Initiating on No-Moat Digital Lottery Retailer Jumbo Interactive

We expect Jumbo’s core lottery retailing business will keep ceding market share to Lottery Corp’s “The Lott” platform, albeit its continued growth is underpinned by a channel mix shift to more lottery ticket sales moving online. Jumbo is principally a digital reseller of Lottery Corp tickets through its Oz Lotteries platform, generating revenue by charging a premium, typically in the range of 10% to 30%, on tickets sold. Largely a result of its first-mover advantage, Jumbo has accumulated a sizable customer base of around 4 million, on our estimation, although each year only around 1 million customers make a transaction.