Lottery fever has returned, and Monday night's Powerball drawing, which was the 10th biggest on record at $750 million, may highlight the online lottery ecosystem, which includes participants like Jackpot.com.
In places where it is permitted, Jackpot.com, a privately held company founded by Akshay Khanna, Roi More, Yariv Ron, and Christopher Brown, offers consumers a way to purchase scratchers and regular lottery tickets through a mobile application. Additionally, it enables lottery retailers to buy tickets for wagerers and scan them to verify ownership.
The internet lottery market is a tiny but quickly expanding segment of the gaming business. Of its main competitors, Jackpot.com has the fewest downloads, followed by DraftKings-owned Jackpocket and Lotto.com. According to Citizens Equity Research Analyst Jordan Bender, the Jackpot.com app has roughly 300K downloads, while Lotto.com has 500K and Jackpocket has about eight million.
Operating in Arkansas, Colorado, Massachusetts, New Jersey, New York, Ohio, and Texas, Jackpot has raised $42 million.
Jackpot.com May Be About to Experience a Significant Development
Although Jackpot.com's public valuation has not yet been made public, DraftKings' (NASDAQ: DKNG) $750 million acquisition of Jackpocket in 2024 was the lottery courier industry's biggest deal to date. The target was worth $620 million before to that.
To put it another way, there aren't any unicorns—private businesses worth at least $1 billion—in the internet lottery space, but there is still plenty of opportunity for expansion because, as Bender notes, only 1% of lottery tickets sold in the US are purchased online.
"Its (online lottery) existing footprint provides it with the highest return at this point, and we get the sensethat a multi-pronged approach of marketing initiatives should help increase the penetration of online ticket purchasing,” says the analyst.
He continues by saying that the goal of jackpot management is not to outbid physical lottery shops. Instead, the corporation focuses on those who have never purchased a lottery ticket, those who have only purchased one, and those who first bought in-store and might choose to add extra tickets from home before major draws.
At a time when Jackpot's revenue compound annual growth rate (CAGR) is higher than the whole lottery business, such operating approach might make it easier to expand into new states.
“That is not to say the company will look outside its existing seven states, and we could expect to see it expand into more states in the coming year, along with offerings outside the draw and scratcher categories,” adds Bender. “Overall, we believe revenue for the company is well outpacing overall lottery growth of a 5% CAGR in the United States.”
Texas's Teachings
The online lottery industry came under attention after a slew of lottery-related scandals in Texas involving internet couriers. However, the good news for businesses like Jackpot is that the repercussions resulted in stronger, more transparent regulatory frameworks.
Bender points out that states are taking action to prevent a recurrence of the Texas tragedy and that discussions around internet lottery couriers are becoming easier at the state level. Both Jackpot.com and its users may gain from greater protections and clarity.
Accomplice, Arctos, Courtside VC, Elysian Park, Powerhouse Capital, Sapphire, and 645 Ventures are among the investors who support the business.
