DraftKings is expanding its portfolio of services in a pretty significant manner with its recent acquisitions of the lottery app, Jackpot. The blockbuster purchase cost the sportsbook and daily fantasy sports operator $750 million, while putting it in the driver’s seat of the US online lottery market.
Jackpot is a downloadable app that allows players to purchase lottery tickets from various US markets. The app is currently operating in 18 US States, including California, Ohio, and Texas. Since roughly a quarter of the US population lives in those three states alone, DraftKings has a very solid, built-in customer base. Though common in many other parts of the world, the US lottery app market is not particularly mature, and offers DraftKings plenty of room for growth.
Under the terms of the deal, DraftKings is paying out 55 percent of the purchase price, roughly $412 million, in cash up front to Jackpot. The remaining 45 percent is being paid out in DraftKings common stock. Coming up with that kind of cash wasn’t a problem for DraftKings, which was sitting on cash reserves of around $1.27 billion.
Speaking through a press release, DraftKings Co-founder and CEO, Jason Robins hyped the deal saying, “We are very excited to enter the rapidly growing U.S. digital lottery vertical with our acquisition of Jackpocket. 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 sees big things for the US lottery and is expecting to see incremental, annual revenue of $350-$450 million from the deal by 2028.