Georgia Startup Lazlo 326 Is Modernizing the $100B Lottery Industry for the Mobile, In-Store, and Online Era

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The lottery is everywhere in America. In grocery stores, gas stations, and on billboards, you’ll see displays and ads for scratch-offs, Powerball tickets, and Mega Millions slips.

The numbers (not just the winning ones) are impressive. Half of all U.S. adults buy lottery tickets at least once a year, collectively spending over $100 billion. The lottery is deeply woven into the American economic fabric, generating revenue for state education, scholarships, and public programs nationwide.

Despite the industry's size, it isn’t technologically forward or the most consumer friendly. $90 billion of its sales is driven by in-store purchases, but the process isn’t designed with the modern shopper in mind. Buying a lottery ticket today most often requires standing in a separate store line and while keeping track of paper tickets.

That's the technology disconnect Lazlo 326 is trying to solve...all while helping retailers and CPG companies connect to a new, younger audience of lottery players.

The Pivot Into Lottery

Long-time readers of Hypepotamus (and fans of the cult-classic film Real Genius) might recognize the Lazlo 326 name. We highlighted the Alpharetta-based bootstrapped startup in 2019 when Lazlo was focused on the gift card market. At the time, the team was building out a platform that turned photos and videos into redeemable gifts.

“What we realized was that [the technology] could be applied to something that was even bigger. And that was the lottery space,” Chris Demetree, CEO and Founder, told Hypepotamus.

The team worked through the pandemic in survival mode and then turned their focus onto making the lottery digital and more “retail centric.” With Lazlo 326, a ticket (like a Quick Pick lottery option) becomes a line item on a customer’s receipt as they are rung up for their entire purchase instead of being an entirely separate transaction.

“We treat lottery like every other product in the store,” Demetree added.

Who Benefits From Lazlo 326?

The platform allows people to apply new winnings to their purchase or receive cash back right away.

The streamlined experience certainly helps the buyer. But the platform is also designed to help retailers and brands get in front of more customers. For retailers, Lazlo 326 allows for the lottery to be connected directly into their point-of-sales (POS) systems and ultimately into an app-based and online experience. This allows a streamlined process to sell lottery tickets without the need for additional hardware and provide new loyalty program opportunities.

Lazlo 326 eliminates the need for in-store ticketing terminals. At the same time, it helps retailers sell more draw games, instant wins, and quick pick tickets in both digital and physical formats. The “in-lane, in-app, and online” experience allows retailers to engage with customers in more efficient and unique ways.

“In-lane, In-app, and Online”

The Lazlo platform also works with CPG brands who want to embed brand experiences into the lottery moment itself. This unlocks promotional and coupon options for brands while providing them with new, verified transaction data.

“We realized the only way for the industry to grow was to leverage the consumer,” Demetree said. “We felt that we could create these revenue streams that were tied back to marketing and advertising from the CPGs. That this would be a way for us to grow the lottery [without] taxing the consumer. CPGs are marketing and their advertising today, so why not drive that into education here in Georgia through the lottery?”

The Lazlo platform can eventually be extended to the retailers’ mobile app or e-commerce site, as state regulations allow.

Self-funded to date, Demetree told Hypepotamus that the company is "now looking for external capital partners as we enter the growth phase."