Analysts See iLottery as an Emerging Powerhouse in US Gaming

Analysts are increasingly confident that iLottery could become one of the US gaming market’s most successful verticals as it benefits from a rare combination of consumer familiarity, political palatability, and untapped digital potential. Online lottery offerings are also able to scale without provoking the same level of controversy as newer betting products.

iLottery Has Substantial Growth Potential

Citizens Bank senior equity research analyst Jordan Bender was highly optimistic regarding iLottery in a recent industry note. He noted that the vertical was well-positioned for steady revenue growth. The note focused on Lotto.com, which Citizens featured in its monthly private company spotlight. However, Bender also examined the broader expansion of iLottery and its growing overlap with other gaming verticals.

Lotto.com and other lottery couriers operate as intermediaries, enabling customers to purchase official state lottery tickets originating from licensed retailers through an app. Bender noted that couriers  enjoy a cost advantage compared to sports betting or iGaming, as lottery players are typically loyal and less expensive to onboard. Massive jackpots amplify that effect, with national media coverage effectively doing the marketing.

The sector also has significant untapped potential. Online ticket sales still account for less than 1% of total lottery purchases, despite the US lottery market generating roughly $120 billion annually. Analysts like Bender believe this gap represents one of the most significant digital opportunities in US gaming as more states adopt iLottery as an easy way to generate additional revenue.

Gaming Giants Are Exploring Potential Synergies

Lotto.com currently operates in 11 states and has expanded its workforce to around 200 employees. The company focuses primarily on draw-based games but is steadily expanding into scratch tickets in select jurisdictions. According to Bender, iLottery is a perfect entry point for new digital users. Lottery courier users largely match the profile of sports bettors, creating cross-selling opportunities.

There appears to be a growing overlap between customers leveraging real money gaming products and playing the lottery.

Jordan Bender, Citizens Bank analyst

Leading gaming companies have already shown interest in that overlap. DraftKings’ 2024 acquisition of Jackpocket showcased the strategic value of lottery customers. The company reported that the intersection of lottery and sports betting users generated greater customer value and reduced acquisition costs. Such data suggests that iLottery is evolving into an essential part of the digital gaming ecosystem.

Regulation remains one of the last remaining obstacles facing broad iLottery adoption. While Texas’s decision to disband lottery couriers created short-term disruption, Citizens sees the situation as an outlier. With several states currently evaluating various types of courier and iLottery regulations, the next wave of growth could arrive as early as 2026.