Company: LTRYW
Filing Date: 2025-05-21
Form Type: 10-Q
Source: 0001641172-25-011865
Chunk: 9

Company: Lottery.com Inc.
Filing Date: 2025-05-21
Form: 10-Q
Item: Part I, Item 1
Chunk 9
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Under
the new standard, Accounting Standards Update (“ ASU”) 2014-09, “ Revenue from Contracts with Customers (Topic 606)

Lottery
game revenue

Items
that fall under this revenue classification include:

Lottery
game sales

The
Company’s performance obligations of delivering lottery games are satisfied at the time in which the digital representation of
the lottery game is delivered to the user of the B2C Platform or the commercial partner of the B2B API, therefore, are recognized at
a point in time. The Company receives consideration for lottery game sales at the time of delivery to the customer, which may be the
user or commercial partner, as applicable. There is no variable consideration related to lottery game sales. As each individual lottery
game delivered represents a distinct performance obligation and consideration for each game sale is fixed, representing the standalone
selling price, there is no allocation of consideration necessary.

In
accordance with Accounting Standards Codification (“ ASC”) 606, the Company evaluates the presentation of revenue on a gross
versus net basis dependent on if the Company is a principal or agent. In making this evaluation, some of the factors that are considered
include whether the Company has control over the specified good or services before they are transferred to the customer. The Company
also assesses if it is primarily responsible for fulfilling the promise to provide the goods or services, has inventory risk, and has
discretion in establishing the price. For all of the Company’s transactions, management concluded that gross presentation is appropriate,
as the Company is primarily responsible for providing the performance obligation directly to the customers and assumes fulfillment risk
of all lottery game sales as it retains physical possession of lottery game sales tickets from time of sale until the point of redemption.
The Company also retains inventory risk on all lottery game sales tickets as they would be responsible for any potential winnings related
to lost or unredeemable tickets at the time of redemption. Finally, while states have the authority to establish lottery game sales prices,
the Company can add service fees to ticket prices evidencing its ability to establish the ultimate price of the lottery tickets being
sold.

  F-10  

Other
associated revenue

The
Company’s performance obligations in agreements with certain customers are to provide a license of intellectual property related
to the use of the Company’s tradename for marketing purposes by partners of the Company. Customers pay a license fee up front.
The transaction price is deemed to be the license issue fee stated in the contract. The license