Jackpocket Scores Another $50M to Make Playing the Lottery as Easy as a Few Taps on Your Phone

4 days ago 8

The lottery is the most popular form of gaming with 49% of adults reporting buying a lottery ticket.  For states, the lottery serves as a source of revenue to fund public education budgets, veteran services, infrastructure, and other public works.  Jackpocket, founded in 2013, partners with official state lottery retailers and offers the players the convenience of getting in on the action from their phones, get automated alerts when they win, and even collect via the phone. The company currently services Arkansas, Colorado, Minnesota, New Hampshire, New Jersey, New York, Ohio, Oregon, Texas, and Washington DC with plans to expand to new markets.  The service went live in New York last month and is already responsible for 7% of all Powerball tickets sold in the state. Despite the pandemic slowing down the overall lottery market, Jackpocket grew 4x in 2020 and now employes a team of 175.

AlleyWatch caught up with Founder and CEO Peter Sullivan to learn more about the $80B lottery industry’s push to go mobile, the company’s traction, future plans, and latest round of funding, which brings the total funding raised to $79.6M.

Who were your investors and how much did you raise?

Our Series C funding round closed $50 million and our investors included: The Raine Group, Greenspring Associates, Circle K Ventures, TEGNA Ventures, BRV Capital, and Gaingels, and a number of new high-profile individual investors, such as David Blitzer, the owner of the NJ Devils & 76ers, Sean Hayes, actor and producer best known for his role in Will & Grace, and Jon Ledecky, the owner of the NY Islanders.

Tell us about the product or service that Jackpocket offers.

Jackpocket is the first and only officially licensed third-party mobile app in the U.S. that offers players a secure way to order official state lottery tickets. Our mission is to create a more convenient, fun, and responsible way to play the lottery. Through the app, lottery players can place orders for their favorite games, check lottery results, join lottery pools with other Jackpocket users, and turn on Autoplay so they never miss a drawing. Jackpocket is currently available in Arkansas, Colorado, Minnesota, New Hampshire, New Jersey, New York, Ohio, Oregon, Texas, and Washington, D.C.

What inspired the start of Jackpocket?

The lottery has always been a family affair for me. My dad is such an avid lottery player, that I was often late to football practice after waiting in line with him to buy his daily lottery tickets. When my dad, who isn’t exactly “tech-savvy,” got his first iPhone, I noticed that he was playing social casino games on his smartphone, and the idea for an app to modernize the lottery took form. Jackpocket launched in 2013.

How is Jackpocket different?

Jackpocket has worked directly with state lotteries and gaming commissions from the start. We are committed to ensuring compliance with existing statutes in every state we operate in and have even worked together with states to establish new regulations around lottery courier services. This patient approach, while rare from the startup world, actually provided us with a competitive advantage—and it’s something that I am immensely proud of.

Today, Jackpocket is the first and only officially licensed lottery courier service in New York and New Jersey, and the easiest, most compliant way to play the lottery in 8 other states. We are also the only mobile lottery service that provides players with a scan of both sides of their physical lottery ticket, along with the ticket serial number that’s been assigned to their account. Together with automatic alerts when you win, these features eliminate the risk of misplacing your lottery ticket or forgetting to check results and ultimately make the lottery even more secure. A member of the National Council on Problem Gambling, we’re also the first mobile app to receive a responsible gambling certification from the NCPG’s Internet Responsible Gambling Compliance Assessment Program.

I feel like Jackpocket presents a win-win scenario for state lotteries across the board: By making the lottery more accessible to today’s players, Jackpocket helps lotteries drive incremental revenue to fund essential state programs for education, the environment, veteran’s services, and other great causes.

What market does Jackpocket target and how big is it?

Americans spend more on lottery tickets annually than they do on movie tickets, sporting events, concerts, books, and video games combined. The $80B lottery industry is the next major form of entertainment to go mobile, and Jackpocket is leading the way by reaching traditional lottery players like my dad, looking for an easier way to order tickets, and new players alike. 98% of the lottery industry is offline and cash-based and consists largely of anonymous transactions… something that Jackpocket is already changing.

What’s your business model?

Jackpocket is built on a lottery courier service model. Players place orders through the app, and Jackpocket then purchases tickets on their behalf from an official state lottery retailer. We’ve built a proprietary technology platform that seamlessly transforms paper tickets into a digital experience at scale. Players can see a scan of their lottery tickets right in their app. From there, we automatically check lottery results and notify players if they win.

We monetize by charging consumers a small convenience fee, combined with a sales commission that we get with every lottery ticket sale. Players always keep 100% of their winnings.

How has COVID-19 impacted the business?

Now more than ever, our customers are looking for safe and convenient mobile experiences. Jackpocket provides a safe alternative to play the lottery from the comfort and convenience of their homes.

We have seen an increase in users’ monthly spend on the app month over month since the start of the pandemic. After our New York launch in January 2021 and record Mega Millions and Powerball jackpots, we hit over $3M in daily ticket sales, shattering December sales records by 10x. What’s more, we had over 1.3M unique active users which was 30% more than the entirety of 2020.

What was the funding process like?

We partnered with diverse companies, groups, and individuals who want to revolutionize the market.

What are the biggest challenges that you faced while raising capital?

In our earlier funding rounds, it was all about proving Jackpocket’s growth potential in an emerging mobile industry while limited by where we were operational. During our Series B fundraise, for example, we were available in Minnesota and New Hampshire. For our Series C, we had the momentum of both New Jersey and New York passing regulations allowing for digital lottery courier services, along with our launches and growth in 8 other states.

What factors about your business led your investors to write the check?

Our investors recognized our proven track record and purposeful approach to growth, which has been based on a deep understanding of both the regulatory environment and the lottery consumer. Our growth over the past 12 months highlights our ability to reach a new demographic of lottery players looking for fun and safe mobile experiences. They wanted to be part of building the lottery of the future and recognized that we are at the tip of the iceberg for what we can accomplish.

What are the milestones you plan to achieve in the next six months?

We intend to fuel new growth marketing campaigns and a series of new additions to the Jackpocket team to support aggressive expansion. With our new, second headquarters in Santa Barbara, our headcount is currently at 175 employees and we are hiring across nearly all departments, including Engineering, Marketing, Product, and Operations.

What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?

Don’t lose sight of the vision, invest in your employees, and be as transparent as possible. We’ve had our setbacks at Jackpocket, as with any startup. There was even a point where I had to tell my team that our funding had fallen through. They stuck with me because they believed in the product and trusted in our team dynamic—and together we got back on track. At their foundation, companies are about getting great people to work together. Once you have those great people, you can get through any wall that comes your way.

Don’t lose sight of the vision, invest in your employees, and be as transparent as possible. We’ve had our setbacks at Jackpocket, as with any startup. There was even a point where I had to tell my team that our funding had fallen through. They stuck with me because they believed in the product and trusted in our team dynamic—and together we got back on track. At their foundation, companies are about getting great people to work together. Once you have those great people, you can get through any wall that comes your way.

Where do you see the company going now over the near term?

Our goal is for Jackpocket to become nothing short of a household name. In 2021, we’re launching in additional markets and working with new partners to reach more players in our existing markets.

What’s your favorite outdoor dining restaurant in NYC?

Love a fresh slice from F&F Pizza in Carroll Gardens, Brooklyn.


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