DraftKings has announced to acquire the lottery app Jackpocket for $750 million, a decision set to increase its annual revenue by as much as $340 million. The payment for this acquisition will be covered by DraftKings, with approximately 55% of the total amount coming directly from its cash reserves, eliminating the need for additional capital fundraising.
Jackpocket, a leader in the digital lottery space, provides users with an easy way to purchase official lottery tickets across numerous states. With its service extending to 18 jurisdictions in the U.S., including New York, Texas, and Ohio, Jackpocket has established a significant presence. The company, headquartered in New York City, has distinguished itself within the digital lottery app market, achieving nine times more downloads than its nearest competitor in the fiscal year 2023.
DraftKings’ acquisition of Jackpocket is not just about tapping into the lucrative U.S. lottery market; it’s also aimed at enhancing its sportsbook and iGaming offerings by increasing customer lifetime value. Jason Robins, co-founder and chief executive of DraftKings, expressed excitement over entering the digital lottery sector through this acquisition. He said:
“This transaction will create significant value for DraftKings not only by giving our customers another differentiated product to enjoy but also by improving our overall marketing efficiency similar to how our daily fantasy sports database created an advantage for DraftKings in OSB and igaming.”
Financial projections post-acquisition are optimistic, with DraftKings forecasting an incremental revenue increase between $260 million and $340 million, alongside an adjusted EBITDA boost of $60 million to $100 million for the fiscal year 2026. By 2028, these figures are expected to rise even further, with revenue potentially growing by $350 million to $450 million and adjusted EBITDA by $100 million to $150 million.
Jackpocket’s appeal lies in its scalable technology, strong brand identity, and a management team led by its founder, Peter Sullivan, who emphasized the value this partnership brings to their customers. He noted the opportunity to expand the digital lottery sector significantly, crediting DraftKings’ extensive footprint and outstanding mobile product offerings as key factors:
“Together with DraftKings, we will be able to bring tremendous value to our customer base as we advance our mission to create a more convenient, fun and responsible way to take part in the lottery.
“DraftKings’ broad footprint and exceptional mobile products present an opportunity to meaningfully expand the digital lottery vertical and we could not be more excited to come together with DraftKings.”
The acquisition is timely for DraftKings, which reported having $1.27 billion in cash assets in its Q4 results. Following a strong performance at the end of 2023, the company also revised its revenue guidance for the fiscal year 2024 upwards, now expecting up to $4.9 billion.
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