Little effort. Free cash.
That’s the promise of a new mobile app called Lotto 23 launched April 10 by a pair of Duke University juniors.
Brandon Sassouni and Zachary Poddela (along with Sassouni’s childhood friend in New York, Arieh Movtady) believe they’re the first in the world to create a mobile lottery that doesn’t require the oversight of government.
Its potential could be industry-changing—U.S. lottery ticket sales topped $78 billion in 2012 and more than 57 percent of the population bought at least one ticket. Globally, at least 100 countries have publicly-operated lotteries.
Sassouni and Poddela figure if people will pay for tickets, they’ll certainly download an app and enter for free.
“It seemed like a big opportunity to do mobile,” says Sassouni, who develops apps under the company name Dream Big Studios. “The lottery is normally run by the state but we saw a legal way to do it for free.”
Like a traditional paper lottery ticket, players pick six numbers and wait for the nightly drawing. They win cash if they get at least three numbers correct. But the jackpot grows each day until at least one person gets all six numbers correct. If there are multiple winners, they split the pot.
But different from the state lottery, Lotto 23 is free and players pick new numbers daily through a mobile app. The men make money by selling ads on the site through an ad network. Eventually, they hope to partner with brands to host or sponsor lotteries.
The whole concept sounds simple enough, but the men had to do a lot of math to determine the odds of winning and project the amount of ad revenue they’d need to generate in order to grow the jackpot and make a profit (Ad revenue is split 50-50 between Dream Big and the jackpot).
They also had to comply with sweepstakes rules—they can’t require a purchase for a person to win. And then they had to sell investors on the idea and business model.
More than $50,000 in investment (Sassouni declines to share the names of investors) launched the site, and $25,000 of that went into the first pot. When I downloaded the app Monday afternoon, the pot had reached $25,750 with 2,600 entries. $135 in prizes had been paid out. (More than 4,700 entries came in for the Tuesday night drawing, according to Lotto 23’s Facebook page.)
And it helped that they’d already created, and learned from, a mobile gaming app a year prior. They first launched MadProps, a pick ’em game for upcoming sporting events.
Two key insights from that experience guided Lotto 23 (which was inspired by the trio’s habit of buying scratch-off lottery tickets). First, that the best apps become part of a user’s daily habit, and second, that users need an incentive to keep playing.
Sassouni has changed his major at Duke from computer science to philosophy—he wanted to free up time to work on Lotto 23. He’s taken advantage of the resources at the DUhatch incubator on campus at Duke, and is now building the company at American Underground @Main.
Today, his time is mostly spent marketing the app through press releases, media and blogs, college reps on other campuses and some online advertising. This summer, the trio will work full time to bring on sponsors and brand partners.
The key to success is getting as many people as possible visiting the app each day and picking numbers.
If the men calculated correctly, there will eventually be enough critical mass and advertising revenue to warrant a grand prize payout. So far, it’s working. The pot is growing, and there hasn’t yet been a grand prize winner.
“We’re just playing with probabilities right now,” says Sassouni. “It’s like the user is playing the lottery and, to some extent, we’re playing the lottery.”