Online lottery ticket company Jackpot announced on Wednesday that it has closed a $35 million Series A funding round, led by some of the biggest names in sports who see promising growth potential in digital lottery sales.
The cash injection could allow Jackpot to begin rolling out its website and app later this year in select locations where online lottery ticket sales are permitted. For example, the company said it could operate in states including New York, New Jersey, Texas, Ohio, and Oregon.
Funding for the round was led by Partner in crimea venture capital firm co-founded by DraftKings board member Ryan Moore and Courtside Ventures, a early-stage investor in the sports, digital media, fitness and gaming sectors. Among the investors also: the Kraft group, owner of the New England Patriots; the Haslam Sports Group, owner of the Cleveland Browns; Michael Rubin, CEO of Fanatics; Jason Robins, CEO of DraftKings; and Boston Red Sox President Sam Kennedy. NBA superstars James Harden and Joel Embiid and NHL great Martin Brodeur round out some of the top investors.
“What we’re really doing is enabling you to buy that lottery ticket without ever leaving your couch,” Akshay Khanna, co-founder and CEO of Jackpot for North America, told CNBC in an interview. .
The $100 billion-a-year lottery business is still mostly cash-based, with shoppers getting tickets at bodegas, convenience stores, gas stations and other places.
Jackpot, which says it wants to transform the business to be more in line with the online shopping habits of today’s consumers, will make money by charging a convenience fee on purchases. The company added that it is currently working with local regulators in some states to get permission to roll out the service.
“More than a dozen states were incredibly receptive to this because they realized it was actually a fundamentally different channel for the same product,” Khanna said.
In 2021, Jackpot said its research showed that 53% of Americans had purchased lottery tickets, but only about 5% of those were purchased online. Khanna said making lottery tickets more widely available online will help increase sales revenue for states.
“We certainly think it will appeal to a potentially younger and more diverse demographic,” Khanna said. “That’s one of the reasons states are supporting this model, because one of the goals here is to extend this product to people who traditionally might not have been the ones buying tickets. lottery.”
But some critics, like the National Problem Gambling Councilwarn that making it easier to buy lottery tickets could present a slippery slope for those at risk.
“Any form of online gambling inherently gives the user a sense of anonymity and is much easier to hide than other forms of gambling,” Jaime Costello, the group’s director of programs, said in an email. . “These features, together with instant access to purchases, results, etc., increase the risk of problems for individuals purchasing lottery tickets online.”
Khanna said Jackpot will have age verification checks and the company invests in order to comply with state regulations.
Correction: This story has been updated to correct spelling by James Harden.