DraftKings CEO Lauds $750M Jackpocket Acquisition as 'Gift That Keeps on Giving'

DraftKings CEO Jason Robins has hailed the potential of the company’s $750m acquisition of lottery brand Jackpocket as being the “gift that keeps on giving.”

The multimillion-dollar cash-plus-shares deal was announced on Thursday, the same day DraftKings put out its Q4 and full year 2023 financial results.

The Boston-based sports-betting giant reported Q4 revenue of $1.2 billion, up 44% year-on-year from $855 million in 2022. 

Speaking to investors and analysts on DraftKings’ Q4 2023 results call, Robins was pressed on the rationale behind the costly Jackpocket acquisition. He asserted that there was a significant overlap between the customer bases of the two firms, and an extensively wider base of lottery players in the US.

“One of the great things about this is unlike [online sportsbook] and iGaming, you don't need legislative action in most states to get lottery, courier lottery, or digital courier lottery to launch,” Robins said. “You need to get usually some kind of approval through the lottery director and the executive branch, but you don't need legislative action, which makes it a much lower hurdle to get up and running in new states.”

Lottery in Your Pocket

As the first licensed third-party lottery app in the United States, Jackpocket aims to provide an easy, secure way to order official state lottery tickets. 

“This [Jackpocket] is something, of course, that every state lottery we think would want. It'll grow the lottery market and bring new customers in,” Robins said. “It's a great opportunity to get a product potentially in the vast majority of US states.”

Jackpocket is currently available for lottery players in Arizona, Arkansas, Colorado, Idaho, Massachusetts, Minnesota, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New York, Ohio, Oregon, Puerto Rico, Texas, Washington DC, and West Virginia.

“As time goes on, if you like us believe that more and more states will continue to launch OSB and iGaming then it'll be the gift that keeps on giving,” he added.

DraftKings has said it expects the Jackpocket deal to increase its revenue between $260 – $340 million, with adjusted EBITDA benefits of between $60 – $100 million by 2026.

Evolving Product, Established Reach

The DraftKings CEO confirmed that despite questions about branding and product still having to be resolved, the Jackpocket app would remain its own brand and app for the time being, as a way of maintaining the existing “strong audience” that the firm had built up.

However, Robins suggested that DraftKings would explore opportunities to integrate the two ecosystems by following an approach like one pursued after the acquisition of Golden Nugget Online Gaming (GNOG), that of having all products available across all subsidiary brands.

“The real question is, what can Jackpocket contribute to the overall lottery ecosystem, and regardless of how it evolves, their products and customers are going to have a role to play,” Robins explained.

“This is something that a lot of lotteries will want, there may be some around the country for whatever reason that don’t, but it increases the lottery market and increases sales, so it should be a no-brainer for the vast majority of state lotteries,” he added. “They have an incredible customer base and brand.” 

There are currently state lotteries in 45 US states as well as the District of Columbia, Puerto Rico, and the US Virgin Islands, with all subject to laws and operated independently by each jurisdiction.

Unlike the UK, France, and many other European countries, there is no national lottery organization.

According to latest data from the North American Association of State and Provincial Lotteries (NASPL), 2022’s 10 biggest lottery spenders at a state level were New York at $10.4 billion, followed by Florida at $9.3 billion and California, which spent $8.9 billion.

“This could be a real tailwind for them depending on how it evolves,” Robins said. “Whether it continues to be the current model or whether it changes, I think that Jackpocket is extremely well positioned and is a very unique asset.”