Online lottery ticket firm Jackpot gets funding from top sports execs

Online lottery ticket firm Jackpot gets funding from top sports execs

Online lottery ticket company Jackpot announced Wednesday that it closed with $35 million in Series A funding, led by some of the biggest names in sports who see the 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 allowed. For example, the company said it could operate in states like New York, New Jersey, Texas, Ohio and Oregon.

Funding for the round was handled by Accomplice, a venture capital firm co-founded by DraftKings board member Ryan Moore and Courtside Ventures, an early-stage investor in sports, digital media, fitness and gaming businesses. Also among the investors: the Kraft Group, owner of the New England Patriots; Haslam Sports Group, owner of the Cleveland Browns; Fanatics CEO Michael Rubin; DraftKings CEO Jason Robins; and the president of the Boston Red Sox, Sam Kennedy. NBA superstars James Harden and Joel Embiid and NHL great Martin Brodeur round out some of the big investors.

“What we’re doing is really allowing you to buy that lottery ticket without even getting off your couch,” Akshay Khanna, co-founder and CEO of North American Jackpot, told CNBC in an interview.

The $100 billion-a-year lottery business is still largely cash-based, with buyers picking up tickets at bodegas, convenience stores, gas stations and other places.

Jackpot, which says it wants to transform the business to be more in tune with today’s consumers’ online shopping habits, will make its money by charging a convenience fee on purchases. The company added that it is currently working with local regulators in select states to obtain authorization to implement the service.

“Over a dozen states have been incredibly receptive to this because they’ve realized it’s actually a fundamentally different channel for the same product,” Khanna said.

In 2021, Jackpot said its research shows that 53% of Americans bought lottery tickets, but only about 5% of them bought online. Khanna said making lottery tickets more accessible online will help increase states’ sales revenue.

“We certainly think this will appeal to a potentially younger and more diverse demographic,” Khanna said. “It’s one of the reasons states support this model, because one of the goals here is to expand this product to people who might not traditionally have been the ones buying lottery tickets.”

But some critics, such as the National Council on Problem Gambling, warn that making it easier to buy lottery tickets could present a slippery slope for people at risk.

“Any form of online gaming inherently gives the user a sense of anonymity and is much easier to hide than other forms of gaming,” Jaime Costello, the group’s director of programs, said in an email. “These features, along with instant access to purchases, results, etc., increase the risk of problems for people who buy lottery tickets online.”

Khanna said that Jackpot will have age verification checks and that the company is investing to comply with state regulations.

Correction: This story has been updated to correct the spelling of James Harden.

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