The path to broader consumer application of blockchain runs through gas stations, grocery stores and liquor shops.

It’s estimated one in five people worldwide play lotteries and a growing number of new and established online lottery companies are focusing on creating contests with prizes in cryptocurrencies. An attempt to disrupt a global industry estimated at more than $300 billion, crypto lottery backers point to the usual inefficiencies the blockchain can solve including national barriers, transparency and limited online offerings.

Just as important, they’re betting the lure of big prizes will be the factor that convinces more people to take the cryptocurrency plunge.

Online lotteries such as Lottoland chip away at some of the constraints of traditional lotteries.

“The path to crypto adoption will start to happen when people see a real-use case that they know and understand,” Nick Almond of CryptoMillionsLotto, which is promising a $20 million global crypto lottery, said in a recent Q&A. “It won’t get much easier to understand than this.”

That’s the Ticket

Online gambling and lottery sites geared toward existing crypto users date back to the early days of bitcoin (BTC). Last year, however, the Irish-based Lottoland arguably became the first mass audience online lottery to offer a bitcoin jackpot among its offerings. In doing so, it used language pointing to the currency’s astronomical rise, not its technical underpinnings.

“Our bitcoin boffins [nerds] take care of all the technical stuff, so all you need to do is pick six numbers and cross your fingers,” the site states. “Don’t have a bitcoin wallet? No problem! We can help you set one up, or you can simply choose a cash equivalent.”

Online lotteries such as Lottoland chip away at some of the constraints of traditional lotteries. Many existing lotteries are state-sponsored, limiting who can participate to residents of the same country or region. Many also make money, in part, through affiliate programs with retailers, which along with laws banning online gambling sharply restrict online offerings. That’s translated into a decline in the number of young people playing the lottery, a trend backers suggest could be reversed by online games.

Blockchain backers point to additional benefits of crypto-based lotteries including transparency, protecting the anonymity of winners and another key problem that comes with paper tickets purchased (and subsequently lost or forgotten) at gas stations: unclaimed winnings. A blockchain-based lottery, proponents say, would be difficult to tamper with and, through its protected record of transactions, allow winnings to be paid automatically into users’ wallets.

Several companies are proceeding with initial coin offerings, which generally promise token holders a commission or share of ticket sales. Sites Wild Crypto and Fire Lotto launched earlier this year following successful token sales. (Wild Crypto is not available in six countries, including the United States, according to the website, because of the company’s licensing laws.) Fire Lotto is also taking a page from traditional lotteries’ affiliate programs, allowing websites to create their own branded games using its technology. CryptoMillionsLotto’s own ICO runs through this month. Its parent company already operates more than 30 lotteries through Nigeria’s AfroMillionsLotto, and it includes former officials of Illinois state lottery on its leadership team.

The Challenge

It remains to be seen whether crypto lotteries can capture the mass imagination. CryptoMillionsLotto says it plans to use the proceeds from its ongoing ICO to finance “a global marketing campaign” to encourage people to open wallets and play using crypto.

Among the strategies, according to the company’s white paper: a “join with a coin” campaign, in which users who open crypto wallets will get free lottery tickets.

“The problem with cryptocurrency is that the majority of people don’t understand it and think it’s beyond their ability to get involved,” the white paper says. CryptoMillionsLotto plans to change that with a global marketing campaign to make cryptocurrency a mass-market product through the easy-to-understand concept of lotto, encouraging new players to open a wallet and become familiar with cryptocurrency.”

Mark Toner
Mark Toner is a Washington, D.C., writer and editor. He has covered business, technology, media, education, and healthcare for a wide range of trade and industry publications.