DraftKings is set to stamp its mark on the US digital lottery vertical by acquiring Jackpocket for US$750m, as the operator also reported a Q4 revenue climb of 44 per cent.
DraftKings said it expects the deal will drive between $260m and $340m of incremental value and between $60m and $100m of incremental adjusted EBITDA in the 2026 fiscal year.
Jackpocket, which provides digital lottery services in the US, will enable DraftKings to “access and grow into the massive US lottery industry,” the company said.
“More importantly,” it said the deal will allow it to “strengthen its position in sportsbook and igaming through higher customer lifetime value – based on demonstrated cross-sell capabilities – and an enhanced customer acquisition engine.”
DraftKings will pay approximately 55 per cent - $412.5m – of the cost of the deal in cash funded from its balance sheet, with no capital raise required. The other 45 per cent will be funded through the company’s Class A common stock.
DraftKings said the incremental value and incremental adjusted EBITDA forecasts could rise to between $350m and $450m, and $100m and $150m by fiscal year 2028.
The deal is expected to close by the second half of 2024 having been approved by the boards of directors of both companies.
Jason Robins, co-founder and CEO of DraftKings, said the transaction will create “significant value” by giving customers “another differentiated product to enjoy” but also by improving its “overall marketing efficiency similar to how our daily fantasy sports database created an advantage for DraftKings in OSB and igaming.”
Jackpocket CEO Peter Sullivan added DraftKings’ “broad footprint and exceptional mobile products” present an opportunity to “meaningfully expand the digital lottery vertical.”
The acquisition comes as DraftKings reported a 44 per cent revenue increase in Q4 to $1.23bn, rising $376m compared with the $855m in revenue posted in Q4 2022.
Monthly unique players increased to 3.5 million average monthly unique paying customers in Q4, climbing 37 per cent.
Average revenue per monthly unique player was $116 in Q4, a six per cent increase.
DraftKings subsequently revealed it is raising its fiscal year 2024 revenue guidance to a range of $4.65bn to $4.9bn, up from a maximum of $4.8bn announced in November.
The company is also increasing its adjusted EBITDA guidance and now expects adjusted EBITDA of between $410m and $510m.
