DraftKings Inc., a leading player in the digital sports entertainment and gaming industry, announced a groundbreaking move to acquire Jackpocket, the foremost lottery app in the United States, for an approximate total of $750 million. This strategic acquisition is set to be financed through a mix of cash—about 55% from DraftKings’ own reserves—and the issuance of approximately 45% in DraftKings’ Class A common stock, adhering to standard purchase price adjustments and specified mechanisms.
Jackpocket, renowned for its leading position in the U.S. digital lottery sector, boasts proprietary technology, a strong brand presence, and a robust management team. This acquisition by DraftKings is aimed not only at penetrating the lucrative U.S. lottery market but also at augmenting its existing sportsbook and iGaming offerings. This move is expected to increase customer lifetime value, thanks to Jackpocket’s proven ability to cross-sell, and to improve DraftKings’ customer acquisition efficiency.
Jason Robins, Co-founder and CEO of DraftKings, expressed enthusiasm about entering the digital lottery space through this acquisition, highlighting the potential for creating significant value for DraftKings’ customers and improving marketing efficiency. Similarly, Peter Sullivan, CEO of Jackpocket, noted the merger’s capacity to bring immense value to their customers and to further the mission of providing a convenient, enjoyable, and responsible lottery experience.
Financial forecasts post-acquisition are optimistic, with DraftKings projecting an incremental revenue of $260 million to $340 million and an Adjusted EBITDA increase of $60 million to $100 million by fiscal year 2026. By 2028, these figures are expected to rise, with revenue forecasts ranging from $350 million to $450 million and Adjusted EBITDA estimates between $100 million to $150 million, assuming no additional legalizations in online sports betting and iGaming within the U.S.
The terms of the merger, formalized on February 11, 2024, entail Jackpocket shareholders receiving a blend of cash and stock totaling approximately $750 million. The stock portion is subject to a variable mechanism ensuring the delivery of approximately $337.5 million in value, depending on the trading price of DraftKings’ stock at the time of transaction closure.
Both companies have expressed a shared commitment to promoting safe and responsible gaming. As members of the National Council on Problem Gambling, they offer various tools and resources to support responsible gaming behaviors. DraftKings believes this merger will not only expand its footprint in the lottery segment but will also enhance its commitment to responsible play, thereby generating additional revenue for state-funded programs.
The merger, which has received approval from the boards of directors of both companies and Jackpocket’s shareholders, awaits regulatory approval and fulfillment of customary closing conditions, with an anticipated completion in the second half of 2024. This acquisition marks a significant milestone for DraftKings, positioning it to capitalize on the expanding U.S. lottery market while reinforcing its offerings in sportsbook and iGaming sectors.
