Lottery.com’s Troubles Continue as Four Board Members Resign

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Four board members of lottery broker Lottery.com resigned this week. They explained that their decisions were “related to recent Board practices.”

These resignations are the latest indication that the tech company is in truly dire straits.

Lottery.com is one of several companies that operate on a lottery courier model. Buying lottery tickets online is illegal in most states, but these companies circumvent that restriction by buying tickets from retailers on behalf of online clients. The company charges a fee to purchase and hold the tickets, then pays out any winnings to the customer’s account. (Jackpocket is another such service, endorsed by Bonus.)

This week’s board member resignations were confirmed in a Lottery.com SEC filing last week. They follow the departures of multiple key executives earlier this year.

This latest turmoil dates back to July. That’s when Lottery.com fired president, treasurer and CFO Ryan Dickinson, then revealed that it had overstated its cash holdings by $30 million. 

Lottery.com’s market capitalization is currently $16.38 million, down from $41.53 million on July 29. However, the current troubles are just the latest chapter in a longer saga.

Lottery.com’s Future Looks Bleak

Lottery.com is facing a class action investor lawsuit on behalf of everyone who purchased Lottery.com securities between Nov 15, 2021, and July 29, 2022. The filing came in August, weeks after a third-party investigation revealed noncompliance with state and federal laws governing the procurement of tickets.

On July 29, Lottery.com said in a Form 8-K filing with the SEC that it had laid off most of its employees and could not meet payroll. It also admitted that it did not have the financial resources to fund its operations over the next 12 months.

The loss of the board members puts the company below the minimum required to maintain its NASDAQ listing if it cannot replace them quickly. It’s the second time the company has faced the prospect of delisting in two months. It received a similar warning in August after failing to submit its financial report on time.

Lottery.com looks like it’s in trouble regardless, but delisting would be catastrophic.

The Rush to Abandon Ship

Lisa Borders, Steven Cohen, William Thompson and Tony DiMatteo were the board members who stepped down this week. Cohen had served as co-chair of the board, and Thompson served as chair of the audit committee of the Lottery.com board.

DiMatteo, the company’s co-founder and CEO, announced his resignation in July.

Though DiMatteo stepped down as CEO, he agreed to serve as a senior advisor to the board. His agreement at the time stated that his role as an advisor would continue “until either party gives no less than ten days prior notice to the other party unless certain conditions for earlier termination become applicable.”

Just before DiMatteo left, the company also lost its Chief Revenue Officer, Matthew Clemenson.

Trouble from the Start

Lottery.com was founded in 2015. However, it went public on November 1, 2021, by way of the special purpose acquisitions company Trident Acquisitions Corp. The company’s shares hit an all-time high of $17.50 shortly after the deal closed.

Problems began almost immediately, and shares were already trading below $7 before the month was out.

Over the first half of this year, Lottery.com’s shares plummeted from $6.42 to $1.12. The resignations of its CEO and CRO in July caused a further crash to just over $0.30, where shares have hovered ever since.

Impact on the Reputation of the Lottery Courier Industry

Given how powerful Lottery.com appeared just a year ago, its downfall seems positive for its competitors, at least on the surface. Lotteries are booming, with Mega Millions and Powerball jackpots across the country reaching record figures. If Lottery.com shuts down, that will be one fewer opponent for the likes of Jackpocket to battle.

However, it’s also an obvious cautionary tale for others in the space. The trouble it has gotten itself into highlights the importance of complying with state and federal laws and being careful about what states to serve. Each courier company is making different decisions in this regard. For instance, Mido Lotto ran afoul of the Washington State Lottery for having misleadingly implied it was operating with the latter’s approval.

Investors’ experience with Lottery.com may also hurt other couriers looking to go public. Like the “skill games” business, lottery couriers risk developing a bad reputation if such stories become commonplace.

About the Author

Joshua Buckley

Sports Content Manager
Joshua Buckley is Sports Content Manager for Bonus.com. Along with award-winning experience as a sports editor in Alabama and Texas, he has also spent time in public relations for the tourism and blood banking industries. Joshua is co-host of "Whole Lotta Wolves," the only U.S.-based Wolverhampton Wanders FC podcast.

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