DraftKings Buying 'Leading Lottery App' Jackpocket for $750M

DraftKings said the acquisition will allow it to tap into the “massive U.S. lottery industry,” but also enable it to acquire and cross-sell users for its other businesses. 

Feb 15, 2024 • 17:30 ET • 2 min read
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DraftKings Inc. is getting into the lottery business.

The Boston-based operator of fantasy sports contests, online sports betting sites, and internet casino gambling announced Thursday that it has an agreement to acquire Jackpocket Inc., “the leading lottery app in the United States,” in a deal worth approximately $750 million in cash and stock.

DraftKings said the acquisition will allow it to tap into the “massive U.S. lottery industry,” but also enable it to acquire and cross-sell users for its other businesses. 

Jackpocket operates an app that allows “lottery fans” to securely order official state lottery tickets, such as for Powerball. After downloading the app, funding an account, and ordering a ticket, Jackpocket sends someone to go and buy a physical ticket from a lottery retailer and stores that ticket for the user in a fireproof safe. The company will then transfer winnings and winning tickets to users.

The proposed acquisition means DraftKings could also connect with some users in states without legal sports betting (or without DraftKings). 

Jackpocket's app is in Arizona, Arkansas, Colorado, Idaho, Massachusetts, Minnesota, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New York, Ohio, Oregon, Puerto Rico, Texas, Washington, D.C., and West Virginia.

“We are very excited to enter the rapidly growing U.S. digital lottery vertical with our acquisition of Jackpocket,” DraftKings Co-Founder and CEO Jason Robins said in a press release. “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.”

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DraftKings will pay around 55% of the purchase price in cash (approximately $412.5 million) and the remainder in common shares (around $337.5 million). The deal is subject to certain regulatory approvals and closing conditions, but DraftKings expects it to close by the second half of 2024.

The proposed acquisition was announced alongside DraftKings’ financial results for the fourth quarter, which ended Dec. 31. However, the company said its revenue and adjusted EBITDA guidance for 2024 does not yet include the estimated impact of the proposed deal.

Even so, DraftKings said that assuming no other states legalize online sports betting or iGaming, the proposed transaction could drive $260 million to $340 million in additional revenue and $60 million to $100 million in extra adjusted earnings by the company’s 2026 fiscal year. 

“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,” said Peter Sullivan, CEO of Jackpocket. “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.”

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