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Read Full BioVirtual Gaming Worlds (VGW), the parent company of popular sweepstakes casinos Chumba Casino, LuckyLand Slots, and Global Poker, is on the verge of a major corporate transformation, as its founder and CEO, Laurence Escalante, seeks to take it private.
Escalante wants to buy the remaining 30% share he doesn’t own in a transaction that would value the company at A$3.2 billion ($2.08 billion). The proposed acquisition reflects a strategic maneuver in response to increasing regulatory security and evolving market conditions in the US.
Lance East Office Proposes Acquisition in Major Buyout
For the acquisition, Lance East Office (LEO), Escalante’s family office, has established Ocean BidCo Limited, a special purpose vehicle registered in the Bailiwick of Guernsey.
Under the proposed Scheme Implementation Deed of purchase terms, VGW would become a subsidiary of Ocean BidCo Limited.
Under the scheme terms, VGW shareholders can receive a A$5.05 ($3.29) per share cash payment, shares in Ocean BidCo, or a combination of the two.
LEO initially approached the VGW board about an acquisition in November 2024. The board then created an Independent Board Committee (IBC). IBC, comprising financial and legal advisors, was tasked with evaluating the potential sale.
IBC rejected LEO’s initial offer of A$3.50 ($2.28) to A$4.00 ($2.58) per share. After further negotiations, IBC deemed that the latest A$5.05 offer accurately reflects the company’s value.
The acquisition is subject to approval from VGW shareholders. If conditions are met, the deal is scheduled to finalize by September 15.
Behind VGW Going Private: Navigating Regulatory and Market Pressures
Escalante’s decision to take the company private follows challenges in the US, one of VGW’s core markets.
Sweepstakes casinos, like VGW’s brands, have faced increased regulatory scrutiny in the US, with several states already moving towards a legislative ban on these platforms.
Last month, Montana officially banned sweepstakes casinos, becoming the first state to do so. Meanwhile, Louisiana, Nevada, and Connecticut are just a governor’s signature away from following Montana.
Additional states, such as New York, New Jersey, and Ohio, are also considering legislative bans. In response, VGW has already announced it will stop sweepstakes play in the Empire State, effectively removing it from its list of eligible jurisdictions.
Due to these challenges, industry sources expect a decline in VGW’s revenue for the remainder of the financial year.
Going private and relocating the company’s domicile to Guernsey from Australia will also benefit VGW. It provides it with tax advantages and a more favorable regulatory environment, which could help VGW in achieving greater operational agility and cost efficiency.
Ending VGW Shareholder Disputes By Going Private
Going private will also help Escalante with his ongoing disputes with shareholders over issues such as valuation, company direction, and regulatory challenges.
As CEO and majority shareholder, Escalante has maintained control of the company; however, these disputes have caused friction, including his recent profanity-laced tirade at investors, in which he told them to sell their shares if they did not trust the leadership.
One of the arguments of minority shareholders is that they believe the company is undervalued. They have pushed for higher valuations and liquidity options. Investors have also questioned VGW’s response to US regulatory pressures, calling for more aggressive expansion and diversification.
Escalante’s move to take VGW private is an attempt to resolve these tensions. By offering a higher price per share than the initial valuation, the CEO is answering those calls for undervaluation.
At the same time, going private gives VGW greater strategic flexibility and Escalante greater autonomy, as the company will no longer be beholden to shareholder expectations.
Being private also allows VGW to keep sensitive business information out of the public eye, which is critical in regulated and competitive businesses like online gambling.
VGW’s Position Compared to Publicly Traded Gaming Giants
Escalante’s ongoing disputes spark comparisons with other high-profile shareholder disputes involving publicly traded gambling giants, such as Penn Entertainment, Bally’s Corporation, and DraftKings.
Ahead of its annual meeting, Penn Entertainment is facing severe pressure from shareholder HG Vora Capital Management. HG Vora claims that the company’s misguided pivot to the digital sector, away from traditional retail casinos, has led to a dramatic decline in shareholder returns.
HG Vora also points the finger at CEO Jay Snowden and the leadership team for a lack of skills aligned with the strategy shift.
Bally’s has faced echoing concerns from shareholders about its focus on its Interactive division. Last year, the company agreed to a merger with its largest shareholder, Standard General, led by Chairman Soo Kim. However, another investor, K&F Growth Capital, opposed the merger.
In an open letter to shareholders, K&F questioned Bally’s shift to digital, which it called “an unmitigated disaster.” It also questioned the mass retail expansion plans for casinos in Chicago, Las Vegas, and New York. The latter faces serious questions as it recently hit a roadblock with the New York City Council.
DraftKings is a digital gaming giant that has grown to become the number two sportsbook in the US. Last year was one of its most successful years in terms of financial results, as it reported its first-ever positive Adjusted EBITDA and 30% yearly revenue growth.
However, between 2021 and 2023, the company faced shareholder concerns over its capital allocation strategy. The shareholders raised questions regarding aggressive marketing spending and acquisitions, with concerns about sustainability and the path to profitability.
Investors even brought in a class-action lawsuit regarding the disclosure of information surrounding DraftKings’ merger with its technology provider, SBTech. That suit was eventually dismissed.
Public vs. Private Gaming Companies: Governance, Regulation, and Strategic Flexibility
The key difference between VGW’s potential privatization and the situations at Penn, Bally’s, and DraftKings lies in their governance and regulatory environments.
Unlike VGW, all three are publicly traded companies operating under strict US gaming regulations. They have disclosure requirements to ensure transparency and accountability. This enables shareholders to actively influence corporate decisions, often leading to public disputes when disagreements arise.
In contrast, VGW does not hold US gaming licenses. The company’s plan to go private and relocate to Guernsey further reduces regulatory oversight and disclosure obligations.
That move gives VGW management greater freedom to pursue long-term strategies without the pressure of investor concerns or public market pressures.
VGW’s privatization enables Escalante to consolidate control and lead the company through evolving market challenges with greater agility. That’s something US-regulated, publicly traded companies cannot do.
