Ethereum is not ready to be used for Lottery - Sulim Malook, CEO of Lucky Gift Cards

Ishan Pandey: Hi Sulim, Welcome to our series “Behind the Startup”. Please tell us about your journey and the story behind Lucky Gift Cards and Crypto Millions Lotto?

Sulim Malook: Hi Ishan, it’s great to be here. Thank you for having me.

I spent many years as a bond trader in London, so I have always had a keen interest in financial instruments and the financial markets. In the first venture of my entrepreneurial career, we developed a stock market lottery app and business, which we eventually sold to a Latin American lottery operator. Over a period of years, we then migrated the app to a traditional lottery business and we ran lotteries for all kinds of organizations around the world, which gave us lots of experience of operating lotteries across borders. By 2018 it was evident that the best way to break down boundaries and offer a truly global product at scale was to use bitcoin, a universal, borderless currency. That was the beginning of Crypto Millions Lotto. Lucky Gift Cards followed in 2020. That was a slightly different idea, where card recipients join a lottery pool and share in its winnings without actually playing the lottery. Given our bitcoin experience on Crypto Millions Lotto, it was an easy decision to base Lucky Gift Cards on bitcoin, so that’s how everything the pool wins is paid. Both sites are entirely built around bitcoin, whether you win it, earn it or gift it.

Ishan Pandey: Can you explain what are lottery pools and how do they work?

Sulim Malook: A lottery pool is simply a group of people who play the lottery together. They each buy a ticket and pool them (hence the name). If any of the tickets wins anything, those winnings are shared amongst everyone in the pool. The principle is that the more tickets in the pool, the better chance you have of winning, and although you have to share any prize money, it’s better to win something than nothing at all.

Pools have traditionally been organized around workgroups or friendship groups. We’ve completely automated the whole idea of a lottery pool online, so the people in the pool don’t have to do anything. No tickets to buy, or lose, and no disputes. Their winnings are just credited to their Lucky Gift Card account automatically.

Ishan Pandey: According to you, can blockchain and other types of technologies be used in gambling and casinos to make the process more transparent for users?

Sulim Malook: That’s a great question. In any gambling product that uses Random Number Generators, or any pooling of bets, so-called pari-mutuel prizes, where payouts depend on the number of tickets sold, there needs to be complete transparency that people have confidence in the game. Blockchain has a role to play in that. But we go a step further. To make prizes transparent, we don’t base them on the number of tickets sold. The amounts of our prizes are all fixed in advance, and our payouts are based on established, televised National Lottery draws, which we have no control over.

Ishan Pandey: Is purchasing a Lucky Gift Card similar to gambling? What are the regulations around it?

Sulim Malook: The short answer is “no”. Before I give you a longer answer, let me define gambling. Gambling is the wagering of money on something that has an uncertain outcome, with the primary intent of winning money. Buying and gifting Lucky Gift Cards or winning bitcoin from a lottery pool is not gambling since recipients aren’t placing bets. The pool is doing all this. As you’d imagine, we’ve sought extensive legal opinion and I’m pleased to say the lawyers agree with us. Lucky Gift Cards does not breach any gambling laws.

Ishan Pandey: What recent trends are you witnessing in the bitcoin casino industry? Has the media hype and the increase in the price of bitcoin increased the size of the industry?

Sulim Malook: Whichever way you look at bitcoin, the trend is upwards. It’s gone from being a speculative investment to almost becoming a currency in the last few years. More and more people are now using bitcoin to buy things, whether that’s Tesla cars, paying statutory bills, or even playing casino games, sports betting or lottery. The industry is significantly bigger than it was a year ago. This is partially driven by the extraordinary price gains, which are regularly in the news. But a lot of it is due to some of the big names who have endorsed the currency in one way or another. The backing of organizations like PayPal and people like Elon Musk has taken bitcoin into the mainstream. More people than ever are interested in bitcoin. In December, Google Trends, which measures retail interest in trending topics, reported that bitcoin’s interest had doubled in a single month.

Ishan Pandey: According to you, what is the future of lotteries with the advent of new-age technologies?

Sulim Malook: The classic model has been one of the lotteries owned by the state, which are licensed to an operator who runs it for a fixed term. Typically, people will buy tickets to play that lottery from a nationwide network of small retailers like newsagents and corner shops.

There are several problems with that model. The first and most obvious one is that those small retailers have all been closed in many countries for a large part of the last year. The operators have been working hard to try to get the lottery sales online. But you can see that there would be some resistance to that from the retailers, who rely on lottery sales to attract people into their stores.

The second problem is that state-run lotteries are generally only available to those living in that country.

So, the trend we see is a move to a proper online lottery, where people can play the lottery without leaving the house and where people can play more than just their own national lottery. The organizations best placed to deliver that are people like us who were born digital. Similarly, we’ve seen high street betting move from the physical bookmakers to digital natives like Betfair.

Ishan Pandey: What advice would you give to a user who wants to win a lottery via a Lucky Gift Card?

Sulim Malook: My honest advice is that you won’t find a more attractive way to play the lottery. When you play the lottery alone, there is an outside chance you might win a jackpot, but the odds are heavily against you. When you join a lottery pool, those odds narrow significantly. Statistically, the pool will win more often and there is a better chance that you’ll win a jackpot if you’re in a pool. On top of that, with Lucky Gift Cards, when you win, you are winning bitcoin.

Ishan Pandey: According to you, do you think that Ethereum is ripe to be used as a currency for buying and participating in lottery tickets?

Sulim Malook: No, our view is that Ethereum has some performance issues that make it unsuitable for the kind of thing we’re doing. First, it’s slow, but it’s also expensive to process and we believe it’s having issues with scaling. + 400$ per transcation in gas fees is very expensive and not feasible in the long run. More alternatives to Ethereum are coming but none of them is mature enough to be used by the public at mass.

We have no plans to add Ethereum to our business. We are totally committed to bitcoin and core bitcoin only. Not any of the bitcoin variants like BCH or BSV, just BTC!

The purpose of this article is to remove informational asymmetry existing today in our digital markets by performing due diligence by asking the right questions and equipping readers with better opinions to make informed decisions. The material does not constitute any investment, financial, or legal advice. Please do your research before investing in any digital assets or tokens, etc. The writer does not have any vested interest in the company.