A Perth start-up is poised to open the virtual doors of its online Aussie casino, but founder Laurence Escalante believes exploiting a loophole in Facebook’s sweepstakes rules could be an even bigger money earner.
Mr Escalante’s Virtual Gaming Worlds operates Chumba Casino, an online world where users play digital poker machines and card games for free, with no chance to win prizes. The ‘social casino’ makes money from dedicated users, who pay for things like extra credits and premium play.
Chumba Casino exists solely as an app within Facebook, but Mr Escalante received a license from The Philippines in August to begin accepting cash bets on his digital games. He hopes to launch a parallel Chumba Casino outside of Facebook for cash play, within a month.
Countries like Singapore, the United Kingdom, and Malaysia allow online casinos that deal in cash, but many others, including Australia and the United States outlaw them. (US states New Jersey and Nevada have legalised them but only with domestic licenses.)
With this in mind, although the licence is a significant milestone, it is not Mr Escalante’s best hope of revenue in the short term. About two thirds of Chumba Casino’s 200,000 monthly active users are based in the US. He intends to target them with “sweepstakes” offers on Facebook, which are made possible by a rule that does not define sweepstakes as gambling for some jurisdictions like the US.
Users can purchase virtual credits to gamble on digital pokies, and then crucially, they can cash out those credits on any prizes won, he said. Such activity would not be allowed in Australia, especially NSW where the rules on sweepstakes are very strict. However, Mr Escalante is confident he is playing by the rules as far as US laws are concerned.
Before offering sweepstakes play, Chumba users earned Mr Escalante about 10¢ per user, per day. The company has about 15,000 daily active users, which means annualised revenue of about $50,000. By the middle of 2014 he wants to grow his business to 100,000 daily active users and boost daily revenue per user to $1 – or annualized revenue of over $3 million.
You can read more about this online Aussie casino in the original article at AFR.com
