Play Lotto, Most timely startup ever!
by Michael Markowski, June 30, 2020
SMTM Global LLC, an online lottery company has the best timing for any startup that I have come across over the last 44 years. The company with its PlayLotto.global (Play Lotto) website is uniquely positioned to leverage the severe global economic contraction, exponential increase in the number of unemployed and the permanent shifts in consumer behavior caused by the Coronavirus which are now underway for three reasons:
- Animal spirits of millions have been awakened. According to a research study on the changes in gambling behavior in Iceland from 2007 to 2011 the world’s newly millions of unemployed will gravitate to buying lottery tickets to improve their lots in life. After Iceland’s stock market, economy and currency collapsed in 2008, its unemployment rate skyrocketed from 1% to 9%. See “Frontiers in psychology case study results”, July 25, 2017.
Excerpts from the Iceland study:
- “strong temporal association between individual financial difficulties during such crisis and increased participation in lotto and scratch tickets and the fact that a higher percentage of new gamblers (started gambling during the economic crisis) report financial difficulties than non-gamblers bolster the claim that economic cycles (as a macrosocial factor) and individual gambling behavior are strongly related.”
- “Further examination revealed that those who reported financial difficulties due to the recession were more likely to buy lotto- or scratch tickets during the recession than those who were not financially affected by the crisis.”
- “More recently, two studies from Sweden and Ireland using repeated cross-sectional household data (collected before and after the most recent economic recession) show similar findings (Rude et al., 2014; Eakins, 2016). The study from Sweden, using household data on general gambling expenditure collected in 2003 and again in 2009, found that the decision to gamble was affected by the recession (Rude et al., 2014). The Irish findings showed that bookmaker/toto participation was hampered during the recession, but lottery participation was not (Eakins, 2016). In general, these studies suggest that lotteries are recession-resistant”
During Iceland’s depression Lotto with a participation rate of 65.7% and Monthly Lottery at 37.2% led all other types of gambling categories by a wide margin. The table below depicts that all of Iceland’s demographic groups increased their gambling activity.
2. Digital taking share from brick and mortar gambling. In addition to the global depression or the severe recession driving the demand for the lotteries, Play Lotto and the online lottery industry will permanently take market share away from the following brick and mortar industries. It’s because of social distancing and the public’s new found fear of pandemics.
- Lottery ticket retailers
- Horse racing and dog tracks, etc.
3. Play Lotto has an independent distributor model. Under Play Lotto’s model anyone and especially the newly unemployed can become an agent. Play Lotto pays an agent a commission of 10% commission from the tickets they sell. Thus, Play Lotto will provide income for those who are unemployed.
The first lottery that Play Lotto will sell for is the US’ extremely popular Powerball. Full tickets will be sold for $3.60. Half tickets will be available for $1.80 and quarter tickets for $0.90. The table below contains a break-down of the profits per each Powerball ticket sold via social media and by agents.
The company’s website PlayLotto.global will launch in the third quarter of 2020. Play Lotto’s projections for pretax profits for the 12 and 24-month periods in the table below are easily reachable for two reasons:
- High profit margin with no receivables. Gross profit of $0.78 and gross margin of 21.7% per ticket sold via social media and $0.42 and gross margin of 11.7% per agent sold ticket rank among the most lucrative of all digital business models.
- Connected management team and shareholders. The company has two individuals who are capable to attract millions of lottery players:
- Johan Schotte is the Chairman of the PlayLotto’s advisory committee and third largest shareholder. He is also the Chairman of an affiliate marketing company which has 57,000 online affiliate marketing firm partners. The firms have an aggregate of over 200 million user clients. For more about Mr. Schotte see johanschottefoundation.org.
- Darin Oliver is the Chairman of Play Lotto’s regulatory and licensing committee. From 2012 to 2015 he was the Deputy Director of licensing for the government of Alderney’s Gambling and Control Commission. Alderney, a British Crown dependent in the Channel Islands is considered one of the world’s leading jurisdictions for the regulation of online gambling. Oliver has a plethora of global gaming contacts who will be interested to add a lottery product due the spike in global unemployment. See “The Gambling Law Review”, July 2019
Play Lotto will eventually sell tickets to all of the world’s leading lotteries. Global demographics for potential lottery players of three billion is 15 larger than the approximately 190 million who now play lotteries in the US. Lotteries worldwide are projected to grow to $102 billion per annum by 2025.
With a pre funding valuation of $2,500,000, the probability of SMTM Global LLC. (SMTM) multiplying by 10 times over the next few years is high. The chart below is for Draft Kings which is the first publicly traded digital fantasy sports and sports book company pureplay in the US.
Additionally, since SMTM is an LLC those who participate in the aggregate loan of $250,000 in the current friends and family round and who also convert their loans will be in the position to receive cash flow in the future. Under US IRS rules and regulations an LLC must distribute 99% of profits to its partners annually.
Summary of opportunity:
Pre money valuation: $3,000,000
Price per partner unit: $3,000
Minimum investment five units: $15,000, five units
Security: Two-year debenture with 8% interest
Miscellaneous: 0.50 equity stake upon conversion
Click here for access to Play Lotto pitch deck.
Disclosure: Dynasty Wealth (DW) has a 5% stake in SMTM. DW may provide consulting services and receive consulting fees in the future. Michael Markowski is a member of SMTM’s advisory board.
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