In a bold move to strengthen its position in the growing sportsbook and iGaming industry, DraftKings is set to acquire the market leader in digital lottery solutions, Jackpocket, for a striking sum of $750 million. The strategic purchase comes at a time when DraftKings reported having cash assets of $1.27 billion, and follows a profitable end to the year 2023 which led to the company raising its fiscal year 2024 revenue guidance up to $4.9 billion.
The transaction, with about 55% of the purchase price payable in cash from the company’s balance sheet, eliminates the need for a capital raise, signaling the company’s strong financial position and confidence in the acquisition. Jackpocket, a digital platform for purchasing official state lottery tickets, currently serves patrons in 18 U.S. jurisdictions, including populous states such as New York, Texas, and Ohio. With its headquarters in New York City, the company prides itself on an app that saw a download rate nine times greater than its closest competitor in 2023.
This highly anticipated acquisition provides DraftKings a direct pathway to the lucrative U.S. lottery market. DraftKings CEO and co-founder Jason Robins expresses his excitement about entering the rapidly growing U.S. digital lottery sector through the Jackpocket acquisition. He believes that the transaction will create significant value for DraftKings by not only offering customers a different product to enjoy but also by enhancing marketing efficiency.
The expected financial impact of this acquisition is noteworthy. DraftKings forecasts that Jackpocket will generate an incremental revenue between $260 million and $340 million and increase Adjusted EBITDA by $60 million to $100 million in fiscal year 2026. By fiscal year 2028, these numbers are projected to jump to an incremental revenue of $350 million to $450 million with an incremental Adjusted EBITDA of $100 million to $150 million.
Jackpocket’s allure goes beyond its financial promise. Founded in 2013, it boasts highly-scalable technology, a powerful brand, and a leading founder-led management team. Peter Sullivan, CEO of Jackpocket, looks forward to the merger with DraftKings, as it aligns with their mission to foster a more convenient, enjoyable, and responsible lottery participation method. He sees DraftKings’ extensive reach and exceptional mobile products as a means to significantly expand the digital lottery domain.
The acquisition signals DraftKings’ continued momentum in the gaming industry, having recently established a multi-year sports betting partnership with Barstool Sports, making DraftKings the official sports betting partner of Barstool. The company aims to build on its portfolio, following an unsuccessful bid last year to acquire PointsBet, ultimately losing to Fanatics.
DraftKings’ move reflects a broader trend in the gaming industry towards consolidation and diversification. By venturing into the digital lottery space, DraftKings not only diversifies its product offering but also capitalizes on the cross-marketing opportunities that come from a user base that enjoys various forms of legal gaming.
With a solid game plan, strong financial health, and a significant new asset in Jackpocket, DraftKings is positioning itself for continual growth, expanded market influence, and a robust presence across the gaming and betting landscapes, bringing more choices and potentially greater rewards to its customers. As the industry evolves, DraftKings aims to remain at its forefront, driving innovation and growth for the company and the broader betting community. With the anticipated fusion of DraftKings and Jackpocket, the future of digital sports betting and lottery participation looks promising, with exciting prospects for gamers and investors alike.
