Laurence Escalante’s Virtual Gaming Worlds trebles profit, considers US listing

Laurence Escalante’s online game and sweepstakes business is booming. A US listing may be next on his agenda.

Laurence Escalante’s Virtual Gaming Worlds trebled its profits this year. Picture: Abigail Harman

Forget Atlassian, Canva, Envato and all the other Aussie technology “unicorns”.

The most profitable local tech start-up is Laurence Escalante’s Virtual Gaming Worlds, which surged in popularity around the world during Covid lockdowns and has kept up its strong financial performance in recent months.

Almost all of VGW’s customers are in North America, playing social casino virtual games such as its Chumba Casino suite of online poker machine, poker and blackjack table games, and Luckyland Slots.

Which is a big reason why VGW is now contemplating following Atlassian and other ­Australian start-ups like BigCommerce and gym training business F45 on a path towards listing in the US.

“We’ve had very solid interest in the business after our recent results, especially from overseas investors, Escalante tells The Australian.

“We don’t need new capital, but we are looking to engage more with the financial and investment community. That’s why we are open to a potential North American IPO in the medium to longer term.”

VGW customers pay real money to buy virtual “gold coins” to play. It operates under a sweepstakes model that gives users the chance to win promotional sweepstakes prizes that can be redeemed for cash.

It has proven to be a very profitable venture for Escalante, a one-time teenage Hungry Jack’s employee who would spend hours playing video games and built a business worth about $3.4bn by his late 30s.

“VGW is fundamentally a technology company with a strong platform and engaged community of users built around games,” he says.

Laurence Escalante, founder of Virtual Gaming Worlds. Picture: Abigail Harman

The business is currently working on a new range of casual non-casino-themed games, and does not operate in Australia.

Financial accounts recently lodged with the corporate regulatory show VGW’s net profit increased more than four times in the 2021 financial year compared to the previous 12 months.

The company’s net profit surged from $72m in 2020 to a record $294m this year, while revenue more than tripled from $778m last year to $2.22bn.

About $285m in dividends were paid at various stages during and just after the financial year, and VGW paid almost $64m in corporate tax. Another dividend was paid to shareholders earlier in October, continuing the company’s policy of distributing surplus cash profit where appropriate.

VGW has continued to perform well since its financial year ended on June 30. Monthly revenue hit an all-time high in August and Escalante says it looks like that figure was even higher in September.

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Laurence Escalante

• Age: 39
• Lives: Perth
• Estimated wealth: $2.15bn
• Industry: Technology
• Secrets of success: Building a global tech company from Perth and surfing the virtual games boom

Source: The List – Australia’s Richest 250

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“October looks likely to be another all-time record high for revenue as the business continues to grow even after last year’s very high growth numbers,” he says.

Escalante started VGW from shared office space in Perth in 2010, and the privately held public unlisted company – Escalante owns about 65 per cent – had a valuation of almost $3.4bn attributed to it after some trading in its shares in late August.

While the business contemplates a US listing in future – management consider it more likely to float there than on the ASX – shareholders can access some liquidity via an over-the-counter trading platform at Primary Markets. VGW management says there has been increasing inbound interest in the shares from private and institutional investors.

Escalante also has a passion for fast cars, which started when he would play arcade games such as NASCAR and Need for Speed for hours. The first car he owned was a Mitsubishi Lancer GLI in 2001, modifying it heavily with chrome rims, 3 inch exhaust and a stereo system.

His fast car passion has seen Escalante invest in a car modification business, Beyond Custom, and training and coaching business Arise Racing.

His first job was working at Hungry Jacks for $5.65 per hour as a teenager, and he later worked at The Reject Shop while doing actuarial studies and economics at Macquarie University in Sydney.

Escalante also supports the SheCodes (formerly Perth Web Girls) organisation that aims to get more women to pursue technology careers – a noted problem for the industry.

His own business has grown quickly. In 2015, VGW made a $2.7m loss from only $3.7m revenue. By 2019 the company’s revenue was $351m, which doubled the following year before trebling in 2020.

Escalate has attributed much of the growth to savvy social media spending. VGW’s accounts show it spent $80m on marketing and advertising in 2021.

Originally published as Laurence Escalante’s Virtual Gaming Worlds trebles profit, considers US listing