DraftKings to Enter Lottery Sector with Jackpocket Purchase
![DraftKings to acquire Jackpocket](/assets/images/news/7026/draftkings-to-enter-lottery-sector_980x428.webp)
Leading sports betting company DraftKings has signed an agreement to purchase Jackpocket, a popular lottery app in the United States, for $750 million.
Under the terms of the deal, DraftKings will finance nearly 55 percent of the consideration payable, about $412.5 million, in cash from its balance sheet and pay the remaining 45 percent, $337.5 million, with its Class A common stock.
While the cash payment requires no additional capital raise, the stock will be subject to customary purchase price adjustment and collar mechanism.
Once finalized, the transaction will allow DraftKings to enter and grow within the extensive U.S. lottery sector. Additionally, it will solidify the company's presence in the sportsbook and iGaming market and expand its customer base.
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.
DraftKings Lauds Jackpocket’s Customer Acquisition Costs
Jackpocket stands as the top digital lottery services provider in the U.S., equipped with its own advanced and easily expandable technology. In 2023, Jackpocket generated $78 million in revenue, forecasting a 73% increase to $135 million in 2024.
According to DraftKings, Jackpocket customer acquisition costs were 80% lower than its own. Examining shared customers, the operator found that those engaging with Jackpocket are 53% more valuable over their gaming lifetime compared to those who haven't.
DraftKings concluded that these indicate that that Jackpocket can attract more valuable customers at a lower cost, which shows a great potential for a more cost-effective customer acquisition.
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.
Fourth Quarter Results
DraftKings has also released its earnings for the fourth quarter ending December 2023. The company posted revenue of $1.23 billion, which closely aligns with the consensus estimate of $1.24 billion. However, losses per share amounted to $0.10, slightly behind the estimated $0.08.
The company has also improved its guidance for the upcoming fiscal year. DraftKings now projects 2024 revenue to fall within the range of $4.65 billion to $4.9 billion, an increase from the previous projection of $4.5 billion to $4.8 billion.
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