At Jackpocket’s operations center in West Milford, a town known for its iron ore mines and waterfront homes 40 miles from Manhattan, dozens of lottery terminals sit at long tables spitting out more than 100,000 tickets a day . Barcode scanners beep every second, indicating that a customer has just purchased a Powerball, Mega Millions or another lottery ticket in the Garden State. Employees then feed the ticket into the high-speed scanner and within seconds, the gambler who bought the $2 dream of getting rich quick with a few taps on the phone can see the scanned image of the ticket in the Jackpocket app.
Eric Parker, 37, who cofounded Jackpocket with CEO Pete Sullivan in 2013, says that when he started the company in a WeWork space in SoHo, he would go three times a day for customers to buy lottery tickets and take photos of each. Used to go to the corner shop to get it. with a smartphone. “In the beginning, it was me and Pete buying tickets at the bodega,” Parker says. “Now we can process one million tickets a day.”
Technically speaking, Jackpocket is a licensed lottery courier service, which means it is legally allowed to buy lottery tickets on behalf of others and store them until the drawing. Instead of going to a convenience store to buy a ticket, a player can open the app, pick their number (or let the computer pick it) and Jackpocket will buy it for them. The app is geofenced so gamblers cannot purchase lottery tickets from outside the state. (For anyone who wins less than $600, the Company will deposit the money directly into the account. With wins over $600, the Company will mail physical tickets for the player to cash in.)
To date, Jackpocket has raised over $200 million in funding from billionaire Mark Cuban, convenience store chain Circle K, and celebrities such as comedians Kevin Hart and Whitney Cummings at a $620 million valuation.
Rising stakes
While sports betting grabs all the headlines, state lotteries are the cash cow of the gambling industry. In 2021, gamblers will spend $98 billion on lottery tickets, according to the North American Association of State and Provincial Lotteries. To put this into perspective, slots and table games at casinos nationwide generated less than half that in 2022 (from January to November), at $43.79 billion, while sportsbooks generated $6.56 billion during the same time period.
The gaming industry is focused on expanding sports betting, which is currently legal in 36 states, but DraftKings, FanDuel, Caesars, Wynn and others are fighting over table scraps. The real opportunity, says Sullivan, is a $100 billion opportunity, expanding and modernizing the lottery for a younger, tech-savvy gambler.
“It’s been the story of my life for 10 years,” says Sullivan, 37. “America loves sports and sports betting is a sexy sell for investors. But it’s extremely niche. People don’t understand how big the lottery is—it’s America’s secret. The lottery is such a vast market that it’s a sleeping giant. has been made.
With a $100 billion market, Jackpocket, which is live in 15 states, isn’t the only one to see the lottery’s huge potential. Currently, the best estimate is that Jackpocket and other mobile lottery courier apps have captured between 2% and 3% of the national lottery market, which means little to no upside.
Mark Cuban, billionaire owner of the Dallas Mavericks and one of the stars of shark TankSays he invested in Jackpocket for two reasons: “It’s a very simple business,” Cuban wrote in an email. forbes, “It makes playing the lottery easier and more fun.”
Lottery history
The modern-day lottery began in New Hampshire in the 1960s, but humans have been playing similar games throughout history—13 of America’s colonies were partially funded by lottery revenue. The earliest known lottery was during the Han Dynasty in China, which is said to have helped fund the Great Wall. Later, the Roman Empire had its own lottery games. Today it is big business for most states, which protect their tax-generating institutions with a fortress of legislation, regulation and bureaucracy. It is estimated that approximately 50% of Americans will buy lottery tickets in any given year.
And lottery jackpots have only gotten bigger, adding to the excitement and growth of the industry. Since 2016, there have been six jackpots (between the Mega Millions and Powerball) with prizes over $1 billion. Three of these happened last year. According to NASPL data, lotto ticket sales grew by 18% between 2020 and 2021. Not bad growth rates for a 60-year-old industry.
Lotto.com
In Jersey City, competitor Lotto.com, which operates in seven states, has an open office with views of lower Manhattan. Tom Metzger, the company’s CEO, scoffs at the idea that mobile lottery couriers are “disrupting” the lottery industry.
“I’m not trying to take a dollar away from the traditional retailer, and the guy who likes to go to the store in the morning and buy his cup of coffee and his Pick 3 ticket; I don’t want to convert that into a customer,” Metzger says. “I want the Millennial or Gen Zer, the customer who is a completely digital native.”
In addition to its lottery ticket offering, Lotto.com is launching a digital scratch-off game in Texas and will eventually bring that product to the six other states where the company operates. “All development is in scratch-off,” he says. “The [lottery] Hasn’t changed in 60 years. Jackpots get bigger, but scratchers don’t have instant gratification. People play these things like slot machines.”
Metzger—who previously worked for Scientific Games, the largest manufacturer of scratch-offs—also consulted for LottoLand, which is operated by EU Lotto Ltd, a Gibraltar-based gambling organization that has been accused of money laundering violations. has been hit with sanctions by the UK government. Metzger says there is no connection between Lotto.com and LottoLand, even though their lobbyists say Lotto.com is the US branch of LottoLand. Metzger denies links between the companies but has been elusive with any details. He won’t reveal the name of his company’s single investor—”a wealthy man in Europe,” he says—nor will he reveal how much the company has raised. “I don’t have money from the Russian mafia or anything like that,” he jokes.
Jackpot
Another entrant in the lottery app wars is Jackpot, owned by UK-based 99Dynamics, which launched in the US late last year.
99Dynamics is known as a derivative lottery, which allows gamblers overseas to bet on the results of US and European lottery games. Founded by Israeli entrepreneurs Rui Morey, who launched ridesharing company Gett, and Yariv Ron, who has founded other gambling companies, Jackpot raised $42 million at an undisclosed valuation from the likes of billionaire Dallas Cowboys owner Jerry Jones and the Tisch family, co. Mobilize. – Owner of the New York Giants, and others. Akshaye Khanna, who worked at StubHub, the Philadelphia 76ers and was named to Forbes 30 Under 30 in 2017, joined the company last year as CEO to help Jackpot pivot to the US lottery market.
With very few companies fighting for a percentage of the $100 billion market, competition is vicious and sometimes leads to litigation. (Last year, Jackpot sued Jackpot for violating federal copyright infringement, unfair competition, deceptive trade practices laws. In December, a judge ruled in favor of Jackpot. Jackpot filed an appeal in early January.) .) But Khanna says the lottery is against the courier space. more competition from each other.
“The real competition is the status quo,” he says. “The main thing we are focused on is not taking market share away from other digital businesses. [Lottery players] It worked one way for the last six decades and suddenly, there’s a new way of doing it.”
And when it comes to running a gambling business, lotteries cannot be beat. Bill Pascrell III, a lobbyist who has worked with Jackpot and Lotto.com, sees lotteries as a typical no-lose proposition for companies. It is almost impossible for the players to win the course. According to lottery officials, you have a 1 in 302 million chance of winning the Mega Millions jackpot.
“The sports betting industry is largely risk management: you have to know what you are doing when you are placing your odds or you could end up with huge losses,” says Pascrell. “But the lottery is far more profitable – there’s no risk. You’re not betting; there’s no chance. You get a [percentage] of tickets – win or lose.
Source: Forbes
