Jumbo Interactive Expands into the USA

Nov 19, 2012

Joint venture with Retail Gaming Solutions.

  • 50/50 Joint venture company established in New York to provide new generational lottery solutions incorporating Internet, physical merchandising and lottery affinity/loyalty programs to US retailers.
  • Contract signed with first customer that serves 15,000 retail locations in several US states.

  Leading interactive lottery business, Jumbo Interactive Limited (ASX: JIN), is pleased to announce an important step into the US lottery market with the launch of a joint venture with Retail Gaming Solutions (RGS), a New York based company specialising in physical lottery merchandising and affinity programs.

The move follows Jumbo’s strategy of entering new markets and embracing established lottery retailers by providing interactive solutions to grow lottery sales. The move also gives Jumbo exposure to the $A60 billion North American lottery market with games such as the US Powerball and Megamillions. This week the US Powerball has jackpotted to US$550 million and in March 2012, the Megamillions game jackpotted to US$640 million.

The new joint venture company, called “Lotto Points Plus” (LPP), will be equally owned by Jumbo and RGS and is based in New York. LPP will market a unique lottery retailer solution to existing lottery retailers with the goal of increasing lottery sales. The unique solution incorporates advantages from new technologies (provided by Jumbo) with innovative, in-store lottery merchandising and affinity/loyalty programs (provided by RGS).

A distribution and implementation program for the LPP solution has already commenced. Launching next month, one of America’s largest distributors to the convenience store industry will begin rolling out the LPP retailing solution to its network of over 15,000 independent retail locations across several northeast US states.

In addition, a pilot program has also been completed with one of the largest single retailers of lottery tickets in the United States. Stores in the pilot program realized a significant increase in lottery sales. Based on these results, LPP is in final negotiations for a full, phased rollout of the LPP Program across a wider, single retailer network of several hundred retail outlets across several northeast US states.

“Jumbo is providing its interactive lottery technology as a key component to a service helping traditional lottery retailers increase their lottery sales”, said Mr Mike Veverka, CEO of Jumbo Interactive Limited.

“This joint venture is an ideal way to establish a presence in the USA and demonstrate the capabilities of our system”, he said.

“RGS is excited to work with Jumbo to create this “best of breed” lottery retailing solution designed to unlock potential and increase lottery sales”, said Mr Jeff Perlee, director of RGS. Mr Perlee is a 20-year veteran of the US lottery industry having served as Director/CEO of the New York Lottery and general counsel with the Illinois lottery. During Mr Perlee’s tenure at the New York Lottery, annual sales increased from US$3 billion to over US$4 billion per year, making the New York Lottery the largest and most profitable state/provincial lottery in North America.

Jumbo has agreed to fund the expansion of LPP with a US$250,000 loan to the joint venture company. Jumbo will supply technology including its Internet and age 3 of 4 mobile lottery software, “E-Retailer” commission sharing system and “Smart Signs” interactive sign technology.