Before last week’s $1.6 billion PowerBall lottery draw in the US, it wasn’t a rare occurrence to be standing by a bus stop, sitting on the train or eating in a work cafeteria and overhearing people ask their friends if they had bought tickets for the lottery. But those conversations weren’t limited to the US. Thanks to the growing lotto messenger industry, plenty of people in countries around the world were also participating in the record breaking lottery.
Prior to lotto messenger there had always been a group of non-US players. But, this group was typically limited to ‘some dude who had a relative in the US’ and was buying lots of lotto tickets, and maybe you could trust them to cash out if they win.
The non-US opportunity has grown as lotto messenger providers such as LottoTech and LottoYard, offer technology solutions to purchase tickets. PowerBall Lotto tickets are then purchased on their behalf in the US. Alternatively, the draw is operated synthetically and no actual tickets are purchased, but the lotto messenger company will pay out winnings in the event of numbers matching. In this model, the lotto messenger purchases insurance to cover potential payouts.
A tsunami of demand
Thanks to the back to back PowerBall jackpots that topped at $1.6 billion last Wednesday, the lottery drew massive demand not just domestically but also internationally. For lotto messenger operators, large jackpots such as those that can occur from PowerBall, as well as European based lotteries, are an important driver of interest in their solutions.
Stocks to Watch This Week – Expedia Group, IncGo to article >>
Last week’s draw was no exception with Stuart Ballan, Head of Sales of Middle East at Counting House Ltd, a firm that provides payment services to gaming and lottery firms, stating: “If most large jackpots create a wave of activity, this most recent PowerBall Jackpot created a tsunami.”
According to Ballan, industry checks showed sizable gains in activity and new customer signups due to PowerBall, with one firm stating “25x more customers registered in January, compared to normal months”. This sentiment was backed up by Yuval Ganot of LottoYard, whose firm provides lotto messenger technology to companies to operate lottery brands, and cited growing demand for the product.
While a large lottery provides awareness for lotto messenger companies and plenty of new customers, the question is, do they stick around? According to Ballan, the reality is that the vast majority of these new players disappear and rarely become ongoing “brand-loyal customers”.
Nonetheless, industry data has shown that these new customers do tend to return for other large jackpots in the future. Ballan explained: “Interestingly, large jackpots also seem to trigger some old, lapsed customers to re-activate”. As such, in terms of new customers arriving for PowerBall and other large draws, the expectation is that “many disappear once the jackpot bubble has been burst, reappearing as the next wave approaches”.
For lottery operators, the conclusion is that the long term value (LTV) of jackpot acquired customers isn’t expected to be a large one. However, the LTV is also directly affected by how well firms are able to reengage customers for future jackpots.