Mobile sports betting and daily fantasy sports giant, DraftKings, recently announced the purchase of the largest lottery app in the nation, Jackpocket, in a $750 million cash and stock deal.
Expanding Its Reach
Boston-based DraftKings has agreed to purchase iLottery gaming app, Jackpocket, for $750 million with 55% in cash and the remaining 45% in stock. DraftKings now has its tentacles in sports betting, daily fantasy sports (DFS), and now the digital lottery gaming industry.
There is more to this than simply another revenue stream for the company, as it will allow the company’s other gambling offerings to be solicited to an entirely new customer base of lottery players who may now consider sports betting or DFS to sate their gambling appetite.
“We are very excited to enter the rapidly growing U.S. digital lottery vertical with our acquisition of Jackpocket,” Jason Robins, co-founder, and CEO of DraftKings, 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.”
New Horizons
Peter Sullivan, CEO of Jackpocket, said in the release, “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. 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.”
DraftKings projects an additional $260-$340 million in revenue by 2026, equating to $60-$100 million in adjusted EBITDA. And by 2028, the revenue is expected to rise to $350-$450 million and as high as $150 million in adjusted EBITDA.
Jackpocket Launches iGaming in Garden State
New Jersey has 31 online casino operators after Jackpocket, self-described as the “#1 lottery app in the United States,” launched on January 31st of this year.
CEO Peter Sullivan released a statement at the time of the launch that said, “This launch immediately expands Jackpocket’s entertainment offerings in New Jersey and will do the same for fans in other markets in the future. As the iGaming space continues to grow, we’re excited to provide our engaged lottery user base with an easy and fun way to get involved in games we know they already love.”
A Step in The Right Direvtion
Now that Jackpocket belongs to DraftKings, industry insider Ed Birkin, senior analyst at H2 Gambling Capital, spoke about how the deal will likely affect the mobile operator’s bottom line going forward.
“On the face of it, I think it could be viewed as a positive acquisition, providing diversification, scope for significant market growth and another customer acquisition channel,” Birkin says.
“iLottery has been painfully slow in the US in terms of states legalizing it – and at some point this has to change – which means that lottery couriers will potentially be competing against official state lottery online channels,” he explains.
“This can be done successfully – as Jackpocket has shown in New Jersey – but it’s a significant potential competitor in each market, and that’s a best-case scenario of a state launching their own iLottery.”
