Entering a new market
DraftKings has reached a deal to acquire the online lottery ticket app Jackpocket in a deal worth $750m. The Boston-based company announced the agreement on Thursday, for which around 55% of the payment will be cash and the remainder stock.
the top US provider of digital lottery services with scalable and proprietary technology
The press release describes Jackpocket as the top US provider of digital lottery services with scalable and proprietary technology, a quality management team, and a strong brand. Both boards approved the deal, which will now need the relevant regulatory approvals to proceed.
DraftKings plans to dip its toes into the country’s lottery sector, as well as cement its position in the online casino and sports betting markets. According to the release, the firm believes the acquisition will help boost customer lifetime value thanks to the opportunities to cross-sell the customer bases.
Boosting efficiency
The US lottery market is a lucrative one, with nationwide lottery sales in the 2022 fiscal year hitting $108bn. DraftKings estimates the deal will create up to $340m in additional revenue in the 2026 fiscal year.
Jackpocket is currently available in more than 16 US jurisdictions, including New York, New Jersey, and Texas. It takes a cut of the deposits that users make into their accounts. Customers can digitally access their tickets through Jackpocket and winnings of less than $600 are credited to their account automatically. Meanwhile, those with bigger wins will receive physical tickets.
Commenting on the acquisition, DraftKings CEO Jason Robins said that the company is excited to become part of “the rapidly growing US digital lottery vertical.” He believes the move gives DraftKings customers another product to enjoy, as well as improving marketing efficiency in a similar way to how it leveraged its daily fantasy sports customer base when launching sportsbooks.
Jackpocket CEO Peter Sullivan also praised the agreement, saying that it will continue to make it more convenient and fun to buy lottery tickets in a responsible manner.
Strong results
DraftKings announced its Q4 2023 results on Thursday, with revenue rising 44% year-on-year to $1.2bn and its adjusted EBITDA at $151m. Monthly unique payers (MUP) were up 37% in Q4 2023, while average revenue per MUP increased by 6%. Net loss for the recent quarter dropped from $242.7m to $44.6m year-on-year.
mobile sportsbooks in 24 states and online casinos in five states
DraftKings is optimistic about the year ahead, upping its revenue forecast to $4.9bn from $4.65bn. The operator currently has mobile sportsbooks in 24 states and online casinos in five states, with further launches on the horizon. DraftKings’ share price finished the day up 1.3%.
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