Jackpocket Acquisition: Key Details, Impact, and What Comes Next

DraftKings' acquisition of Jackpocket for $750 million marks a significant milestone in the digital gaming industry. This strategic move allows DraftKings to enter the U.S. digital lottery market, enhancing its position in Sportsbook and iGaming. The integration of Jackpocket's technology is expected to drive substantial financial growth and improve customer acquisition capabilities, setting new standards in the sector.

What Is Jackpocket?

Founded in 2013, Jackpocket is a lottery app that allows users to order official state lottery tickets online. Its core services include access to popular games like Powerball and Mega Millions, scratch tickets, and lottery pools. Unique features such as viewing a scan of the ticket, receiving email confirmations, and in-app giveaways set it apart. With a high app rating and over $500 million in prizes won by customers, Jackpocket offers a convenient and secure lottery experience.

Who Acquired Jackpocket?

DraftKings operates in the daily fantasy sports and sportsbook industry, providing platforms for users to participate in fantasy sports contests and place bets on various sports events. Key products include daily fantasy sports, where users create teams and compete for prizes, and a sportsbook for betting on a wide range of sports. With a comprehensive range of services and lucrative incentives, DraftKings holds a strong market presence and significant influence in the industry.

When Was Jackpocket Acquired?

DraftKings completed its acquisition of Jackpocket on May 23, 2024. This acquisition comes at a time when the digital lottery and online gaming industries are experiencing significant growth. The timing aligns with DraftKings' strategic focus on diversifying its portfolio and increasing its market share in the U.S. digital lottery vertical. Additionally, the acquisition reflects broader industry trends of consolidation and expansion into new verticals to drive growth and innovation.

Why Was Jackpocket Acquired?

• Market Expansion: The acquisition of Jackpocket allows DraftKings to tap into the expansive U.S. digital lottery market, significantly broadening its market presence beyond sports betting and iGaming. This move enables DraftKings to diversify its offerings and reach a new customer base in 18 U.S. jurisdictions, including major states like New York, Texas, and Ohio.
• Technology Integration: Jackpocket's proprietary and highly-scalable technology will be integrated into DraftKings' platform, enhancing its digital lottery services and overall customer acquisition engine. This integration aims to improve customer acquisition efficiency and innovate the overall product portfolio, leveraging synergies to drive growth.
• Competitive Advantage: The acquisition strengthens DraftKings' position against competitors by enabling it to offer a broader range of gaming products, thereby increasing customer lifetime value and bolstering customer acquisition capabilities. The integration of Jackpocket's technology and brand presence is expected to drive growth and innovation, further differentiating DraftKings in the market.

Acquisition Terms

• Acquisition Price: The total consideration for the acquisition is approximately $750 million.
• Payment Method: Approximately 55% of the consideration ($412.5 million) will be payable in cash, and approximately 45% of the consideration ($337.5 million) will be payable in DraftKings’ Class A common stock.
• Key Conditions or Agreements:
  • The stock consideration will be subject to a collar mechanism to ensure the value of approximately $337.5 million, with specific conditions based on the 30-trading-day volume weighted average price of DraftKings’ Class A common stock.
  • The transaction is subject to customary purchase price adjustments.
  • The merger agreement was approved by the Boards of Directors of both DraftKings and Jackpocket, as well as Jackpocket’s stockholders.
  • The transaction is subject to required regulatory approvals and other customary closing conditions.
  • The transaction is expected to close by the second half of 2024.

Impact on Jackpocket

The acquisition of Jackpocket by DraftKings is set to bring notable changes to its operations and management. DraftKings plans to integrate Jackpocket's digital lottery services into its existing platform, leveraging synergies to drive growth and value creation. This integration will likely involve changes in how DraftKings manages its lottery and gaming services, with a focus on enhancing customer lifetime value and improving customer acquisition capabilities. The leadership teams from both companies have expressed optimism about the potential for innovation and growth, indicating a collaborative approach to the transition.

In terms of product offerings, the acquisition allows DraftKings to enter the U.S. digital lottery market, adding a new dimension to its portfolio. This move is expected to enhance customer lifetime value and improve marketing efficiency. While specific employee reactions have not been detailed, the overall sentiment appears positive, with a focus on leveraging new opportunities. Customers can anticipate a more comprehensive and innovative gaming experience, as DraftKings aims to deliver enhanced value and convenience. For founders considering business transitions, tools like Sunset can assist in managing such processes compliantly, ensuring a smooth and efficient transition.