DraftKings is set to allocate approximately 55% of the acquisition cost in cash from its financial reserves, without necessitating a capital raise.
This development coincides with DraftKings’ disclosure in its Q4 results, citing current cash holdings of $1.27bn.
Additionally, it revised its revenue forecast for fiscal year 2024 to a potential range of up to $4.9bn following a robust conclusion to 2023.
DraftKings’ acquisition target, Jackpocket, is a leading platform facilitating the purchase of official lottery tickets across multiple states.
Presently operational in 18 US jurisdictions, including New York, Texas, and Ohio, Jackpocket boasts significant user traction, with its app outpacing competitors ninefold in downloads within the digital lottery app segment during fiscal year 2023.
Jason Robins, DraftKings’ co-founder and CEO, expressed enthusiasm regarding the acquisition, stating, “We are very excited to enter the rapidly growing US digital lottery vertical with our acquisition of Jackpocket.”
He highlighted the anticipated benefits, including enhancing customer experience and bolstering marketing efficiency, drawing parallels with the advantages derived from DraftKings’ daily fantasy sports database.
The proposed transaction is expected to yield substantial revenue and adjusted EBITDA increments for DraftKings over the coming years.
By fiscal year 2026, DraftKings projects a potential revenue boost of $260m-$340m and incremental adjusted EBITDA of $60m-$100m.
Further, by fiscal year 2028, the acquisition could drive additional revenue of $350m-$450m and adjusted EBITDA of $100m-$150m.
Jackpocket, established in 2013, is lauded by DraftKings for its scalable technology, strong brand, and proficient management.
Peter Sullivan, Jackpocket’s CEO, expressed optimism about the collaboration, emphasising their joint commitment to enhancing lottery participation in a convenient and responsible manner.
DraftKings’ recent endeavours include the announcement of a multi-year sports betting partnership with Barstool Sports and a previous bid to acquire PointsBet, which ultimately fell through in favour of Fanatics.
Under the Barstool agreement, DraftKings assumes the role of Barstool’s official sports betting partner.