Jackpocket Business Model | How Does Jackpocket Make Money?

Jackpocket is a smartphone application that enables users to purchase official state lottery tickets directly from their phones. You can download the Jackpocket application on your phone, which is available for iOS and Android devices.

Jackpocket business model is based on charging service fees and commissions. However, you should understand that there is no signup fee or monthly subscriptions associated with Jackpocket.

In this article, we will learn how Jackpocket works and how Jackpocket makes money.

What is Jackpocket?

Jackpocket is a smartphone application that allows users to purchase state lottery tickets online. Jackpocket’s licensed partners then sell and store the lottery tickets.

Jackpocket Business Model

Jackpocket makes money by charging a service fee for using its platform and commissions paid out by the states in which it is offered.

Jackpocket, which was founded in 2013, has evolved to become the leading third-party iLottery smartphone application in the United States. Jackpocket application works in 11 states as of 2021.

How Does Jackpocket Work?

Jackpocket is a smartphone application that allows its users to purchase official state lottery tickets, which are then fulfilled by one of Jackpocket’s registered lottery partners.

It is quite easy and simple to use the Jackpocket smartphone; however, you must first download and install the app on your smartphone, which is accessible for both Android and iOS devices.

You must be 18 years old and living in the States where Jackpocket is available to be a Lottery Player. The Jackpocket app is available in 11 states, including Arkansas, Colorado, New York, or Ohio.

Once you sign up, you can use the app to purchase lottery tickets. Different games such as Mega Millions, Powerball, and other lottery games can play on the platform.

You will then receive an email with a confirmation code and a high-resolution photograph of your purchased lottery ticket, which will be uploaded to the app.

If you win a minor prize (usually less than $600), your prize money is deposited into your Jackpocket account. However, you can then transfer it to your bank account.

If you win greater cash prizes, the ticket is securely mailed to your address. You can then claim it at the relevant state lottery branch.

Jackpocket has a few more features to enhance the user experience. You can, for example, play in groups (by pooling money) or utilize the Autoplay option to put bets automatically.

Furthermore, the app has tools to assist players suffering from gambling addiction, such as daily deposit and spend limitations, the ability to self-exclude, and in-app access to responsible gaming resources.

Over the length of the app’s existence, users have won more than $30 million. According to the business, it is the first and only licensed third-party software in the United States that enables online lottery games.

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How Does Jackpocket Make Money?

Jackpocket makes money primarily in two ways, charging a service fee from its user for buying lottery tickets and commission it gets paid from the states where the app is available. 

Jackpocket Business Model

Let us understand the revenue sources of Jackpocket in detail:

Service Fee

Jackpocket charges its users a service fee ranging from 7 to 10% in exchange for delivering courier service when you buy and store your tickets on the Jackpocket platform.

The total service fee is calculated depending on the total purchase price of the Lottery. If a user purchases tickets for $10, the service cost will be between $0.70 and $1.

The ticket is then purchased and stored by either Jackpocket staff or employees from the ticket operators it collaborates.


Jackpocket earns money from commissions divided with the stores with which it collaborates for Lottery tickets aside from service fees.

The state-funded lottery system commissions different retail partners who distribute lottery tickets in a regular lottery ticket sale.

If you purchase a lottery ticket using the Jackpocket smartphone app, the commission is divided between Jackpocket and the retail partner.

The State and Jackpocket do not disclose the actual percentage split and are most likely determined by the contractual agreements between the two parties.

According to Jackpocket, working with the service allows lottery merchants to reach a younger, more tech-savvy population. 72% of users of Jackpocket platforms are under the age of 45.

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What is the Funding and Valuation of Jackpocket?

Crunchbase reports that Jackpocket has received a total of $79.6 million in venture capital funding over six rounds.

Some of the well-known investors of Jackpocket are BRV Capital Management, The Raine Group, Greenspring Associates, Evolution VC Partners, David Blitzer (owner of the New Jersey Devils and Philadelphia 76ers), and many others.

What is the Revenue of Jackpocket?

Jackpocket, as a privately held firm, is not required to reveal any revenue or valuation numbers to the public. If the company (or anyone linked with it) is ready to publish those metrics, subsequent investment rounds may reveal them.

Success Story of Jackpocket

Jackpocket was launched in 2013 in New York City by Peter Sullivan (CEO), Leo Shemesh, Eric Parker, and Matt Silber.

Before starting Jackpocket, Sullivan was the founder and CEO of Tripl, a social travel web application.

While he could obtain $700,000 in capital and participate in a couple of accelerator programs, his company never took off. He had to close it down in 2012, after three years of work.

Following his failure, Sullivan worked as a freelancer for several New York City-area software businesses. 

The majority of his work was done from a WeWork office, where he met Shemesh, who later became his co-founder.

Jackpocket Business Model

Sullivan’s family came up with the idea for Jackpocket. His father is a regular lottery winner. Sullivan was frequently late for football practice because his father needed to purchase a ticket.

When Sullivan’s father received his first iPhone in 2013, he discovered that he played various social casino games on the device. 

However, lotto play remained trapped in the previous century, driving Sullivan to believe that there should be a better way to purchase tickets.

The Jackpocket app, which was first available on Android devices, was released in December 2013. At first, the service was exclusively offered in New York. 

As people hurried to buy tickets for the $636 million Mega Millions jackpot, Jackpocket quickly grew to over a thousand users.

Jackpocket’s team of developers worked tirelessly on improving the product’s quality for the next several years. The team’s approach was (and continues to be) to collaborate closely with state authorities. 

Jackpocket is usually the first and only licensed third-party app approved to sell lottery tickets online in states where it operates.

2020, in particular, was a tremendously successful year for the organization. Stay-at-home orders caused by the new coronavirus led numerous retail places to close for a time. 

People afraid of contracting the virus resorted to online courier services such as Instacart or Postmates to deliver products to their homes.

As a result, states’ income from their various lottery programs decreased, pushing them to modernize. 

With its compliance-first strategy, Jackpocket was perfectly positioned to capitalize on this trend. Despite a slowing lottery industry, Jackpocket was able to quadruple its revenue in 2020.

Following that success, the company raised a $50 million Series C financing in January 2021. For the time being, the team is intent on expanding its operations into additional states.

Jackpocket presently employs around 200 employees and has offices in New York City and Santa Barbara.

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Key Takeaways from Jackpocket Business Model

Jackpocket is a third-party lottery app for North America, the first of its sort in the country. After realizing that lottery ticket purchasing mechanisms were out of date, co-founder Peter Sullivan came up with the idea for the app.

Jackpocket’s revenue creation model is straightforward. It does not charge a monthly subscription fee, nor does it collect a percentage of the cash reward won by the winning contestant.

Jackpocket instead charges a service fee for purchasing and storing tickets in a safe vault on behalf of entrants. It also divides the commission fee from each ticket sale among its retail partners.

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