Most gamblers believe that there is a method to their madness, including such tricks as counting cards and stalking stingy slot machines. But if legal experts agreed with the gamblers, then Zorik Gordon would be behind bars. Instead, he’s talking with reporters about how he helped secure $9.2 million from top-flight venture capitalists like Bob Kagle of Benchmark Capital.
Gordon is president of WorldWinner.com, a three-year-old company that offers users the opportunity to compete for cash prizes in such games as Golf Solitaire, Free Cell and Press Your Buck Trivia. The common denominator to all of the Los Angeles-based company’s diversions is that they are all defined as “games of skill,” which stands in stark contrast to the “games of chance” which predominate casinos and offshore Internet gambling sites. In most U.S. states, games of skill are considered legal, while games of chance are prohibited.
While some of these distinctions are murky – think church bingo or certain carnival midway games – they are solid enough to have helped build WorldWinner.com up beyond $10 million of annualized revenue (the company takes around 20% off each tournament bet) and over four million players.
“There aren’t a lot of skill-based sites out there,” says Sue Schneider, publisher of Interactive Gaming News, an industry trade publication. “Maybe five to 10 sites have gotten traction with it, and WorldWinner.com is certainly one of them.”
WorldWinner.com was launched in July of 1999, and soon secured approximately $3.5 million in Series A funding from Zero Stage Capital and CommonAngels. The $8.3 million second round deal was led by HarbourVest Partners, which set a $33 million post-money valuation.
“We were very focused on getting the B round done, and were very pleased to bring in HarbourVest,” Gordon explains. “But we had a lot of interest on it and wanted to expand further, so we opened it back up.”
Benchmark Capital led the oversubscribed $9.2 million Series C round, with all of WorldWinner.com’s previous investors also participating. No valuation information was available, but Gordon did say it was an increase over the $33 million Series B mark. As part of the agreement, Benchmark’s Kagle will take a WorldWinner.com board seat.
Gordon acknowledges that potential investors were nervous about his company’s Internet association, but believes that Kagle’s positive experience with eBay may have worked in WorldWinner.com’s favor. “I think he understands that a good business is a good business, even if it’s using the Internet.”
Moreover, WorldWinner.com investors seem impressed with their portfolio company’s proprietary technology. Beginning today, WorldWinner.com will deploy a patent-pending algorithm that essentially matches players up to others of their own skill level. This is a major breakthrough in an emerging market that mostly has relied on a less sophisticated eBay-like rating system.
As for the immediate future, Gordon says the company is fully funded and has no plans to look for additional venture capital. He also hopes to expand WorldWinner.com’s partnership roster with recognizable online brands. So far, it has signed partnership agreements with such companies as Lycos, InfoSpace and Shockwave.com.
Contact Dan Primack