As of late, blockchain technology has become an increasing trend within the gambling industry, and an example of that recently came from global online lottery operator Lottery.com, which announced the development of a project in line with that trend, ‘Project Nexus’. In a video interview with Yogonet, the company’s co-founder and CEO Tony DiMatteo shared further insights into this, other industry trends, and how the company seeks to become a global marketplace for all types of games, or “an Amazon of gaming.”
In order to leverage blockchain-based technology, the company announced Project Nexus, which is a platform that will operate lottery sports betting and other forms of online gaming. Which were the key factors that led you to this decision and enter the blockchain market, and which changes do you need to make in order to adapt to this kind of technology?
In our opinion, blockchain is the future of all types of gaming, really just for the integrity of that game, meaning you don’t have to trust the house, so to speak, because you can trust the technology. And so that was probably the initial driver of us going towards that, and because I believe that this is just the future and it’s going to happen eventually and we should be in front of that. And, specifically for lottery games, that trust and integrity of the game are really paramount. And so it allows us to deliver a potentially global game where people in hopefully 100+ countries can actually play, whether they’re actually playing in fiat or crypto. However, you don’t have to be a crypto person to actually benefit from this type of game, meaning it’s the actual blockchain as a technology that gives you that confidence and that trust that you can trust the game. We just want to be able to expand our total addressable market, let people from all over the world play in games, in multiple games, not just draw games, hopefully, instant games and other gaming verticals that are all backed by the blockchain technology so that you have that inherent trust of what’s actually happening and you can trust the results in the outcome of those games.
What are the company’s expectations, specific goals with this project, and target audiences in the US and abroad? When and where do you estimate or expect that this project could be up and running?
I guess I would say our specific audience are really just existing lottery players outside of the United States, whether they are playing their own, as they might be currently playing their own sovereign game and we don’t want to discourage that, but we also want to give them other options. We believe that if we can create this game, we can create a sort of a multi-country global game that can have very high jackpots over time, potentially, and that could be a very good thing. So again, whether you’re playing in fiat or crypto, you can choose again how you get paid out. Maybe you purchase your ticket in fiat, but you might want to be able to be paid out in crypto or vice versa, or however, that works for the actual player. And so I think that’s our overall strategy, we just want to create a gaming platform that can have all of these games based on the blockchain. We can run our own games there, but we can also leverage that platform and let other operators leverage our technology to operate their own games. And overall, that just increases the legitimacy and the overall growth of the ecosystem. And just furthering the idea of that, eventually, all of these games really do need to be blockchain-based, and we believe that we could be the platform to deliver that.
We expect that we’ll launch at least our first game in 2022. So I think it’s coming soon and it’s our main focus. We’re working hard to get the first game out to the public.
Revenue growth in the third quarter was driven by the company’s global affiliate marketing program. Can you further explain the global affiliate marketing program that you introduced recently in the earnings report for the third quarter?
Our global affiliate marketing program is one of the building blocks and one of the lynchpins in the company going forward. We have operated affiliate programs in the past and this is really just the evolution of that. If you’re familiar with co-op dollars or that type of marketing, we have had some marketing credits on our balance sheet for some time before the business combination in Q3, we were able to sell some of those credits to one of our master affiliates, that’s a revenue-generating event for us. And so that’s a good thing for the company, and those credits can be deployed against multiple marketing platforms with, I think, some very big names. And so then the master affiliate, who has sub-affiliates under them can then either deploy and give those in a co-op situation to those sub-affiliates. Those sub-affiliates then leverage their marketing and their distribution and all the things that they’re doing to eventually drive actual user acquisition to the company of Lottery.com. And along the way, everybody makes a bit of money there and a bit of revenue. So once those marketing credits are actually deployed, the sub-affiliate is getting some revenue from those sales, so is the master affiliate and then, ultimately, we are as well. This is really just the first step for us, and we expect this to be a continuous piece of our business going forward. It’s not a one-time transaction, and it’s really important for us as we move forward in our overall growth strategy.
On October 29th, you completed your business combination with Trident Acquisition Corp. And you said you anticipated using the proceeds of that to accelerate growth by leveraging your customer acquisition costs in continuing to expand the customer base. So could you share the initial results, performance, and feedback from this listing? Which specific impacts do you expect in the coming months from this new status as a public company?
We do have very low customer acquisition costs of around $4, both domestically and internationally. And so now that we have received the funds from the business combination, we can focus on doing that direct B2C user acquisition model. I think we have a very huge blue ocean ahead of us, meaning, a very small percentage of all lottery tickets in the world are actually sold online right now, and so the benefit that we have as Lottery.com is that we can leverage our brand and effectively do awareness campaigns. Meaning, ‘did you know that you can now play the lottery from your phone, you don’t have to go to the store anymore. The game that you already love to play, you can do this all from your phone.’ And so I think that our big focus now, aside from the affiliate program, which is really in concept with the affiliate program, is just reaching consumers as fast as we can to spread the name. And for us, it’s important as Lottery.com to control the consumer layer, meaning, once we get a user, our retention rates are very, very good, and once we have a user, we tend to continue to keep them for a very long period of time. And it’s really just changing the behavior and changing the way that people play the lottery in the same way Amazon changed how people shop online for other products. And once that change has been made, people tend to stick with that. If there is a silver lining in COVID, it was that people looked for alternative ways to do the things that they usually do. And that has been a driver for us, if you cannot go to the store, if there’s a quarantine, what have you, you need to have some type of alternative to be able to do the same things you normally do. And we’re a great solution to that. And that’s been proven out over the last almost two years now.
Are you seeing an increased interest in investing in new projects for your business areas, including sports betting, iGaming, and blockchain uses as well? What are the new opportunities, challenges, and growth potential in those business areas?
I think there’s a tremendous amount of interest in all of those various sectors. In the lottery, I think the overall expectation is for that total addressable market to increase to about $625 billion in the next couple of years. So that’s a huge blue ocean for us to go and tackle. And I think that’s probably where most of our focus is going to be. We do also intend to get into sports betting. We announced earlier this year the acquisition of sports.com as a domain, as a property, and we will look to leverage that. Initially, I believe that we will leverage that property outside of the United States. We recently acquired Aganar and JuegaLotto, which are two Mexican lottery companies. They have good distribution, they sell national games right now, but they also have access to a sports betting license. And so you can imagine us bringing sort of very sophisticated sports betting technology to Mexico and doing very well there, but also being able to cross-sell our various products. Meaning if we can sell a lottery ticket to a sports player, I think that’s very easy. And then also, additionally, as we can sell sports betting to lottery players that have maybe not played that game before.
Considering your enhanced access to capital, what is your approach and criteria in terms of acquisitions, synergies, and business partnerships? Are there any new products or projects the company is currently working on that you could anticipate?
I think synergy is really the right word when we think about M&A. We look for companies who are very good operators who know their business and whatever vertical that is, whether that’s in gaming, sports betting, online casinos, poker, etcetera. If they are good operators that are doing very well in revenue and EBITDA we don’t necessarily want to replace them or what they’re doing, but we do want to be able to acquire them, bring them under the umbrella of our various properties like Lottery.com or sports.com, or whatever fits there, and then be able to cross-sell against those properties. As I mentioned earlier, that I think is the real win and where we’re going with this. I think in 2022, you’ll see potentially several acquisitions around that thesis, and that’s how we get to where we’re going, which is again, to become a global marketplace for all types of games, think of an Amazon of gaming. And we’ve been saying that for around two years now, that is the future of gaming and we believe that we’re best positioned to be that company. We have the best brands possible with Lottery.com and Sports.com, and I think that the future is very bright for us and we have a big blue ocean to go and explore.
Are there any further insights or plans that you would like to share?
I would just say that again on the global affiliate marketing program, that this is a real core part of our business that will continue to grow. Q3 was in a way a unique situation as it was sort of the big kickoff to that, but that will pay dividends for us as a company over the next several quarters as we go forward and I think into the future. So it’s an important part of what we’re doing and I think more details will come out around that.