Merchant Innovation

Lotteries And A Lotto Green, Online, Without Lines

Everything is getting done online these days – so why not the path quickest to riches? LottoGopher is a lottery messenger service that, as CEO James Morel tells PYMNTS Karen Webster, takes the hassle out of dreaming big. One thing though: You’re still not guaranteed to win. 

Across so many facets of daily life, online has replaced the “on line” part of transactions — from paying bills to grocery shopping and making tuition payments. Why should it be any different with playing the lottery, a most breathless of events that, to paraphrase the old adage, you’ve got to be in to win it?

Until quite recently, the “in” part has been — and still is — marked by long lines at the convenience store or other brick-and-mortar retail locations, with dollar bills plunked down in an effort to play granddad’s birthday numbers for what might be the cash windfall of a lifetime.

One company is striving to transform that retail experience. On the eve of the stunning $535 million Powerball drawing that captivated many last week (with no winner, we might add, boosting the pot to $650 million), and as part of the latest Topic TBD with PYMNTS’ Karen Webster, LottoGopher.com CEO James Morel discussed the ways buying lottery tickets through his site can speed up, streamline and make the process of playing the numbers generally more enjoyable — all in hopes of making participants’ spending dreams come true.

LottoGopher.com operates an online subscription based service out of California, limited, at present, to the state’s residents who want to buy tickets online rather than in a store. California residents can play Mega Millions, SuperLotto Plus and Powerball through LottoGopher.com.

The subscription tiers are $12 a month, $99 annually or $3 for a 24-hour pass, which does not factor in the ticket costs. As might be expected, the dual choices of lotteries are represented: Users can either choose the numbers or select the random number generator option. The tickets are sold at face value — Morel noted there’s no upcharge — and are secured through ticket retailers. The company accepts debit and credit cards across Mastercard, Visa and American Express, though Morel told PYMNTS alternative payment forms are being considered for future acceptance by LottoGopher.

The lottery market is a sizable one, as Webster noted, with $80 billion spent on lottery tickets across the United States in 2016 — more than was spent on movies, books and sports tickets combined. The odds, clearly, are trumped by enthusiasm, but even with daunting numbers in which winning can be measured in infinitesimal figures such as 1 in 292 million, as evidenced by Saturday’s Powerball drawing, the returns on investment are very high, according to Morel. In fact, the mere specter of stratospherically high returns is at least part of the lure of tossing a few dollars (or more than a few) at such an outsized game of chance.

Thinking a bit like a hedge fund or private equity firm, spending $2 to get half a billion dollars back means the return is in the hundreds of million percentage points, said Morel. Not a bad night’s work.

“It’s not always about winning…it’s about being in the game,” Morel said. And the cost is a palatable one, he added, where for a few dollars, “You can spend some time thinking and talking about what you would do” with all that money — “and the conversation is worth a dollar or two” for the excitement, distraction and fantasy that just might come true.

Think of LottoGopher.com as an online lottery social network, Morel told PYMNTS, one in which “the idea is to enhance all the things that are fun and cool about playing the lottery, and eliminate all the things that are a hassle….we are not gambling operation. We are a messaging service,” he said. The online-focused, California-based site’s services also see couriers traveling to brick-and-mortar lottery ticket retailers and purchasing tickets on behalf of LottoGopher users.

There’s also the ability to gift tickets online to people and to join online pools, akin to the common office pool, said Morel. The public online pool allows users to sync up with several other online ticket buyers (up to 100), so an individual essentially holds 100 tickets instead of just one, and all share in the possible winnings. This way, he explained, the mathematical boost to the odds of winning is a heady 10,000 percent.

Just who is buying $80 billion in lottery tickets every year? As Webster noted, the average lottery spend is $251 per adult per year in the United States. And, drilling down a bit, the numbers can skew by location. In Massachusetts, for example, that per capita is even higher at about $634, but might be much lower in other areas. Morel noted as the firm operates in California, data from that market and proprietary analysis from LottoGopher show buyers closely match California demographics in terms of gender, race and income.

The difference is in the spend itself, said Morel, as people who earn $75,000 or more annually spend three times as much on lottery products as seen with those who earn below that threshold, though the demographic does spend a greater percentage of their disposable income on those tickets.

Morel told Webster the regulatory hurdles that needed to be satisfied to get the site up and running in California included — and would include, upon branching out to other states — federal laws, state laws and gaming laws that are specific to each state.

Having gone public earlier this year, the LottoGopher plans to expand to as many as 20 more states by the end of next year, with an eye on the biggest states like Texas.

As for the ever-present lure and possible trap of games of chance, Webster asked about gambling addiction concerns. Morel noted there are advantages in the online model offered by LottoGopher compared to the traditional model requiring an in-store visit, but is ultimately anonymous. Users of the site must submit their names and card information, and the site also monitors large purchases. In essence, Morel said, “We know who our customers are.”

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