Lottery.com stock fell as much as 17% Monday after disclosures showed the online lottery retailer had overstated its available cash by $30m.

The company’s preliminary internal investigations found it had overstated available unrestricted cash balance by approximately $30m, according to an 8-K filing first reported to the SEC July 11 and disclosed on the company’s investor relations website July 15 . Subsequently, Lottery.com also improperly recognized $30m in revenue from the prior fiscal year.

“(Lottery.com), in consultation with its outside advisors, is currently validating its preliminary conclusion, assessing any impact on previously issued financial reports, and has begun to institute appropriate remedial measures,” according to the 8-K form released last week.

The filing also announced chief revenue officer Matthew Clemenson had resigned as of July 11.

Lottery.com stock briefly reached an all-time intraday low at $0.75 per share on the Nasdaq Monday before recovering slightly. The stock was still down more than 10% during midday trading despite a strong session for the Nasdaq overall.

Clemenson’s resignation follows the July 1 termination of Ryan Dickenson, who had served as the company’s president and treasurer since October 2021 and as the company’s CFO since March 2022.

Harry Dhaliwal, a long-time C-suite exec who has previously held leadership roles at AIG and Barclay’s and served as an advisor to Lottery.com, will take over as interim CFO.

The financial disclosures and corporate shake-ups come as Lottery.com stock has slumped along with other gaming industry stocks and the market overall. Lottery.com’s share price reached an all-time closing high of $15.70 per share Nov. 5, shortly after the company completed its SPAC merger and went public under the ticker symbol LTRY.

The stock has steadily fallen since and is down more than 86% year-to-date.

$LTRY Downside Alert. Not sure if this is new info, but it's devastating if it is. Balance Sheet overstating cash by $30m. Market Cap: $50m pic.twitter.com/QOolluSTyH

— Yonezu Investing (@SteveYonezu) July 15, 2022

Founded in 2015, Lottery.com and its app allows users to play the lottery from their mobile devices. It offers official state-sanctioned lottery games such as Powerball, Mega Millions and certain state offerings, according to a press release last year announcing its plans to go public.

According to company statements, Lottery.com is the world’s “largest provider of lottery data to over 400 digital publishers, including hundreds of digital newspapers, television and news sites, and major digital publishers such as Google, Verizon/Yahoo and Amazon’s Alexa devices.”

The company’s board of advisors features multiple high-profile gaming-industry figures, including DraftKings founder and CEO Jason Robins.

Legal online lottery games are live in some variety in 10 states plus the District of Columbia with three more US jurisdictions pending. Nevada, Alaska, Hawaii, Utah and Alabama are the only states without some sort of state-run retail lottery.

Lottery.com has publicly stated intentions “to become a global marketplace for legally available lottery games to consumers across the world,” according to last year’s press release. The company estimates that only 4% of $430 billion of global lottery sales are currently online, leading it to announce that “this is a large market opportunity that is expected to shift to transact online during the next decade.”

From 2016 to 2020, Lottery.com grew gross revenue at a compounded annual growth rate of 322%, according to the company ahead of going public. As of fall 2021 it had forecasted gross revenue equal to approximately $71m in 2021, $280m in 2022 and $571m in 2023.

At the time of its SPAC merger, the Austin, Texas-based company was operating in 11 jurisdictions with plans to cover 34 states by the end of 2023.

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