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Online gambling is taking off
Who doesn’t want to win the lottery, kick back and live the good life?
Let’s face it. Everybody wants to be a winner.
Maybe that’s why online gaming is taking off the way it is. Did you know there was about $7 billion dollars wagered on the Super Bowl alone? It’s insane.
States across the US are seeing the value of legalizing online gaming. Now they really see it by the tax revenues. New York saw a whopping 25% of those Super Bowl wagers.
“Nationwide, sports betting handles are up more than 150% this year,” said Dave Forman, head of research at AGA.
“We’ve seen 11 states launch in 2021. So just the expansion alone, when you couple that with the growth of mature markets, there’s no question that the Super Bowl’s probably going to shatter last year’s record.”
States that legalized sports betting within the past year have seen exponential growth. New York, which launched mobile sports betting in January, saw $1.6 billion in online sports bets last month, breaking a record set by Arizona and surpassing a one-month record set last year by New Jersey, CBS News reported.
Revenue from the New York Lottery and its nine racetracks with video-lottery terminals fell 19% in 2020 from 2019, according to data obtained by the USA TODAY Network New York through a Freedom of Information request.
The drop was in part because the “racinos” were closed from March through September due to the CV-19 pandemic, but also because traditional lottery games, such as Powerball, Mega Millions and Quick Draw, saw revenue plummet.
While it’s true revenues bounced back some after the lockdowns. What did we learn from all this? Well, in order to bring in steadier play, help avoid major downturns, and to attract millennials and Gen Z, states need to up their game.
With only 7% of transactions happening online…the U.S. lottery needs a shot in the arm, and Lottery.com is working hard to get them up-to-speed.
Oh and Lottery.com also has a subsidiary in Sports.com primed to potentially capture a piece of that massive sports action as well.
Lottery.com does not intend to be a lottery provider, they aim to help states take their offerings to a wider audience. An audience tethered to their phones. Ones that don’t use cash. Moreso millennials who want to play, but aren’t big on playing the lotto at convenience stores.
Lottery.com has developed a full technology stack to help solve this. There really is an app for that!
Through their validated, certified, secure, and geo-fenced technology, users can safely buy their tickets right from their handheld devices.
States love it because now they can reach a much wider audience, especially an out of state audience without an Act of State Legislature.
Did you know the State of Nevada has no lottery?
That’s right, even in Las Vegas, the mecca of gaming, there is no lottery. Las Vegas residents have to drive about an hour to the Lottery Store in Primm Nevada where they can legally play.
How is that you ask? It’s because the store is located on Lotto Store Rd and has a Nipton, California address, even though the small community of Nipton is more than 15 miles away, and Lotto Store Rd is entirely on the Nevada side of the border.
Thankfully Lottery.com is working hard to help people everywhere avoid these type hassles.
It’s true, states can create their own digital lottery systems (and some have), but this requires a lot of time and money. Systems have to pass stringent laws and obtain funding for development. Let’s not forget the cost of site maintenance.
And let’s be honest, when was the last time anyone raved about the user experience on a state-run site? Right now Lottery.com is active in 12 states including Texas and California with nine more in the pipeline.
According to TechNavio, the lottery market in the US will be driven by factors such as high penetration of smartphones. The penetration of smartphones is increasing because of the declining average selling price of smartphones and developments in communication network infrastructure.
This is fantastic news for Lottery.com as the market is expected to expand by USD $27.90 billion at a CAGR of 5.96% offering the company a healthy amount of market opportunity.
What’s even more impressive is the fact that it is playing in the 2nd largest global addressable market, the global lottery market, that’s worth $398 billion. Which dwarfs even global sports betting at $85 billion.
Right now Lottery.com is valued at a tiny $700 million market cap. And that’s with just 0.02% of the market share. Do the math and imagine how much upside potential this company has at a measly 1% of the market?
Let’s just say, big. Very big.
You see this is not about what ifs. Lottery.com has the means to potentially take more than 1% of the market. And here’s why.
Not only does the company have a current US strategy, but they have a very impressive international strategy as well.
In the US consumers can buy draw games and scratchers right online or from their smart devices for a reasonable service, or convenience fee.
Plus Lottery.com runs a charitable sweepstakes where players can donate to qualified causes and enter to win luxury sweepstakes.
On the business 2 business side, Lottery.com features a robust API platform that can integrate to sell lottery tickets and games from their online properties.
Partner sites can use their payment processors to complete the transactions and Lottery.com receives a service fee for each transaction.
Gross margins on these transactions run from a very healthy 17%-33%. Partners with the best of the best…
That all sounds good, but who are the partners? Take a look at the list below and ask yourself how much upside is there for Lottery.com as buying lottery tickets online becomes more common. We all know how fast that can happen!
As we’ve seen, the national market is amazing, but the international market? Frankly it’s even better.
Most every country has some sort of lottery game or games. However, many would prefer to play the US games like Powerball where the grand prize has reached as high as USD $1.56 billion in 2016.
In fact it’s so popular that the company’s surcharge can be between $2 to $5 per transaction. Gross margins for international play balloons as high as 34%-54%!
Lottery.com does this through their B2B global affiliate marketing program.
The company provides marketing services that are sold through a credit program. This includes pre-paid advertising, marketing collateral and more. This marketing plan is highly scalable and very profitable as the company generates revenues in two ways: marketing services and profit share from sales.
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Key acquisitions provide a strong footprint in Central and South America.
As of August 2021 the company completed the purchases of aganar.com and juegalotto.com boasting 421,000 registered players and a home in a combined $9.8 billion market.
Europe is in play as well…
In an effort to penetrate the entirety of this available market, Lottery.com has also finalized several international partnerships, including one to expand into Europe and another to expand into Turkey.
All with some of the lowest customer acquisition costs in the industry.
The company currently spends about $4 to acquire a user, and then extract on average $24 from them within just the first year, all while retaining almost 70% of them on an annual basis. And that is just the lower margin, US lottery player.
Let’s put that $4 into some perspective.
In online sports wagering, the customer acquisition costs for FanDuel and 32Red are $68 and $245.7.
And this will blow your mind. In the United States, the customer acquisition cost for an online casino player is more than $500.
How is that $4 looking now? The company is doing an absolutely amazing job at keeping costs low.
Lottery.com posted their first audited, quarterly earnings as a publicly listed company in Q3 2021, and the numbers are very impressive.
They posted 1912% same quarter YoY revenue growth, a quarterly net income of $11.2 million on $32.2 million in revenue with a gross margin of 63%. They also reiterated their previously stated FY2021 guidance, saying they “expect to meet or exceed 2021 revenue guidance of $71 million.”
According to Simply Wall Street, it estimates revenue to grow a healthy 84.35%.
As you can see in the chart above, earnings and revenue are both heading in the right direction, with revenues absolutely taking off.
With hedge fund giants BlackRock and The Vanguard Group as top shareholders, you can imagine something good is being anticipated.
The more you do your due diligence on Lottery.com the more there is to like.
Another vertical Lottery.com has signaled is that they intend to cross-promote with sports bettors. They have already acquired the domain name Sports.com to host a robust information platform that they can use to generate affiliate income from the wildly sports wagering sector.
“The acquisition of the Sports.com domain is an important first step in entering the sports betting vertical,” said Lottery.com CEO Tony DiMatteo. “The brand name is a perfect fit for us, and this product pairing is special in the marketplace, as the lottery is one of the most popular games in the world. Our goal is to leverage our favorable customer acquisition costs and platform to efficiently drive growth for Lottery.com and parlay it into other related products.”
You didn’t think they were going to leave out the blockchain, did you?
Perhaps an even bigger area for expansion is the recently announced Project Nexus. Details on this are still coming out, but CEO Tony DiMatteo has said the intention of Project Nexus is to build a blockchain-based platform that any company can leverage for creating compliant, trusted games of chance, complete with support for payments and payouts in any form of currency (fiat or crypto).
He has also said development is well underway, and that a global, progressive jackpot game (similar to PowerBall), run by Lottery.com on this platform could come as soon as Q2 2022.
There is so much more to this fascinating company. It’s young, it’s profitable and it has delivered on explosive growth projections and it packs some serious upside potential. Get LTRY on your watchlist today.
Source 1: https://triblive.com/local/regional/super-wagers-7-6b-expected-to-be-bet-on-super-bowl-lvi-would-shatter-record/
Source 2: https://www.democratandchronicle.com/story/news/politics/albany/2021/03/11/ny-lottery-games-cas-inos/6945302002/
Source 3: https://sportshandle.com/ny-super-bowl-2022-geocomply/
Source 4: https://ir.lottery.com/static-files/774846f6-8047-42ec-8f55-44d8a9ee417a
Source 5: https://www.lasvegasadvisor.com/question/nevada-lottery/
Source 6: https://www.primmnevada.net/lotto-store/
Source 7: https://www.oleantimesherald.com/news/state/lottery-market-in-us-to-grow-by-usd-27-90-billion-from-2020-to-2025/article_db9011c2-8d4e-56cd-bfae-2a4ad4c61fe0.html
Source 8: https://www.usnews.com/news/us/articles/2021-10-05/what-are-the-10-largest-us-lottery-jackpots-ever-won
Source 9: https://askwonder.com/research/sports-betting-market-analysis-k5y28wdrn
Source 10: https://simplywall.st/stocks/us/consumer-services/nasdaq-ltry/lotterycom
Source 11: https://ir.lottery.com/news-releases/news-release-details/lotterycom-enters-agreement-ritzio-international-it-seeks-enter
Source 12: https://ir.lottery.com/news-releases/news-release-details/lotterycom-enters-large-and-fast-growing-market-turkey-offer-us
Source 13: https://ir.lottery.com/news-releases/news-release-details/lotterycom-acquires-sportscom-domain-signaling-expansion-sports
Source 14: https://ir.lottery.com/news-releases/news-release-details/lotterycom-commences-development-blockchain-gaming-platform
Source 15: https://twitter.com/tonydimatteo/status/1457776381090164739
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