The Role of Jackpocket’s Acquisition by DraftKings

The acquisition of Jackpocket by DraftKings represents a strategic expansion into the U.S. lottery vertical, a market with substantial growth potential. This move aligns with DraftKings’ broader objectives of diversifying its offerings, enhancing customer engagement, and solidifying its position as a leader in the sportsbook and iGaming sectors. The acquisition carries significant implications for both companies and the larger real-money gaming industry.

1. Strategic Expansion into the Lottery Vertical

• The acquisition allows DraftKings to access the U.S. lottery market, a traditionally underexplored segment of gaming that offers new revenue streams and customer demographics.
• Jackpocket’s digital-first approach to lottery services, combined with its robust technology, complements DraftKings’ expertise in sportsbooks and iGaming.

2. Enhancing Customer Lifetime Value

• By integrating Jackpocket’s services, DraftKings can create a more comprehensive ecosystem of gaming products. This cross-offering increases customer engagement across multiple platforms, extending customer lifetime value.
• The integration also allows for tailored promotions and retention strategies, leveraging customer data across platforms to deliver personalized experiences.

3. Bolstering Customer Acquisition

• Jackpocket’s established presence and brand recognition in the digital lottery space provide DraftKings with an expanded customer base.
• The acquisition leverages Jackpocket’s technology and platform to attract lottery players who can be converted into users of DraftKings’ other offerings, such as sports betting or iGaming.

4. Leveraging Synergies for Growth

• DraftKings aims to integrate Jackpocket into its operations, utilizing synergies to optimize costs, streamline operations, and enhance product innovation.
• The acquisition positions DraftKings to explore additional partnerships with state lotteries, tapping into a market that contributes significant revenue to local beneficiaries.

5. Innovation and Market Leadership

• Jackpocket’s innovative approach to digital lottery platforms complements DraftKings’ emphasis on cutting-edge mobile technologies, enhancing their collective ability to deliver innovative products.
• By entering the lottery market, DraftKings strengthens its competitive edge against other real-money gaming providers, broadening its market influence.

6. Commitment to Responsible Gaming

• The acquisition aligns with DraftKings’ mission to provide safe and engaging gaming experiences. By leveraging Jackpocket’s customer-friendly design and operational expertise, DraftKings can promote responsible gaming practices across a wider audience.

7. Broader Industry Implications

• This acquisition underscores the increasing convergence of different real-money gaming verticals, with operators like DraftKings seeking to diversify their revenue streams.
• It highlights the importance of technology and innovation in the gaming industry, particularly as digital platforms become central to customer acquisition and engagement.

The acquisition of Jackpocket is a pivotal move for DraftKings, enabling the company to enter a new vertical while reinforcing its existing offerings. By leveraging Jackpocket’s strengths, DraftKings is poised to drive sustained growth, expand its customer base, and deliver greater value to stakeholders. This strategic integration underscores DraftKings’ vision of becoming a comprehensive leader in the real-money gaming landscape, fueled by innovation and customer-centric strategies.

Benefits for DraftKings from the Acquisition of Jackpocket

DraftKings’ acquisition of Jackpocket, highlighted in its Q2 2024 report published on August 2, 2024, underscores significant strategic and financial advantages. The integration of Jackpocket into DraftKings’ operations has contributed to robust growth in customer acquisition, retention, and engagement while enhancing the company’s financial performance.

1. Expansion of Monthly Unique Payers (MUPs)

• The acquisition of Jackpocket contributed to a 50% year-over-year increase in Monthly Unique Payers (MUPs) during Q2 2024, reaching 3.1 million average monthly unique paying customers.
• Excluding the impact of Jackpocket, MUPs still showcased impressive growth, increasing by 34% year-over-year. This indicates that the acquisition amplified an already strong customer growth trajectory.

2. Enhanced Customer Retention and Acquisition

• Jackpocket’s established presence in the U.S. lottery vertical has provided DraftKings access to a broader customer base, complementing its Sportsbook and iGaming products.
• The integration of Jackpocket strengthens DraftKings’ ability to retain existing customers while attracting new ones, leveraging the combined product offerings to increase lifetime customer value.

3. Access to New Jurisdictions

• The acquisition supports DraftKings’ expansion into new markets, aligning with the broader rollout of its Sportsbook product across jurisdictions.
• Jackpocket’s digital lottery expertise enables DraftKings to penetrate previously untapped markets, further diversifying its revenue streams.

4. Financial Synergies and Value Creation

• A discrete income tax benefit of $75.8 million was recorded in Q2 2024 as part of the acquisition’s purchase accounting, driven by partial releases of DraftKings’ U.S. valuation allowance.
• The synergy between DraftKings and Jackpocket is expected to yield cost efficiencies and operational optimizations, reducing transaction-related and integration costs over time.

5. Increased Engagement and Product Innovation

• Jackpocket’s digital-first lottery solutions complement DraftKings’ innovative approach to gaming, enhancing engagement across its platform.
• The integration allows DraftKings to broaden its portfolio, offering customers a more diverse range of real-money gaming experiences.

About Jackpocket

Overview of Jackpocket:
Jackpocket is a mobile app that simplifies playing the lottery by allowing users to participate directly from their smartphones. Operating across multiple U.S. states, the app offers convenience and accessibility to lottery enthusiasts by eliminating the need to visit physical retailers.

Key Features of Jackpocket:

1. Wide Availability: Accessible in 18 states, including New York, Texas, and Colorado.
2. Diverse Game Selection: Supports popular national lotteries like Mega Millions and Powerball, as well as state-specific games.
3. User-Friendly Functionality: Enables ticket purchases, result checking, and winnings collection directly through the app.
4. Enhanced Accessibility: Expands the reach of lottery games to a broader audience through its digital platform.

Jackpocket delivers a seamless lottery experience, catering to both casual and avid players with its innovative, user-centric features.

Awards and Recognition