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February 16, 2024

DraftKings Acquires Jackpocket: Expanding Presence in US Lottery Sector and Boosting Revenue

Clara Williams
Written byClara WilliamsWriter
Researched byAishwarya NairResearcher

DraftKings, the Boston-based company, has announced its acquisition of the online lottery ticket app Jackpocket in a deal worth $750 million. This strategic move will allow DraftKings to expand its presence in the country's lottery sector while solidifying its position in the online casino and sports betting markets.

DraftKings Acquires Jackpocket: Expanding Presence in US Lottery Sector and Boosting Revenue

The Deal

The agreement, approved by both boards, will see DraftKings pay approximately 55% of the total amount in cash, with the remaining portion in stock. Jackpocket is recognized as the leading provider of digital lottery services in the United States, boasting scalable and proprietary technology, a quality management team, and a strong brand.

Boosting Efficiency and Revenue

With nationwide lottery sales reaching $108 billion in the 2022 fiscal year, the US lottery market presents a lucrative opportunity. DraftKings estimates that the acquisition of Jackpocket will generate up to $340 million in additional revenue by the 2026 fiscal year. By leveraging the customer bases of both companies, DraftKings aims to enhance customer lifetime value through cross-selling opportunities.

Expanding Reach

Jackpocket is currently available in over 16 US jurisdictions, including New York, New Jersey, and Texas. Users can conveniently access their digital lottery tickets through the app, with winnings below $600 automatically credited to their accounts. For larger wins, physical tickets are provided. This widespread availability and user-friendly experience contribute to Jackpocket's success in the market.

Positive Outlook

DraftKings CEO Jason Robins expressed excitement about entering the rapidly growing US digital lottery vertical. He believes that this move will not only provide DraftKings customers with another enjoyable product but also improve marketing efficiency, similar to how the company leveraged its daily fantasy sports customer base when launching sportsbooks. Jackpocket CEO Peter Sullivan also praised the agreement, emphasizing the continued convenience and responsible approach to purchasing lottery tickets.

Strong Financial Performance

In its Q4 2023 results, DraftKings reported a 44% year-on-year increase in revenue, reaching $1.2 billion. The company's adjusted EBITDA stood at $151 million, and monthly unique payers (MUP) saw a 37% growth in Q4 2023. Additionally, average revenue per MUP increased by 6%. Notably, the net loss for the recent quarter decreased from $242.7 million to $44.6 million year-on-year.

Future Growth

Looking ahead, DraftKings is optimistic about its future performance, raising its revenue forecast to $4.9 billion from $4.65 billion. The company currently operates mobile sportsbooks in 24 states and online casinos in five states, with plans for further expansion. Following the announcement of the acquisition, DraftKings' share price rose by 1.3%.

In summary, DraftKings' acquisition of Jackpocket marks an important step in the company's expansion into the US lottery sector. With a strong brand, proprietary technology, and a focus on customer value, DraftKings aims to capitalize on the lucrative market and drive additional revenue. This strategic move aligns with the company's positive financial performance and optimistic outlook for the future.

About the author
Clara Williams
Clara Williams
About

Clara "LottoLore" Williams, a Kiwi with a zest for numbers and narratives, dives deep into the thrilling world of lotteries. As a leading writer for LottoRank, her pieces resonate with enthusiasts, offering a harmonious blend of data, history, and human interest.

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