Lucky5 Review: Virtual scratchie lottery-based MLM
Despite Lucky5 being widely promoted through Facebook, there is currently no information on the website advising visitors who owns or runs the business. Nor have I seen this information disclosed in any Lucky5 marketing material.
The Lucky5 website domain (“lucky5.com”) was first registered on the 30th of May, 2002. The domain registration was recently updated on the 23rd of June 2015, suggesting this is around the time the current owner(s) acquired it.
As always, if an MLM company is not openly upfront about who is running or owns it, think long and hard about joining and/or handing over any money.
The Lucky5 Product Line
Lucky5 has no retailable products or services, with affiliates only able to market Lucky5 affiliate membership itself.
Lucky5 affiliates pay a €30 EUR fee each month, with which are bundled five “scratchie credits”.
These credits can be redeemed through Lucky5 for five virtual scratchie cards, with cash prizes between €5 to €500,000 on offer.
The Lucky5 Compensation Plan
The Lucky5 compensation plan sees affiliates pay €30 a month to maintain a matrix position, through which they are paid to recruit new Lucky5 affiliates.
The matrix Lucky5 use is that of a 5×6.
A 5×6 matrix places an affiliate at the top of the matrix, with five positions directly under them. These first five positions form the first level of the matrix:
The second level of the matrix is generated by splitting each of the level 1 positions into another five positions each (25 positions).
In this manner all six levels of the matrix are generated, with the entire 5×6 matrix housing 19,530 positions.
Positions in the matrix are filled via direct or indirect affiliate recruitment, with commissions paid out based on the number of matrix positions filled.
In Lucky5 commissions aren’t paid out as cash, rather affiliates are paid in scratchie credits, at a rate of
- 5 credits per filled position on level 1 (5 scratchie cards in total) and
- 4 credits per filled position on levels 2 to 6 (15,620 cards in total)
Affiliate membership with Lucky5 is €30 EUR a month.
Breaking down the Lucky5 compensation plan reveals is it pretty much a monthly sweepstakes.
Affiliates buy in for €30 EUR a month which equates to 5 tickets. Additional tickets are obtained via affiliate recruitment, with the prize pool for the current month likely composed of affiliate fees collected the previous month.
Lucky5 affiliates are advertising that ‘approximately 1 in 3.4 cards will be a winning card‘, with the idea being that everyone who buys in has an equal share of winning a share of affiliate fees paid in.
The reality however is that those who recruit the most and have the largest downlines, dramatically increase their share of the prize-pool.
From month to month there are of course bound to be statistical abnormalities, but over time affiliates with more scratchie cards each month are going to make more.
One thing that stuck out to me was the advertised €500,000 prize in Lucky5 affiliate advertising. This would theoretically require, at a minimum, some 100,000 affiliates buying in each month.
In reality that number is actually much higher, as there are other prizes paid out and Lucky5 likely do not pool 100% of affiliate fees into the prize pool.
100,000 affiliates in MLM is an extremely unlikely number, so either Lucky5 affiliates are being disingenuous with their advertising of available prizes, or there’s additional information they’re not disclosing.
My money (no pun intended) is on the former.
What with commissions in Lucky5 put down to chance (assuming nothing suss is going on in allocation of scratchie cards each month), affiliates will need to take into consideration local gaming laws.
To that end Lucky5 affiliate presentations advise:
By buying scratchcards, in effect, we are gambling.
The USA, Iran, North Korea, and Nigeria are currently closed to this opportunity.
Alexa traffic estimates Lucky5 is currently being primarily promoted in the UK (49.8% of traffic) and Australia (28.1%).
At the time of publication I haven’t seen any information revealing gaming registrations in either country.
The interesting question the Lucky5 business model poses is whether it’s a pyramid scheme if commissions are based on chance.
If Lucky5 were paying cash commissions through the matrix, it’d be an open and shut case. What Lucky5 affiliates are instead paying for is a chance to win other affiliate’s membership fees, with recruitment increasing the chance (and therefore share of funds) they have each month.
Murky waters indeed.
What I will conclude though is until it’s disclosed who is running Lucky5 and whether or not they have required gaming licenses, anyone who is considering signing up and marketing the opportunity should proceed with caution.
If Lucky5 ownership and gaming license/registration information is ultimately not disclosed, there is a good chance it might be nothing more than an elaborate money laundering operation.
At this point there’s not much to be gained from delving too much into that possibility, but keep it in mind as you’re pitched promises of €500,000 scratchie jackpots.