Citizens Analysts Call iLottery a Rare Growth Win for Investors in US Gaming

The bank featured Lotto.com in its ‘Monthly Private Company Spotlight’ for January. This is a lottery courier service, which means users can buy official state lottery tickets online for an additional fee.

Analyst Jordan Bender notes that the online lottery segment is among the least controversial in the U.S., compared to sports betting and iGaming.

Lawmakers often view the lottery as a safe way to increase state revenue without significant backlash, particularly because proceeds are typically earmarked for education or other public programs.

Backlash has significantly stalled iGaming legalization in recent years. Rhode Island was the last state to launch regulated online casino gaming, going live in 2024, while Maine recently became the eighth state to approve iGaming but has yet to open its market.

Over a Dozen States Allow iLottery

At the same time, close to 20 states allow online lottery ticket sales. They include Michigan, Pennsylvania, Virginia, Georgia, and North Carolina. Kansas was the last state to launch iLottery in early 2025.

Massachusetts is scheduled to go live in July 2026, following lawmakers’ approval of iLottery in 2024. The state initially planned to launch in the fall of 2025, but several delays pushed the date back.

The Massachusetts launch is significant. The state ranks first in the nation in per-capita spending on lottery tickets, according to multiple reports. Players in the state spend between $839 and $915 annually.

So far in 2026, there has been limited interest among lawmakers regarding iLottery. In Indiana, a bill was sent to the House floor but was pulled from the calendar due to a lack of support. Meanwhile, in New York, iLottery is part of an active online casino bill.

Lower Barrier to Entry

Bender noted that iLottery customer acquisition costs run significantly lower than in traditional online gambling. Citizens highlighted how Powerball reaching $1.8 billion in late 2025 drove revenue and user growth across the sector.

The fear of missing out is a powerful driver when people hear about massive jackpots, with national media coverage effectively replacing paid marketing during peak jackpot cycles.

Lotto.com itself is expanding, having grown to 200 employees in its New Jersey office. Its average customer earns about $130,000 annually, with demographics similar to those of a 35-year-old sports bettor.

A major growth area Citizens sees is regulatory expansion across the U.S. Currently, Lotto.com operates in just 11 states and serves 4 million customers. This includes major markets like New York, Massachusetts, and New Jersey.

Citizens notes that those states alone account for roughly $30 billion in annual lottery ticket sales, compared to an estimated $120 billion U.S. lottery market overall.

Lotto.com CEO Tom Metzger said eight states currently have outstanding lottery courier legislation, and about half of them could pass the measures. Citizens argues that this creates a clearer and less politically fraught expansion path than iGaming or sports betting in most jurisdictions.

The Citizens report underlines the growing overlap between lottery players and sports betting. Operators see the lottery as a way to increase customer base and lower acquisition costs.

That was a key reason for DraftKings acquiring Jackpocket for about $750 million in 2024. The operator noted that overlapping customers increase users’ lifetime value by 50%.

Citizens is confident that with lottery generating around $120 billion annually in the U.S. and online penetration still negligible, it’s one of the most underexplored opportunities. Online purchases account for less than 1% of total U.S. lottery spending.

Pushback in Texas

While several states have looked at formally regulating lottery couriers, others have taken a different stance. The most notable was Texas banning lottery courier services like Lotto.com.

One was an $83.5 million winning ticket bought through a courier, and another involved a $95 million jackpot in 2023, in which the winning syndicate bought nearly all combinations through a courier.

The Texas Lottery Commission banned courier services in 2025 after the two high-profile jackpot wins. However, the jackpots raised integrity concerns among lawmakers and triggered investigations into the Commission. Those controversies ultimately led to the Commission’s abolition in September 2025.

Lotto.com joined competitors to oppose the ban as part of the Coalition of Texas Lottery Couriers. Metzger believes this was an isolated situation due to the state’s historically complex relationship with gambling. Citizens echoed that view, describing Texas as an outlier rather than a bellwether for national policy.

The Citizens report underscores why iLottery is gaining traction at a time when other gaming verticals, such as prediction markets, are facing increasing scrutiny. With consumer demand and regulatory pathways opening, Citizens believes the lottery may quietly become one of the most scalable and sustainable growth stories in U.S. gaming.