A Perth businessman hopes his online portal can help mitigate the effects of problem gambling.
Laurence Escalante is on a mission to reduce the effects of problem gambling – by building his own online gambling business.
Perth-based Mr Escalante is the founder of technology start-up Virtual Gaming Worlds, which is preparing to launch what’s understood to be the world’s first real-money gambling website integrated with social networks.
The site is expected to go live in six weeks and is aiming to attract 1 million active users per month by the end of the year.
Mr Escalante told Business News he expects that number to double in the first 12 months.
The venture is a complete turnaround from Mr Escalante’s previous work history, which includes founding a computer gaming business for the Christian market and a decade as a financial planner.
He also has three problem gamblers in his family and feels strongly about the destructive effects gambling can have, including online gambling websites.
“The business model is extremely powerful and extremely dangerous,” Mr Escalante told Business News.
“But I’m not doing this to be part of the gambling market that exists; I want to disrupt it.”
Mr Escalante’s argument is that his business is a much less risky form of gambling because users will bet amounts as little as 1 cent on a spin of the virtual pokie machines, as opposed to the $1 per spin in Australia’s existing casinos.
He said Virtual Gaming Worlds would be vigilant about monitoring users’ activity, including how much money and time they spent on the website, and prompting them to reconsider betting if levels go too high.
“Because we’ve got so much information it affords us a lot of tools for how we can responsibly promote gambling and make sure that it is entertainment and it’s not futile and out of desperation,” Mr Escalante said.
The business has just started a $5 million capital raising campaign with the help of local stockbroking firm Triple C Consulting, and has secured about half that amount only a week into the campaign.
It follows a successful $2.5 million private equity raising earlier this year, indicating there’s no lack of enthusiasm from local investors.
That’s despite Mr Escalante’s commitment to promoting responsible gambling and the acknowledgement that it will reduce potential revenue.
“I’m not out to make a lot of money and rip people off, we can make a little bit of money from a lot of people,” he said.
It’s the statistics around Mr Escalante’s business concept that makes the model feasible.
The website will essentially convert Virtual Gaming Worlds’ virtual casino game Chumba World, which is free to play, into a real-money online casino.
Chumba World is what’s termed a ‘social casino game’ in that it’s primarily played through social network Facebook.
The social gaming market has boomed over the past four years with the most popular, Candy Crush Saga, recording 140 million active users per month.
Despite social games being free to play and not allowing users to bet real money, Candy Crush Saga’s annual revenue has topped $200 million purely from users spending real money to enhance their gaming experience with additional features.
Mr Escalante said no-one had yet enabled ‘real-money play’ in social games – which essentially matches the online gambling market with social gamers – because it was difficult from regulation and technology perspectives.
Having already secured its online casino licence, Virtual Gaming Worlds has developed unique back-end technology that provides a secure platform for real-money transactions in social games.
Chumba World currently has about 130,000 active monthly users.
When the real-money version goes live, Mr Escalante plans to spend about $1 million on Facebook advertising to market the game.
It will be illegal for Virtual Gaming Worlds to take bets from Australia, the US or China.
Mr Escalante expects most of the business to come from the UK and Asian countries other than China, with a sweepstakes function, which is legal in both Australia and the US, adding to revenues.