Small Bets, Giant Rewards - An Operator’s Guide to the US Lottery Market

Lotteries are a heavyweight contributor within the US gambling industry, generating an impressive market size of around $100 billion annually. This estimated figure reflects the total revenue generated by state lotteries across the nation, encompassing sales from draw games, scratch-off tickets, and other lottery products​. The sheer scale of this revenue underscores the lottery sector's substantial impact and highlights its potential as a lucrative opportunity for iGaming operators. 

As the sector continues to evolve, sportsbooks have a growing opportunity to integrate lottery offerings into their platforms. While challenges exist, like regulatory hurdles, significant competition from the retail sector and the reluctance of many states to allow interactive lottery products, the inherent trust associated with state lotteries provides a considerable advantage. Players often feel more secure placing bets with established lottery brands, making it easier for sportsbooks to capture their interest.

With the rapid growth of digital gambling, online lottery (iLottery) betting is becoming another avenue for sportsbooks to diversify and expand their offerings. Not least, it aligns with the increasing demand for convenient and reliable gaming experiences, appealing to a broader audience and helping sportsbook brands strengthen customer loyalty. Moreover, by collaborating with well-established lottery brands, sportsbooks can bridge the gap between traditional and digital products, capitalising on a trusted and lucrative market segment.

Biggest Lotteries in the United States

From Powerball’s record-breaking payouts to Mega Millions’ colossal jackpots, the USA’s lotteries command serious attention. California’s SuperLotto Plus, Florida Lotto, and Texas’ iconic Lotto Texas lead the charge, while gems like Arizona’s The Pick and Indiana’s Hoosier Lotto offer their unique appeal for participants. Each has its own winning formula, attracting millions and generating substantial revenue nationwide.

1. Powerball: $2.04 billion (November 2022)

Powerball, launched in 1992 and operated by the Multi-State Lottery Association, is America’s biggest lottery game. Draws are held twice weekly, attracting millions of hopeful participants. With billions wagered annually, Powerball’s reach is vast and open to anyone over 18 in participating states. Its most significant jackpot win reached an astonishing $2.04 billion in November 2022, setting the record for the highest win in lottery history.

2. Mega Millions: $1.602 billion (August 2023)

Mega Millions, launched in 1996, is one of America’s most popular lotteries, managed by a consortium of state lotteries (10 in total). With draws twice weekly, it attracts millions of participants and billions in annual wagers from adults across 45 states. The lottery's most jaw-dropping prize stands at $1.602 billion and was claimed in August 2023, setting a record-breaking milestone in its history.

3. SuperLotto Plus (California): $193 million (February 2002)

SuperLotto Plus, introduced in 1986, is California’s flagship lottery game, operated by the California State Lottery. It offers bi-weekly draws, luring millions of ticket buyers with enticing odds and hefty payouts. Open to players over 18, this popular draw also attracts annual wagers in the billions. The largest jackpot win to date? A staggering $193 million was claimed in 2002.

4. Lotto Texas: $145 million (June 2004)

Lotto Texas, the state’s hallmark jackpot game, has been enticing players since 1992. Operated by the Texas Lottery Commission, it draws twice weekly, bringing in millions of hopeful participants each time. With substantial annual wagers, the allure, like all the biggest lotteries, lies in its massive payouts. Its largest prize? A record $145 million jackpot was won in 2004, making Lotto Texas a defining fixture in the state’s lottery market.

5. Florida Lotto: $81.6 million (March 2022)

Since 1988, Florida Lotto has been attracting millions twice weekly under the management of the Florida Lottery. Renowned for its simple yet appealing format, Florida Lotto attracts significant yearly wagers, becoming a favourite among Floridians aged 18 and up with a record jackpot of $81.6 million. Oddly enough, it once featured a prize of free petrol for 20 years.

6. New York Lotto: $72.5 million (October 1994)

The New York Lotto, introduced in 1978, is run by the New York State Gaming Commission. Featuring offerings such as the traditional Lotto and the fast-paced Quick Draw, the New York Lotto draws in players looking for various ways to test their luck. The largest jackpot hit an astounding $72.5 million, and interestingly, early winners were awarded their prizes as lifelong annual payments, creating their reputation for delivering dreams in instalments.

7. Hoosier Lotto (Indiana): $54.5 million (November 2007)

The Hoosier Lotto, Indiana’s premier lottery game, has been a fixture since 1994. Operated by the Indiana Lottery, it offers traditional Lotto draws alongside popular picks like Quick Draw and Cash4Life. The biggest jackpot was an impressive $54.5 million win in 2007. Significantly, it’s one of the few lotteries where winners can opt for flexible payout periods, giving players greater control over their winnings.

8. Lotto America: $40.03 million (March 2018)

Lotto America, revived in 2017 after its original launch in 1988, is a multi-state lottery run by the Multi-State Lottery Association. It offers draws with traditional number picks and an intriguing All Star Bonus feature. Its record jackpot stands at $40.03 million. In this lotto, winners can boost their non-jackpot prizes by up to five times with the All Star Bonus.

9. Michigan Lotto 47: $32.3 million (October 2021)

The Michigan Lotto, launched in 1972 and run by the Michigan Lottery, is a staple in the state’s gaming offerings. Alongside its classic Lotto 47 and Fantasy 5 games, it captured the imagination of millions with its largest jackpot prize of $32.3 million. Uniquely, Michigan’s lottery once offered winners the quirky option of receiving their winnings in gold bullion instead of cash.

10. Illinois Lotto: $37.5 million (April 1989)

The Illinois Lotto, established in 1974, is operated by the Illinois Lottery and remains a cornerstone of the state’s gaming sector. Alongside the main Lotto game, it offers a variety of options, including Pick 4 and Lucky Day Lotto. The biggest jackpot reached was a whopping $37.5 million in 1989. In a unique twist, early players could choose between receiving cash or a luxury car as part of their prize.

11. New Jersey Pick-6 Lotto: $48.9 million (May 2004)

The New Jersey Pick-6 Lotto, launched in 1980, is the state’s flagship draw game. Managed by the New Jersey Lottery, it offers additional games like Jersey Cash 5 and Quick Draw. The biggest prize hit a very respectable $48.9 million in 2004. In the early days, this lottery once offered a “roll down” feature, distributing unclaimed jackpot money across lower-tier prizes, which boosted winnings for lucky secondary players.

12. Arizona The Pick: $13.5 million (June 2007)

The Pick, Arizona’s premier lottery game since 1984, is run by the Arizona Lottery and offers draws twice weekly. Players can also enjoy additional games like Fantasy 5 and Triple Twist, with the largest jackpot reaching $13.5 million in 2007. Historically, the Pick once allowed winners to take their prize in a combination of cash and gold coins.

What is iLottery?

iLottery refers to the digital version of traditional lottery games that are played and managed online. It enables players to participate in lottery games through websites or mobile apps, offering convenience and a more comprehensive range of game options. iLottery platforms typically include draw-based games (like Powerball or Mega Millions), instant win games (such as scratch cards or instant Keno), and other digital lottery offerings. 

Key Features of iLottery:

• Digital Ticket Purchases: Players can buy tickets for traditional lottery draws online, eliminating the need to visit physical retailers.

• Instant Win Games: iLottery platforms often offer online scratch-offs, Keno, and other instant win games with immediate results.

• Automatic Number Checking: iLottery systems automatically check and notify players of their winnings, reducing the risk of missing out on a prize.

• Secure Payments: Players can deposit funds, purchase tickets, and withdraw winnings securely through trusted payment options.

• Player Accounts: iLottery users can set up accounts to track their purchases, check results, and manage funds in one place.

Online Alternatives to Traditional Lotteries

Over and above physical lottos and lottery syndicates, other alternative options exist that provide similar excitement and winning potential without participating directly in lottery draws. These alternatives offer bettors a variety of ways to enjoy the thrill of lotteries with the potential to win large cash prizes.

Here are some popular online alternatives to traditional lottery draws:

1. Lottery Betting
   Lottery betting allows bettors to wager on the outcome of popular international lotteries without buying actual lottery tickets. Platforms like Lottoland or Jackpot.com let players bet on the winning numbers of global lotteries like EuroMillions or Mega Millions, offering payouts equivalent to the official prizes.

2. Number Betting on Sportsbooks
   Many sportsbooks offer number-based games that mimic lottery draws, allowing bettors to select numbers and wager on the results. These games often include variations of keno, bingo, or even custom-number draws. This provides bettors with a fast-paced alternative to traditional lotteries.

3. Virtual Lottery Games
   Virtual lottery games in online casinos and sportsbooks simulate lottery draws using random number generators (RNG). These games often have shorter intervals and offer immediate results, making them appealing to those who enjoy quick gameplay.

4. Instant Win Games
   Online instant win games such as digital scratch cards, pull-tabs, and dice games are popular alternatives to traditional lottery tickets. Bettors can play these games instantly and win cash prizes based on matching numbers, symbols, or card values.

5. Keno
   Keno is a traditional lottery-like game available in many casinos and online platforms. Players select numbers, and payouts are based on how many numbers match those drawn. It offers frequent draws and varied betting options, appealing to fans of number-based games.

6. Daily Fantasy Sports (DFS)
   DFS offers bettors the chance to create fantasy lineups and compete for cash prizes based on real-world sports performances. Platforms like DraftKings and FanDuel allow players to bet on the outcomes of their fantasy teams, providing a blend of sports betting and jackpot excitement.

7. Raffles and Online Draws
   Some online casinos and betting platforms offer raffles and prize draws, which operate similarly to lotteries. Players buy virtual tickets and wait for a draw to see if they win. Frequently, raffles and prize draws are typically offered through loyalty or VIP programs. Prizes can vary from cash rewards to luxury items or experiences.

8. Slot Games with Progressive Jackpots
   Progressive slot games are another alternative where a portion of every bet contributes to a growing jackpot. These games, available on online casino platforms, offer the thrill of hitting a large payout, similar to a lottery jackpot.

Interested in adding iLottery and novel instant win games to your platform? Reach out now to book a demo and discover how to boost player excitement with Altenar’s instant win integration.

The Benefits of Including Lotteries in Sportsbooks

In addition to enhancing brand trust and strengthening customer loyalty, Incorporating lottery products into online sportsbooks offers numerous other benefits for iGaming operators. For starters, players who already engage with lotteries are more likely to explore other gaming options, increasing overall engagement in betting activity. Moreover, lotteries appeal to a broader demographic, allowing sportsbooks to diversify their audience, improve cross-sell opportunities and ultimately, drive higher revenue. This strategy also helps build a well-rounded offering, positioning operators as comprehensive gaming destinations​. 

The main benefits include:

1. Enhanced Brand Trust and Customer Loyalty
   Adding lottery products boosts credibility by tapping into the strong reputation state lotteries hold. Players already trust these well-established games, which translates into increased confidence in the sportsbook’s overall offerings.​
   

2. Diversified Audience and Increased Engagement
   Lotteries attract a diverse player base, providing sportsbooks access to segments that might not typically engage with sports betting. This expanded reach encourages cross-selling opportunities and deeper player engagement.​
   

3. Positioning as a Comprehensive Gaming Destination
   By combining lotteries with traditional betting, operators can position themselves as all-inclusive gaming platforms, increasing customer retention and enhancing player experience​ and satisfaction.

4. Improved Cross-Sell Opportunities
   Integrating lotteries creates opportunities to cross-sell other betting and gaming products. Players drawn in by familiar lottery games may be more inclined to explore sports betting or casino games similar to lottery, like bingo, keno, scratch cards, etc.
   

5. Cost-Efficient Player Acquisition
   Lotteries can serve as a cost-effective tool for acquiring new players. Leveraging the appeal and trust of lotteries reduces the need for extensive marketing efforts, as familiarity with lottery games often drives organic engagement​.
   

6. Increased Play Frequency and Revenue Stability
   Lottery games generally feature frequent draws and quick-win opportunities, which keep players returning regularly. This consistency helps maintain a steady revenue flow and encourages repeat visits to sportsbooks.

7. Higher Revenue Streams through Familiar Products
   Lotteries are a consistent revenue generator due to their widespread popularity and familiarity. Integrating these products allows sportsbooks to broaden their revenue base while offering reliable, familiar games that appeal to new and existing players.​

Integrating Lotteries into Sportsbooks

Integrating US lotteries into existing sportsbook operations requires significant planning since lotteries present several legal, regulatory, and technical considerations. From a regulatory perspective, laws around lottery operations differ widely across states, which means operators must adhere to varying licensing requirements and responsible gambling standards. Furthermore, some jurisdictions still resist digital lottery offerings due to the strong influence of brick-and-mortar retailers and fears of underage access, notwithstanding the safeguards currently in place regarding online verification to prevent this.

From a technical standpoint, integrating lotteries can also be complex due to the need for secure digital infrastructure to handle high-frequency transactions and ensure game integrity. Lotteries must ultimately integrate with existing sportsbook platforms while providing a user experience consistent with other betting products. This includes ensuring that lotteries comply with geo-restriction and player verification protocols to avoid legal pitfalls.

Here are the best practices sportsbook operators can adopt to achieve a smooth and trouble-free integration:

• Align lottery offerings with local regulatory requirements.

• Maintain secure and scalable digital infrastructure.

• Implement transparent payment and withdrawal policies.

• Prioritise responsible gambling features and user verification.

• Build strong relationships with state regulators and retailers.

Campaign Strategies, Tips and Advertising Techniques

One of the most effective ways to enter the online lottery market successfully is to employ targeted campaign strategies that appeal to both lottery enthusiasts and sports bettors. One proven tactic is to run cross-promotions that reward customers for participating in both lottery and sports betting activities. For example, offering a bonus or free bet to those who buy lottery tickets and place a wager encourages cross-engagement and increases overall player value.

Another effective strategy is to personalise campaigns based on player behaviour. By analysing data, operators can identify opportunities and create targeted promotions that cater to specific demographics, offering tailored lottery draws or themed events that resonate with various player segments. This approach not only boosts engagement but also strengthens customer loyalty.

Marketing ideas such as limited-time draws tied to major sports events or seasonal themes also have the potential to capture the attention of both sports bettors and casual lottery players alike. The effect of this strategy can be boosted by integrating progressive jackpots into lottery offerings to add excitement and encourage frequent participation due to the potential for larger payouts.

Some US bookmakers have successfully integrated US lotteries into their platforms using a combination of strategies and campaign targeting. DraftKings, for instance, has excelled in incorporating lottery services into its platform by capitalising on its established user base. One fundamental approach has been cross-selling promotions between sports betting and lottery offerings to increase customer retention. 

Another effective tactic used by DraftKings (a leading digital gaming company and a pioneer in the fantasy sports industry) involved leveraging its mobile app to offer lottery draws with a simple user interface. This strategy made the transition natural and organic for users familiar with sports betting.​

In essence, DraftKings mastered integrating lotteries into their existing platform by emphasising trust, reliability, and familiarity. They capitalise on their broad user base by promoting lotteries as an accessible entry point to betting. Furthermore, by using data-driven insights to personalise lottery promotions, they created segmented campaigns that align with individual player preferences​.

In states like New Jersey, where online lottery is legal, successful campaigns from established operators have focused on positioning lotteries as an integrated part of the broader gaming experience. The emphasis on simplicity and convenience in both messaging and user experience has proven to be highly effective in many quarters.

The Future of iLottery, Challenges and Considerations

The trajectory of iLottery in the United States is poised for growth, influenced by shifting player demographics and the increasing digitalisation of gaming. Moreover, states like Virginia and Michigan have demonstrated success in this area by tapping into tech-savvy audiences that value convenience and immediacy. This forward momentum is likely to inspire other jurisdictions to explore iLottery as a profitable avenue as online sportsbooks seek to modernise their gaming portfolios and capture new revenue streams​.

However, there still remains significant resistance to this forward movement as established retail operators, protective of their revenue, continue to wield considerable influence in legislative circles, often pushing back against digital initiatives, despite growing evidence that online sales remain unlikely to threaten traditional retail lottery sales significantly in the foreseeable future. 

For ambitious sportsbooks, the key to breaking into this vertical lies in balancing innovation with thoughtful regulation and forging collaborative efforts with stakeholders to build trust and sustain long-term growth.