Fintech startup Yotta customer wins $500,000 in sweepstakes drawing

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Georgia resident Nicolette, in the midst of a breakup with her husband, was looking for a new bank when she found Yotta, a fintech startup offering weekly prize money to customers with savings accounts.

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He signed up.

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Now Nicolette has won $500,000 in Yotta’s sweepstakes at the end of the summer. The New York-based company also runs a weekly cash giveaway in which account holders earn one recurring sweepstakes ticket for every $25 in their savings account.

With her win, Nicolette plans to pay off her Hyundai Elantra and buy a larger SUV for her cleaning and home-services company, which will help support her two children.

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“I was in shock for a few days. I was speechless,” said Nicolette, who Posted his reaction to the award on Instagram. “It will help me set up and get my business off the ground.”

With 45 employees and a total of $300 million in savings accounts, Yotta is expected to grow as its name is mentioned on social media by people talking about winning, and saving, money.

“People are bad at doing things that are good for them in the long run, if they aren’t fun in the short run,” Yota founder and CEO Adam Moelis told MarketWatch. “We’re trying to make the savings instantly gratifying rather than something that will pay off five years down the road.”

Yotta isn’t the only fintech company combining games, sweepstakes and financial services. Other companies offering prize money include PayPal’s PYPL,
-2.34%
Venmo unit, which organized #VenmoMe giveaway To award a total of $10,000 in prizes of $20 or $50 each to eligible account holders in the previous month. Block Inc. SQ,
-5.02%,
Formerly known as Square, recently gave $10,000 #CashAppFriday Sweepstakes.

Moelis, whose father Moelis & Co. CEO is MC,
-2.68%
Ken Moelis launched Yota in 2019 as a way, he said, to address a strong market need to boost Americans’ savings. He modeled business after one UK government program called premium bonds Which sweepstakes offers as an incentive to save money.

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Yotta’s business model was made possible by the American Savings Promotion Act, which Congress passed in 2014, and updates to existing sweepstakes laws.

Moelis said that despite spending an estimated $80 billion on lottery tickets, Americans struggle to build up significant savings, and about half of them don’t have enough cash.

Yotta works with a chartered bank partner, Evolve Bank & Trust of Tennessee, to hold your savings accounts and insure them under FDIC guidelines.

Describing the company’s business model, Moelis said that Yota is able to pay about 2% interest on savings accounts and use some of its cash flow to run sweepstakes in which people pick numbers before weekly drawings. And get a cash prize for choosing the winning number. ,

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“Our math is the same as how all banks make money,” he said. “Big banks pay hardly anything on savings accounts, and their cost structure is in real estate and marketing. Instead of spending in marketing and real estate, we can pay a higher yield. We can’t afford to sponsor football stadiums.” Can proceed through word of mouth.”

Goldman Sachs Group Inc. Moelis started Yotta after working in the multi-strategy investment group at GS.
-2.88%
and as a data analyst at market-research firm YipitData.

Nicolette’s $500,000 prize was part of a drawing at the end of the summer for a second chance. The jackpot started at $250,000 and went up to $50,000 every week until someone won. According to Yotta, the $500,000 prize represents the largest prize in the history of American prize-linked savings.

Moelis said the combination of sports and finance isn’t a bad thing if it’s done the right way. In Yotta’s case, the sweepstakes rewards people for saving their money, and does not lose any money if depositors fail to choose a winning ticket number.

“I don’t think it’s inherently bad,” Moelis said. “It depends on what encouragement is being given by the game.”

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Emily Berry contributed to this report.



Credit: www.marketwatch.com /

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