal battles in the United States. The company faces several legal challenges, primarily revolving around gaming regulations and interpretations of what constitutes legal betting or gaming activity.
California, for instance, is on the verge of making daily fantasy sports (DFS) illegal, a move that threatens to eliminate regulated options for games involving skill and chance. This potential ban, expected from California Attorney General Rob Bonta, could create a precarious environment for VGW and similar operators offering fantasy or skill-based contests, as California does not currently allow sports wagering.
Mississippi, Ohio, and Delaware also pose challenges for VGW. These states have established regulated gaming frameworks, including traditional casinos and online gambling. VGW and similar companies must navigate state-specific regulations regarding online gaming, including compliance with anti-money laundering laws, Bank Secrecy Act requirements, and possibly regulations on crypto and virtual currency use within gaming platforms.
The broader challenge facing companies like VGW involves the complex regulatory landscape regarding crypto and no-KYC (Know Your Customer) casinos, which are increasingly popular among online gamblers. Stricter regulations in parts of the US, including potentially these states, pose challenges for compliance and operating models that rely on minimal identification requirements.
Additionally, companies in online gaming face risks related to white-collar legal issues such as money laundering, sanctions violations, and compliance with federal and state laws, which require robust legal frameworks and monitoring.
Moreover, there are emerging lawsuits and legal scrutiny around gaming addiction and harm, such as recent Minecraft addiction lawsuits alleging mental health injuries. Although this is more directly tied to specific game titles, it reflects a growing legal environment that could affect VGW if their games are linked to similar harms.
The buyout requires a 75% majority to proceed, as reported by The Australian Financial Review. Mike Symons, an independent director, has confirmed the deal's legitimacy and stated that no better offers have been made. If the buyout is approved, VGW will be under the full control of its founder, Escalante.
If the buyout goes through, VGW will become an owned part of an offshore entity, potentially reducing its responsibilities to Australian corporate regulators. The purchase will be handled by Ocean Bidco Limited, a Guernsey-registered company set up by Lance East.
Despite these legal challenges, VGW posted impressive figures in the six months ending December 2024, with $3.51 billion in revenue and $301 million in profit. The company predicts a softer second half and forecasts total annual profit between $555 million and $570 million, up from $496 million the year before.
Escalante emphasizes regulatory uncertainty and growing competition as reasons for the buyout. The buyout could lead to significant changes within VGW, but the shareholders will decide whether to sell their shares at a higher price or remain with the company amid these changes. The Federal Court has given its approval for a shareholder vote on the buyout plan, scheduled for August 1.
- The legal challenges faced by Virtual Gaming Worlds (VGW) include navigating state-specific regulations regarding online gaming, such as complying with anti-money laundering laws and Bank Secrecy Act requirements in Mississippi, Ohio, and Delaware.
- In addition to these issues, companies in online gambling, like VGW, face growing legal scrutiny around gaming addiction and harm, as seen in recent Minecraft addiction lawsuits alleging mental health injuries.
- If approved, the $3.2 billion buyout of VGW by Australian billionaire Laurence Escalante would potentially restructure the company's operations, as it would become an owned part of an offshore entity, potentially reducing its responsibilities to Australian corporate regulators.
