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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.

Product expansion

In November 2021, Jackpocket announced a Series D funding round worth $210 million. CEO Peter Sullivan noted that some of the capital would be used to add to Jackpocket’s core business of lottery ticket sales with mobile gaming. Capital would also be invested in technology that would enable the company to invest in best practices from the eCommerce, subscription, and mobile wallet service industries.

Games that may be added to the Jackpocket platform include raffles, sweepstakes, social casino games, and bingo. According to Sullivan, these would complement Jackpocket’s existing lottery system where a portion of the money is donated to charity. “What a lot of people don’t know about the lottery is that a percentage goes to good causes. We want to provide more fun gameplay and chances to win, and more ways to give back.”

Sullivan has also touted future partnerships with instant grocery delivery startups, considered to be digital extensions of the popular corner store which were at one time the only place lottery tickets could be purchased. 

Partnerships

In 2021 and 2022, Jackpocket entered into several partnerships with high-profile universities and sports organizations. Some of these are listed below.

Dallas Mavericks

In a multi-year partnership with NBA team Dallas Mavericks, Jackpocket will host sweepstakes across the season allowing fans to win game tickets, merchandise, and VIP experiences. 

The deal was no doubt helped by Dallas Mavericks owner and serial entrepreneur Mark Cuban, who was aware of Jackpocket’s momentum in the industry and believed mobile gaming was a natural evolution for lottery-based games.

New Jersey Devils

Jackpocket also announced a multi-year partnership with National Hockey League team New Jersey Devils to become its official lottery courier partner. Similar to the deal announced with the Mavericks, Devils fans will be able to participate in branded sweepstakes with many prizes such as:

  • Free Jackpocket lottery tickets.
  • Autographed merchandise that is one-of-a-kind, and
  • Private access to the ice at the team’s practice arena.

Announcing the deal, Senior Vice President of Corporate Partnerships Adam Cross said that “we are confident Jackpocket will be the preferred, digital lottery platform for Devils fans – who are already five times more likely to play the lottery than the national average.”

Rutgers Athletics

In January 2021, Jackpocket and Rutgers Athletics reached a multi-year agreement to become the school’s first-ever mobile lottery partner. For Jackpocket, this enabled brand integration in two major sports stadiums and the school’s social media platforms. The company would also receive significant exposure via print, radio, and other digital assets.

Rutgers was Peter Sullivan’s alma mater, with the CEO relishing the opportunity to enhance the viewing experience for basketball and football fans during games. Like the other deals, Jackpocket will offer free lottery tickets with special codes and host contests where participants can win tickets to sports matches. These are open to campus alumni, students, and general attendees.

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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