DraftKings Buys Jackpocket for $750M

Article ByDavid Weir

February 16, 2024

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Posted in: US Lottery News, Massachusetts Gambling News, US Gambling News

Leading U.S. online gambling operator DraftKings has announced it is acquiring fast-growing online lottery app Jackpocket for $750 million.

The move brings DraftKings into the U.S. lottery space for the first time. It already operates online and retail sports betting, online casinos, and daily fantasy sports.

Jackpocket is the market leader in online lottery couriering, where companies act as a proxy service for people to buy store-bought lottery tickets via their apps.

It is currently available in 17 states, having expanded into various others, including the Massachusetts lottery market, in 2023.

The announcement comes in the same week as the Boston-based DraftKings released its Q4 2023 reports.

“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,” said DraftKings CEO Jason Robins.

Jackpocket’s Success

Jackpocket was founded in New York in 2012 and is now a $750 million business.

It was styled as an Uber for the lottery by its founder and CEO Peter Sullivan. Jackpocket will send a courier to buy your lottery ticket and deal with the winnings automatically, up to $500. Above that, users have to contact the relevant lottery themselves.

It takes a 9% fee from deposits, which are used to purchase tickets.

This business model has been a roaring success, and has even been replicated by other big operators.

Now, the leading Jackpocket is part of DraftKings.

Jackpocket’s data says its first move advantage has kept it at the top of the pack, with nine times more downloads than the nearest competing apps in the space. In 2023, it launched in several states and signed a promo deal with the MLB’s Boston Red Sox.

Market Efficiency

DraftKings says it expects Jackpocket to bring in some $250 million to $350 million in revenues per year once the deal is complete, from which it expects between $60 million and $100 million in adjusted earnings.

It also says the value of the transaction is not purely based upon Jackpocket’s revenues, but the potential for integration with the existing DraftKings verticals.

This $750 million outlay comes in the same week that DraftKings execs, including Robins, have been cashing out millions in shares.

Although Q3 2024 showed solid growth, it still did not post a profit-making quarter and fell narrowly short of revenue expectations from investors.

Nevertheless, despite have yet to make a profitable quarter, let alone full year, DraftKings has made yet another big purchase in Jackpocket.

It also recently brokered a promotional deal with Barstool Sports media network. The price of the promotional deal was not disclosed, but rumors say it could be upwards of $10 million a year for several years.