New York-based online lottery app Jackpocket announced it raised $16 million in a Series B round of financing. Venture capital firm, Conductive Ventures, led the charge. DCM Ventures and former NBA Commissioner, David Stern also participated.
The recent investment brings Jackpocket’s total funding to $25 million when paired with a Series A round of investments.
Carey Lai, founding member and managing director of Conductive Ventures, talked about the decision to invest in a press release.
“We invested in the Jackpocket team because they’re going about things in all the right ways—innovating on their proprietary ticket-processing technology, carefully navigating legislative environments that are unique to each state, and going through proper channels to operate in a way that makes regulators comfortable, lotteries better funded, and consumers interested in a novel way to play the lottery.”
Betting on Jackpocket
Online gambling is a favorite topic these days. The interest comes from the recent launch of several sports betting markets, gaming expansion laws and a nation obsessed with colossal lottery jackpots.
Jackpocket is positioned to take advantage that interest. Specifically, it focuses on the lottery.
Lottery fever has swept the nation thanks to the recent $1.6 billion (with a B!) Mega Millions jackpot. Jackpocket makes it easier for people to get in on that exciting action.
Currently, the app is available only to players located in Minnesota and New Hampshire.
Lottery players can purchase their lottery tickets through the Jackpocket app. Here’s how it works:
- A player loads money onto their Jackpocket account. There is a seven percent fee on the total amount deposited.
- The player buys the tickets. Geo-location services are used to confirm the player is physically in Minnesota or New Hampshire.
- Members of the Jackpocket team then deploy to a lottery retailer to purchase the tickets and sends the player a scanned image.
Winnings of less than $600 automatically show up in the player’s account. With larger jackpots, Jackpocket arranges to get the physical ticket to the player so they can cash out in person. Tax laws require winners of prizes over $600 to sign tax forms.
What makes the lottery app innovative?
There are a few things that make Jackpocket’s app attractive to venture capitalists.
Jackpocket offers a wide variety of lottery games, including the popular Powerball and Mega Millions. A player can establish preferences to purchase tickets when a jackpot reaches a certain amount automatically.
It also strives to protect enthusiastic lottery players from playing above their pay grade by placing a $100 per day limit on purchases.
Jackpocket recently released a new feature: “Pools.” It allows groups of players to join forces and pool their Powerball and Mega Millions tickets into a combined larger pool with higher chances of winning.
The feature was in demand during the recent Mega Millions mania. In fact, over 3,000 lottery players joined a Jackpocket pool during that time.
Is Jackpocket legal?
The legality of Jackpocket accepting mobile lottery ticket purchases in states where online gambling is illegal has raised some eyebrows.
“The reason this is legal is that they are actually purchasing the ticket from the actual lottery retailer,” said Adam Prock, spokesman for the Minnesota State Lottery, to Cleveland.com. “They are working as a courier service.”
If you think about it, it is not illegal to buy a lottery ticket for someone else.
Jake Grassel, the executive director for Citizens Against Expanded Gambling, disagrees. He contends if you can order a lottery ticket online, that is online gambling.
“What’s next — can you pay someone to sit on the slot machine while you push the button on your phone from the couch?” Grassel said.
Currently, there are some Minnesota legislators expressed concern. It is unclear whether there are plans to take up the issue when the legislature convenes in Jan. 2019.
Jackpocket has plans for the new influx of cash
The capital will be used to expand Jackpocket throughout the country. Accordingly, there is a possibility of expansion into Ohio sometime next year.
Jackpocket CEO Peter Sullivan talked about what the recent investment means to him and the company.
“There’s no greater validation than someone making an investment in your company to say they believe in what you’ve accomplished as a business, but more importantly, in your vision to create something transformational.
“We’re looking forward to growing in our relationships with lotteries and in support of their beneficiaries, and to serving as their trusted partners, as they keep pace with the evolution of gaming in pursuit of a better lottery experience for everyone.”