Health Check: How Prudently Does Lottery.com (NASDAQ:SEGG) Use Debt?

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. Importantly, Lottery.com Inc. (NASDAQ:SEGG) does carry debt. But should shareholders be worried about its use of debt?

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When Is Debt Dangerous?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we think about a company's use of debt, we first look at cash and debt together.

How Much Debt Does Lottery.com Carry?

You can click the graphic below for the historical numbers, but it shows that Lottery.com had US$5.28m of debt in June 2025, down from US$6.99m, one year before. However, because it has a cash reserve of US$262.6k, its net debt is less, at about US$5.02m.

How Healthy Is Lottery.com's Balance Sheet?

The latest balance sheet data shows that Lottery.com had liabilities of US$32.4m due within a year, and liabilities of US$2.0 falling due after that. Offsetting these obligations, it had cash of US$262.6k as well as receivables valued at US$580.5k due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by US$31.6m.

This deficit casts a shadow over the US$8.43m company, like a colossus towering over mere mortals. So we definitely think shareholders need to watch this one closely. After all, Lottery.com would likely require a major re-capitalisation if it had to pay its creditors today. There's no doubt that we learn most about debt from the balance sheet. But it is Lottery.com's earnings that will influence how the balance sheet holds up in the future. So if you're keen to discover more about its earnings, it might be worth checking out this graph of its long term earnings trend.

Check out our latest analysis for Lottery.com

Over 12 months, Lottery.com made a loss at the EBIT level, and saw its revenue drop to US$965k, which is a fall of 85%. To be frank that doesn't bode well.

Caveat Emptor

Not only did Lottery.com's revenue slip over the last twelve months, but it also produced negative earnings before interest and tax (EBIT). Its EBIT loss was a whopping US$14m. Combining this information with the significant liabilities we already touched on makes us very hesitant about this stock, to say the least. Of course, it may be able to improve its situation with a bit of luck and good execution. But we think that is unlikely, given it is low on liquid assets, and burned through US$3.9m in the last year. So we consider this a high risk stock and we wouldn't be at all surprised if the company asks shareholders for money before long. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. We've identified 5 warning signs with Lottery.com (at least 4 which shouldn't be ignored) , and understanding them should be part of your investment process.

If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.