Karma Gaming, the Halifax startup out to marry regulated lotteries with video games, has signed a major contract to provide online games to Jumbo Interactive, a regulated lottery company in Australia.
Brisbane-based Jumbo said yesterday it had signed a deal with Karma Gaming, under which it would launch a Karma-designed interactive game that users could play as a means of picking lottery numbers. Karma CTO Jay Aird said in an interview yesterday that Karma – which is only 15 months old – will launch three products for Jumbo, first in an online format with mobile and tablet projects to follow.
Aird and CEO Paul LeBlanc formed Karma with the aim of bringing the video-game generation into the realm of regulated lotteries. Young people generally don’t play standard lottery products like draws, scratch-tickets and video lottery terminals, so Karma designs games for lottery companies that offer cash prizes and can engage young people.
What the Jumbo deal means is Karma for the first time has partnered with a national regulated lottery, as publicly listed Jumbo covers all Australia. Though Karma is now beta-testing six products with 12,000 users and receiving positive feedback, the Jumbo launch will be the first time its products are used in real-money lotteries.
What’s more, Aird said the lottery industry in the U.S. has recently become deregulated, and as Jumbo enters the U.S., Karma will have the opportunity to partner with it in that vast market.
“This deal is really our breakout moments into the lottery industry,” said Aird. “Jumbo’s our partner – hopefully one of many.”
With about $24 million in annual revenues, Jumbo Interactive is not a huge company, but its revenue surged 33 percent in the last fiscal year and its share price has almost quintupled in a year. The company is also innovative: its FunPicker product allows lottery players to pick not only numbers but also star signs or celebrities’ names.
Aird said Karma hopes this will be the first of many partnerships his company will strike. The company will be in Montreal speaking at the World Lottery Summit next week, and during that time it will work on more partnerships.
In April, Karma secured $400,000 in equity financing from angel investors, taking total committed capital to $1.15 million. The seed round included a $250,000 investment funding from Groupon CTO and Dalhousie University alum Paul Gauthier. The company is tentatively planning a Series A venture capital round for 2013 with a target of $3 million.