Online Lottery Expansion Is ‘Path Of Least Resistance’ In Gaming, Citizens Bank Says

In an industry note sent Monday, Citizens Bank Senior Equity Research Analyst Jordan Bender directed his focus toward the online lottery and lottery courier sectors and identified those verticals as being in a position for revenue growth.

Specifically, the Citizens note centered around courier company Lotto.com, the subject of Citizens’ “monthly private company spotlight.” But Bender tied in iLottery as well as overlaps between lottery and other forms of gaming and DraftKings’ ownership of Lotto.com competitor Jackpocket.

Bender wrote regarding expanded legalization of online lottery that it is “the path of least resistance compared to other … more controversial forms of gambling,” and that it is “one of the best ways to increase revenue without major pushback.”

The note also observed: “Online lottery sits outside the ‘traditional’ real money gaming space offered by well-capitalized, large companies, yet there appears to be a growing overlap between customers leveraging real money gaming products and playing the lottery.” Bender pointed out that Lotto.com’s average customer earns $130,000 per year and skews young, creating overlap with the online sports betting audience (and suggesting DraftKings was wise to purchase Jackpocket in 2024).

“The expanding gaming landscape in the United States,” the note said, “could allow for customer cross-sell opportunities at a time when gaming operators are moving toward an all-in-one app including sports betting, iGaming, peer-to-peer, and prediction markets.”

The note pointed out that the lottery industry in the U.S. is increasing at about a 5% compound annual growth rate:

Talking Texas

Bender’s note also delved into arguably the biggest lottery industry topic of 2025, Texas’ investigation into perceived lottery scandals, which led to a shutdown of courier services in the state.

Although Texas’ maneuvering created “a headwind for revenue and customer acquisition” for couriers, Bender wrote: “We view Texas as an isolated situation, with the state having had a complicated relationship with gaming in general and, to date, not having been a catalyst for other states to pursue similar action, but rather establishing regulations to affirm the legitimacy of lottery couriers. States like Oregon, Colorado, New York, New Jersey, and Arizona have since moved toward more proper regulation, easing fears that Texas could be the tip of the iceberg.”

There are currently eight states considering legislation to regulate couriers, and Bender noted that Lotto.com CEO Thomas Metzger believes four of those eight succeeding is a realistic expectation.

In addition to that benefiting Lotto.com, Bender observed that it would boost DraftKings and Jackpocket as well. “Entering a new state is relatively low cost for the company,” the note said, “as it spends small upfront costs to increase brand awareness around launch before pivoting to traditional digital marketing.”