DraftKings Acquires Jackpocket for $750 Million

GamingToday.com is an independent sports news and information service. GamingToday.com has partnerships with some of the top legal and licensed sportsbook companies in the US. Gaming Today may receive referral compensation from the sportsbook company when you claim a bonus offer or promotion through a link on this site. Although the relationships we have with sportsbook companies may influence the order in which we place companies on the site, all reviews, recommendations, and opinions are wholly our own. They are the recommendations from our authors and contributors who are avid sports fans themselves.

For more information, please read How We Rate Sportsbooks, Privacy Policy, or Contact Us with any concerns you may have.

Gaming Today is licensed and regulated to operate in AZ, CO, CT, DC, IA, IL, IN, KS, KY, LA, MA, MD, ME, MI, MS, NJ, NV, NY, OH, ON, PA, TN, VA, VT, WV, and WY.

On the back of a strong Q4 result, DraftKings announced the acquisition of lottery app Jackpocket for $750 million. The deal is expected to generate an additional $340 million in annual revenue. More than half the total purchase price (55%) will be paid in cash from the DraftKings balance sheet, with no further capital raise required.

DraftKings indicated that it possesses cash assets of $1.27 billion at the end of 2023. Accordingly, it has raised its 2024 fiscal year revenue guidance range to $4.9 billion, following a solid end to 2023. Jackpocket offers lottery customers a convenient channel to purchase lottery tickets in multiple states. Lottery tickets can be purchased through Jackpocket in 18 US states, including New York, Texas, and Ohio.

Here is more on the DraftKings acquisition of Jackpocket.

Jackpocket Operates the Leading Lottery Courier Service

Founded in 2013, Jackpocket is a lottery courier service that allows users to purchase lottery tickets through its app. Since the users are not physically present at the time of purchase, the company buys the tickets on the users’ behalf. The physical tickets are then scanned and accessed digitally via the Jackpocket app, with winnings under $600 automatically redeemed into the ticket purchaser’s deposit wallet.

Jackpocket is the first registered lottery courier service in New York and New Jersey, with the former location also serving as the headquarters of DraftKings Inc. Up until its acquisition, Jackpocket had raised $200 million in funds and was valued at a total of $620 million. Jackpocket is the market leader in mobile apps, as the current digital infrastructure for lottery services is fragmented and localized due to various geographical and legislative constraints.

Harley Miller, founder and managing partner at Left Lane Capital, said his firm invested about $50 million in Jackpocket because state lotteries are “inherently mass market” products that attract 50% of the US population. He also recognized that Jackpocket was the first company to transform the “offline, analog world” of physical lottery tickets into a “digital-first world.”

Jackpocket received accolades for building its business model slowly and without bypassing any of the existing regulations of the markets in which it operates. “The difference here,” Miller said, “is that unlike Uber and Airbnb, which went directly against regulators, going through the back door and then asking for forgiveness, Jackpocket has taken the long road and gone in with permission.”

DraftKings Hopes to Expand Into US Lottery

DraftKings stated that 55% of the acquisition, or $412 million, would be made in cash from its balance sheet, while the remaining $337 million would be completed using common stock. The company stated it is looking to “grow into the massive US lottery industry” but also wishes to deepen its hold on online games and sports.

Jackpocket CEO Peter Sullivan stated the deal would “meaningfully expand the digital lottery vertical” through DraftKings’ “broad footprint and exceptional mobile products.” DraftKings echoed this sentiment by stating that its “top priority is stewarding safe and responsible play.”

DraftKings’ Board of Directors and Jackpocket’s stockholders both approved the merger and proposed transaction agreements, with the deal expected to complete formalities by the end of 2024.

DraftKings Earns $1.231 Billion in Q4 2023

DraftKings Q3 results indicate an increase of $376 million or 44% compared to the same period in 2022, which ended its last quarter at $855 million. The company’s strong growth in Q4 2023 has been attributed to healthy customer engagement and efficient customer acquisition.

Additionally, the company’s sportsbook product has expanded into new jurisdictions, and product innovation has led to an increased parlay wager, allowing for a higher hold percentage for the sportsbook.

Sports outcomes in the last two weeks of Nov. 2023 led to higher customer winnings, impacting DraftKings revenue by approximately $175 million, while its EBITDA was affected by approximately $126 million. “In 2023, we delivered on our commitments to generate outstanding revenue growth and drive significant operating efficiencies,” said Jason Park, DraftKings’ Chief Financial Officer.

DraftKings’ acquisition of Jackpocket will create another strong revenue stream for the sportsbook giant as it looks to diversify its portfolio ahead of the wave of legalization sweeping across the United States.


About the Author
Nikhil Kalro

Nikhil Kalro

Nikhil Kalro is a sports betting writer at Gaming Today. With an interest in strategy and mathematics, applying that to sports writing was the natural progression. Nikhil’s previous experience includes working with ESPN for five years. His specializations include soccer, football, basketball, tennis, and esports betting.

Get connected with us on Social Media