Pollard Banknote's Instant Ticket Comeback and Digital Acceleration
Pollard Banknote delivered a strong second quarter, with revenue rising to $154.8 million from $142.7 million a year earlier and gross margin expanding to 18.1% from 16.7%. The company's adjusted EBITDA jumped to $31.1 million, and management framed the quarter as confirmation of its long-term strategy. After a period of softness in instant ticket volumes and heavy start-up costs in Kansas, the latest results suggest a turning point—driven by both a recovery in the core business and accelerating digital expansion.
A Return to Normal in Instant Tickets
The instant ticket segment, the backbone of the company, finally flexed its muscle. “During the second quarter, our instant ticket production volumes returned to our historic levels from 2025, plus we got the additional incremental volumes from the impact of our new primary supply position for the California Lottery.” — Douglas Pollard, Co-CEO · 2026-08-13 The California contract, won earlier this year, is already exceeding expectations—volumes and average selling prices are running ahead of internal projections. Management noted that the company has been able to sell value-added innovations like California Lottery's higher-tier games, lifting the average ticket price and countering the naturally dilutive pricing of a large-scale contract.
Gross margin improvement was broad-based. CFO Rob Rose attributed it to three factors: higher instant ticket volumes, stronger eTab contributions, and better revenue recognition on the Belgium contract. “It was certainly driven by the instant ticket improvement, certainly sequentially. That was the big driver.” — Robert Rose, CFO · 2026-08-13 The company also cited lower spoilage and manufacturing efficiencies, a welcome reversal after the first-quarter's
We're very pleased that our results confirm that our underlying strategy, which we have, is the correct strategy to drive our long-term success.
Prior quarters had been marred by these exact issues; management now points to a renewed focus on operational excellence, with a new VP of Operations driving process improvements. The fixed costs associated with the California ramp are being absorbed efficiently, and the company expects margins to continue climbing toward the low-20s territory seen a few years ago.
Digital Expansion Gaining Traction
Beyond the instant ticket rebound, the digital business is becoming a more meaningful growth driver. The company announced the Colorado Lottery's intent to award its digital solutions contract, a competitive RFP that includes both iLottery and the PlayOn loyalty platform. This win—alongside the ongoing Belgium omnichannel project and the Kansas iLottery rebid—positions Pollard as a credible player in the rapidly digitizing lottery space. “We are very confident but we are not taking the Kansas Lottery contract for granted.” — Douglas Pollard, Co-CEO · 2026-08-13 The Kansas contract is up for bid, and the company has responded with what it calls a compelling proposal, though the financial risk of losing it remains.
The strategic shift toward digital is not new. In prior calls, management consistently highlighted the growing interest in iLottery. “There is definitely more interest and there are more states that are going down this path.” — Doug Pollard, Co-Chief Executive Officer · 2025-05-10 Now that interest is translating into tangible wins. The Belgium contract, which moved from scoping to development in Q2, is a key milestone—it validates the company's Catalyst platform and opens the door to more European opportunities. The company's iLottery contract portfolio, including the NeoPollard joint venture, remains a profitable anchor, though the expiry of the Michigan contract will create a headwind.
The company is also investing in game content, a critical differentiator. “The reality for game content is we're looking at both.” — Douglas Pollard, Co-CEO · 2026-08-13 Doug Pollard said, referring to internal development and external acquisition. The success of games like Bacon Me Crazy highlights the cross-pollination between iLottery and charitable channels, driving engagement in both.
Outlook and Risks
Looking ahead, management remains optimistic. The scheduled ticket volume for the rest of 2026 is robust, and the charitable gaming segment continues to deliver record eTab revenue, particularly in Minnesota, which had been under regulatory pressure. The NCIB program is in place, signaling confidence in cash generation and capital allocation.
However, risks persist. The Kansas RFP outcome is uncertain, and the Virginia RFP is still pending. The company's earlier struggles with spoilage and technology ramp-ups are a reminder of execution risk. Yet the Q2 results suggest the company has turned a corner, with instant ticket sales and average selling price both moving in the right direction. As the digital portfolio matures, Pollard Banknote is no longer just a ticket printer—it is becoming a full-service lottery technology partner, and that transformation is worth watching.