Karma Gaming, the Halifax startup that is developing video games for regulated lotteries, has signed three major customers this year.
So next year, its products will be available on three different continents.
Jay Aird, the company’s chief innovation officer, said the firm probably won’t receive substantial revenues from the deals until 2014, so it is now in the late stage of raising a follow-on round of venture capital funding that is seeking $4 million.
Karma has devised a solution for a problem that afflicts regulated lottery companies around the world: their clientele is aging and young people are not interested in buying weekly lottery tickets.
So the company is developing video games that will include a modest cash prize. In September, Karma signed an agreement with Jumbo, a lottery operator based in Brisbane, Australia, that will see the Halifax company launch an interactive game that users could play to pick lottery numbers.
And since the start of the year, Aird said Karma has signed three more major clients, though he is barred by confidentiality agreements from revealing their names.
“It’s been a crazy, crazy start to the year,” Aird said Wednesday. “In the past 10 weeks, we’ve signed three major distribution deals, including one in North America. Two are lotteries and one is a lottery product supplier that has distribution all over the world, including a major presence in the U.S. and Europe.”
With the latest sales, the company now has five lottery pipelines and the potential for more.
Integration in the lottery world is a long, slow process so the revenue returns will not be immediate, he said.
Karma Garming has so far raised about $750,000 in two rounds of angel funding. It is now in discussions with venture funds in Montreal, California, Germany and the United Kingdom, as well as possible strategic investors.
Aird said the talks are going well and he would hope to close a funding round capped at $4 million in the next few months.
Every party the company is talking to is in a position to help Karma expand its market, he said.
Last summer, Aird led a project to spin out a subsidiary company, Dystillr, an analytics tool for monitoring every casual gaming site in the world. The product has been taken up by several clients including the global investment bank Morgan Stanley.
Aird said the team is now strengthening the ties between Dystillr and Karma because the analytics unit helps the parent company so much with its sales and customer service.
“The lottery world is, overall, fairly devoid of analytics right now,” said Aird. “We’re now trying to give lotteries a level playing field with other social games so they can bring out games that are fun to play.”
Dystillr can help assess what games people are playing in social settings such as on Facebook. It can also help Karma’s customers react quickly to the latest gaming trends so they can put out popular games.