Amidst shareholder tension, Laurence Escalante, Founder of the gaming giant VGW, has set out his intentions to take total control of the company.
Holding a 70% stake in VGW, Escalante will offer minority shareholders AU$5.05 per share, less any dividends paid, to claim the remaining shares. This will be done through a Scheme Implementation Deed with Ocean BidCo Limited, an unlisted special purpose company created by Escalante’s family office, Lance East Office.
This values VGW, operator of brands such as Chumba Casino, Luckyland Slots and Global Poker, at roughly $3.2bn. According to Lance East, the figure offered represents a premium of approximately three times VGW’s EBITDA for the 12 months ending 31 December 2024.
The timing of the move from Escalante – who has an estimated value of $4.5bn – is interesting, given recent volatility with VGW’s investors over questions around the transparency of the company’s financial reporting.
Disruptions were largely fuelled by the decision of the firm to move to an annual rather than biannual reporting model last year.
Last month, he further heightened the tensions as he launched into an angry rant on the social media site Telegram, telling investors to sell their shares if they didn’t trust VGW’s practices.
On the share purchase offering, he commented: “For some time now, many VGW shareholders have asked how and when a liquidity event may arise, and the Scheme represents an efficient opportunity to allow those shareholders looking to monetise their investment for cash to do so.”
If the scheme is implemented, shareholders will have the option to continue their investment in VGW through holding shares in VGW’s new holding company, Ocean BidCo Limited.
The scheme must now be authorised by shareholders who have been urged to do so by a VGW Independent Board Committee. A shareholder meeting to decide on the scheme is expected to take place in July, with implementation expected to occur in August if approved.
“The VGW Independent Directors believe the offer price recognises the value of VGW’s business, after taking into account its medium and longer-term potential and the ongoing risks relating to VGW’s business and operating environment,” said the committee’s Chair, Mike Symons.
Surrounding the proposals is an uncertain future for VGW’s North American sweepstakes business, which currently faces increased scrutiny from regulators and lawmakers alongside the wider sweepstakes industry.
New York departure
Last week, the firm made the shock decision to pull its sweepstakes gaming offering from New York, informing players of a timeline for winding down the Sweeps Coins section of its platform.
The exit of VGW follows suit competitors such as High 5 Casino, McLuck and Hello Millions, which all shut down sweeps operations in the Empire State earlier this year.
In May, Montana became the first US state to explicitly ban online sweepstakes casinos after Gov. Greg Gianforte signed into law SB 555. A host of states, including New York, are considering similar legislation to curtail the vertical.
Given the scrutiny faced by sweepstakes casinos, VGW has also shut down its sweepstakes platforms in several other states in recent months.
The company pulled out of Connecticut last year, shut down its Global Poker operations in Nevada in January and left Delaware in April. Each of these states, as well as Maryland, issued cease-and-desist orders to VGW and other sweepstakes operators.
