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How Does Jackpocket Make Money? The Jackpocket Business Model In A Nutshell

Jackpocket is a North American third-party app enabling consumers to purchase official state lottery tickets, founded in 2013 by Peter Sullivan, Leo Shemesh, Eric Parker, and Matt Silber with a mission to provide a convenient, fun, and responsible way to play the lottery. Jackpocket has a relatively simple revenue generation model, collecting service fees and commissions.

Origin Story

Jackpocket is a North American third-party app enabling consumers to purchase official state lottery tickets.

The company was founded in 2013 by Peter Sullivan, Leo Shemesh, Eric Parker, and Matt Silber with a mission to provide a convenient, fun, and responsible way to play the lottery.

Tech freelancer Sullivan is the man credited with the idea behind Jackpocket. Growing up, his father was an avid lottery player. But as an adult, Sullivan realized his father could not purchase lottery tickets on his iPhone and still had to buy them in person. The lottery industry, he argued, had failed to adapt to modern technology.

In December 2013, the Jackpocket app launched in the state of New York. Leveraging the attraction of a $636 million jackpot, usage of the app grew quickly. Since that time, the success of the company is directly related to its ability to build close relationships with state gaming regulators.

Jackpocket was another business to profit from the coronavirus pandemic. States were forced to modernize their gaming industries by allowing locked-down consumers to purchase lottery tickets remotely. In January 2012, the platform hit over $3 million in daily ticket sales with 1.3 million active users.

Jackpocket revenue generation

Jackpocket has a relatively simple revenue generation model, collecting service fees and commissions. It should also be noted that there are no monthly subscription fees or sign-up fees. The company also refrains from taking a cut of the jackpot winner’s prize money.

Service fees

Firstly, Jackpocket charges a service fee of around 7 to 10% for its courier service. In the context of the lottery industry, a courier service simply describes the buying and storing of lottery tickets on behalf of the entrant.

After receiving the required funds, Jackpocket places an order with a licensed lottery retailer and secures the tickets in a locked vault with restricted access. For peace of mind, customers are given a scanned copy of the ticket which is available in-app. They are also sent an email including the ticket serial number.

The exact fee varies according to the state and the total purchase price of the tickets.

Commissions

Historically, a state-funded lottery system would pay a commission to retail partners such as gas stations and newsstands in exchange for distributing (selling) the tickets.

In the more modern system, Jackpocket splits the commission from each in-app ticket sale with its partner stores. The exact nature of the split is undisclosed and likely agreed upon contractually.

Key takeaways:

  • Jackpocket is a North American third-party lottery app, the first such app of its kind in the United States. Co-founder Peter Sullivan got the idea for the app after noticing that lottery ticket purchasing systems were outdated.
  • Jackpocket has a simple revenue generation model. It does not charge a monthly subscription fee, nor does it take a cut from the winning entrant’s cash prize.
  • Instead, Jackpocket collects a service fee for buying and then storing the tickets in a secure vault on behalf of the entrant. It also splits a commission fee from each ticket sale with various retail partners.

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Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"