Laurence Escalante, the inventor of the sweepstakes casino model as we know it today, has found himself in some hot water recently. The American Gambling Association (AGA) recently dropped a bombshell memo directing state regulators to investigate sweepstakes sites, claiming that they are risking player safety by offering casino-style games and cash prizes without being regulated.
But Virtual Gaming Worlds (VGW), Escalante’s company, wasn’t about to let this one slide. Oh no, they came out swinging! They shot back, saying they’re fully compliant with the laws in every state they operate in. They also insisted they have top-notch protocols for verifying players and keeping them safe.
Despite VGW gearing up to smash the $3 billion mark in annual revenue, Escalante hasn’t exactly been winning in the court of public opinion. Back in August 2023, he pled guilty to possessing a small stash of hard drugs. Earlier this year, the Australian Financial Review also called him out, hinting that investors weren’t too thrilled with his antics.
Now, let’s dive into the story of Laurence Escalante, the man who has managed to revolutionize the industry while stirring up a fair share of controversy along the way. Buckle up!
Who is Laurence Escalante?
Escalante’s story is one that sounds almost too wild to be true. From what I can tell, he began as a pretty regular guy. He grew up playing World of Warcraft, and his first job was at Hungry Jacks flipping burgers for $5.65 an hour as a teenager.
Fast forward a few decades, and at 42, he’s the mastermind behind Virtual Gaming Worlds (VGW), a company with over 1,200 employees worldwide and enough cash flow to make him one of Australia’s wealthiest.
Let’s talk about this guy’s lifestyle because it’s pretty next-level. We’re talking a Bombardier 7500 private jet with his nickname “Lee” plastered on it, a sleek Lamborghini yacht, and, oh, just a casual fleet of 120 supercars – facts he never lets you forget, judging from his Instagram profile. Laurence is living the dream, with a luxurious apartment in Perth and weekend benders in Las Vegas.
But, how did he come by all this money? Hard as it may be to believe, this father of four did not begin his career in the gambling industry. If anything, he started on the opposite end of the spectrum. After studying Economics and Actuarial Studies at Macquarie University, he founded White Knight Games, a company that made Christian games where players collected “love,” “faith,” and “hope” instead of cash and pledged 10% of its profits to alleviate poverty in the Philippines.
So, how did he pivot from making feel-good Christian games to raking in billions with VGW? Let’s go back to 2010, the year Escalante launched VGW, the company behind the ever-popular Chumba Casino, along with other platforms like Global Poker and LuckyLand Slots. Armed with a Malta Gaming license, VGW offered casino-style games through sweepstakes, which turned out to be a genius move.
In case you’re wondering, no, Laurence did not invent sweepstakes gaming. In fact, the whole sweepstakes loophole where you can legally participate in lotteries and prize games as long as there’s “no purchase necessary” has been around since the 1940s. However, Laurence was the first to pair this clever workaround with mobile casino games. And, of course, I don’t have to tell you that it was an instant hit. The rest, as they say, is billion-dollar history.
Escalante’s Grand Idea
Virtual Gaming Worlds started out as a small company in Laurence’s basement as many startups do. At the time, it was just a modest platform where players could gather to play poker online with their friends.
It wasn’t until 2012 that Escalante had his big “lightbulb moment”. He came up with the idea to offer sweepstakes games online through Facebook (yes, Facebook!), with Zuckerberg’s platform taking a 30% cut. This was groundbreaking because, although online casinos existed, people weren’t used to scrolling through their social media and suddenly stumbling upon slot machines. Escalante was onto something, and he knew it.
For the whole thing to stay legal, Sweeps Coins cannot be bought. However, you can write a letter to the casino to send you Sweeps Coins for free. You’re probably thinking all this doesn’t sound very profitable, and you’d be right, but here’s the moneymaking bit – the casino gives players free Sweeps Coins for every purchase they make, incentivizing them to buy more in order to win big. And all of this can operate without the added cost and limitations of US licensing because it fits snugly into the sweepstakes loophole. Genius, isn’t it?
Thus, Chumba Casino and Luckyland Slots were born. There was a not-so-tiny problem, though: the age-old issue of financing. Laurence first tried Kickstarter, but his campaign was soon suspended. He went on to hire a stockbroker to raise funds by selling stakes in the private market. It worked, kind of, but the funds raised weren’t enough to take VGW to the next level.
The board members at VGW pushed for the company to go public so they could get more funding. Laurence didn’t like this idea as going public would mean giving up his hefty 65-70% stake in the business, and that wasn’t something he was willing to do. So, he said “no thanks,” and every single board member promptly quit. He had to bring in his then-wife and his father to join the board. To this day, VGW is run by a three-person board, although his ex-wife has since exited the picture.
Did this decision pay off? Oh, you bet it did, for him at least. As of December 31, 2023, VGW saw a 23% jump in profits, reaching a cool $207 million, and Laurence is still holding on to his lion’s share of the loot.
2020 was a phenomenal year for VGW. Many of us spent quarantine bored out of our minds, and this led a lot of people to turn to the internet for entertainment. VGW’s profits skyrocketed by 60% compared to the previous year, netting them $115.8 million in profits from just July to December. By 2021, Chumba Casino had over a million players. That’s more than the population of some entire countries!
As for whether VGW will ever go public, Laurence remains coy. When one of his Instagram followers asked, he simply said, “eventually.” Guess we’ll just have to wait and see.
New Ventures
VGW is clearly aiming for more than just sweepstakes fame. The company has recently made a bold move by purchasing a 13.9% stake in the British lottery firm 99Dynamics for a cool $25 million. If you’ve heard of Jackpot.com, then you know 99Dynamics owns this lottery powerhouse. Escalante himself called this investment a smart play for “exposure to an attractive adjacent market, diversification, and future optionality.”
But let’s talk about the move that really had us doing a double-take: VGW becoming a premium partner for Ferrari Formula One. Yep, you read that right. According to Escalante, this move “ supports growth and brand recognition in our core North American market.” Sounds fancy, but we’re still scratching our heads over here, trying to figure out the connection between fast cars and sweepstakes casinos.
Could this be a hint that VGW is eyeing a future in social sports betting? Who knows! One thing’s for sure, though—this partnership has raised more than a few eyebrows, especially among investors. One disgruntled investor even grumbled that “[Laurence] is pissing money up the wall and treating the company like his own personal fiefdom.”
Controversies
As expected, Escalante has faced his fair share of controversies. In May 2022, Laurence Escalante ended up in a bit of a pickle, thanks to his lavish, jet-setting lifestyle. He was caught with small amounts of cocaine, ecstasy, and LSD as he flew back in his private jet to Melbourne from a wild weekend getaway in Las Vegas.
When questioned, his defense was the classic, “I didn’t even know it was in my bag.” Apparently, after “literally partying with 20 friends” and downing drinks for three days straight in Vegas, Escalante simply chucked everything into his bag. Although he pleaded guilty in August 2023, he ended up with only a six-month good behavior bond and no conviction.
There have also been some less personal controversies. Recently, VGW’s sweepstakes casinos have faced criticism from the AGA regarding the regulatory framework around sweepstakes casinos. The AGA expressed concern for the consumer’s safety due to the lack of stringent regulation in sweepstakes casinos, even though they “look and play like an online casino”. The AGA was also worried that players might not be getting the same responsible gambling features they would have access to in a real money casino.
Laurence deflected this criticism by stating that the company’s financial crime controls are the “best in class”, establishing that players are in very safe hands with VGW casinos.
VGW has also been fielding lawsuits from individual plaintiffs in Georgia, Ohio, Florida, and most recently Mississippi, claiming that the company should not be allowed to operate in their states. So far, Lawrence has managed to dodge most of these lawsuits, continuing to operate in 45 US states. That’s pretty impressive when you consider that most sweepstakes casinos don’t even come close to that kind of coverage!
Our Thoughts
We all dream of stumbling onto that genius idea that will make us billions of dollars, but Laurence actually pulled it off! His clever loophole with sweepstakes casinos turned him into an overnight sensation. He may have had his fair share of drama, lawsuits, and even a few run-ins with the law, but Laurence still manages to keep VGW growing, pushing the boundaries of what an online casino empire can be.
One thing is certain, others have taken notice and the sweepstakes casino market is booming thanks to him!
Author: Alex Windsor
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