New Hampshire lottery fans have become the first in the country who can buy Powerball tickets with a smart phone app, channeled through a Keene-based convenience chain by a San Francisco startup called AutoLotto – a prospect that isn’t welcome news to stores that sell tickets.
“Tickets are about 30 percent of our business. We sell a lot of tickets,” said Jim Bashios, owner of South Street Market in Concord and grandson of the store’s founder.
New Hampshire stores keep 5 percent of ticket sale revenue and receive a bonus payment if they sell a jackpot winner, and also use lottery tickets as a lure for customers. If people started buying lottery tickets on their phone instead of coming into stores, Bashios added, “that would affect us a whole lot.”
But Matt Clemenson, cofounder of AutoLotto, thinks that concern is unfounded. He said Thursday that many other countries have allowed online lottery sales for years without harming store sales.
“Digital expands the market. In the (United Kingdom), more than half of all tickets are digital, and they’ve never had a down year,” Clemenson said.
“Candy sales won’t be affected,” he said.
AutoLotto will get a high-profile launch this weekend as sponsor of the NASCAR Xfinity Series race in Loudon on Saturday, but has been selling Powerball tickets through its app for several weeks. The startup chose New Hampshire for its launch because we were home to the first state lottery, in 1964.
At the moment, AutoLotto only works for Powerball tickets, and only in New Hampshire, although it plans to roll out more games and more locations over time.
Laws prevent out-of-state companies from selling New Hampshire lottery tickets, so AutoLotto has reached an agreement with T-Bird Minimart, a chain of 10 convenience stores owned by Keene-based Cheshire Oil. T-Bird Minimart is one of roughly 1,250 businesses, mostly convenience and grocery stores, that have licenses to sell state lottery tickets.
Clemenson said AutoLotto and T-Bird will split revenues that goes to ticket sellers. A representative of Cheshire Oil declined to discuss the arrangement over the phone with the Monitor on Thursday.
New Hampshire lottery spokesman Maura McCann said the AutoLotto arrangement had been approved by the state lottery commission and attorney general’s office.
AutoLotto has been the topic of buzz around Silicon Valley, gathering $2.4 million in seed funding last fall from a number of prominent investors by depicting itself as a way to bring lottery sales into the 21st century.
“It doesn’t make sense to buy tickets on paper,” Clemenson said.
For example, he said, AutoLotto will keep track of winning numbers and will alert ticket buyers – overcoming one of the issues of paper tickets, that they get lost or overlooked. The company says roughly $2 billion worth of winning lottery tickets go unclaimed each year for this reason.
Although it’s a digital company, AutoLotto has to actually buy and print out each ticket that is purchased through the app, due to the way that state lotteries work.
The company is “fundamentally a service that buys tickets – take orders and fulfills the orders. . . . It looks a lot like an office pool,” said Clemenson.
Unlike firms like Uber and Lyft, which have sidestepped or ignored existing laws about taxi service, Clemenson said AutoLotto has been working with regulators and lawmakers as it developed its service – partly because that will help people have confidence to use it, he said.
“The first thing that a customer is going to do is call the lottery and say, is this legit?” he said.
Meanwhile, at South Street Market, owner Bashios, who had not previously heard that smart phone Powerball sales were coming, was philosophical.
“The state, they’re going to do anything they can to increase the money they make,” he said.
(David Brooks can be reached at 369-3313, or firstname.lastname@example.org or on Twitter @GraniteGeek.)