DraftKings announced that it had reached an agreement to acquire Jackpocket, a leading lottery app in the United States, for a total consideration of approximately $750 million, with about 55% of the consideration payable in cash funded from the company’s balance sheet with no capital raise required and approximately 45% of the consideration payable in the company’s Class A common stock, subject to customary purchase price adjustments.
Jackpocket is a leading provider of digital lottery services in the U.S. with proprietary and highly scalable technology. The proposed deal will enable DraftKings to access and grow into the massive U.S. lottery industry, but more importantly, strengthen its position in Sportsbook and iGaming through higher customer lifetime value based on demonstrated cross-sell capabilities and an enhanced customer acquisition engine.
Assuming no additional OSB and iGaming legalization in the U.S., DraftKings expects the proposed deal to drive $260 million to $340 million of incremental revenue and $60 million to $100 million of incremental Adjusted EBITDA in fiscal year 2026. And on the same basis, assuming no additional OSB and iGaming legalization in the U.S., DraftKings expects the proposed deal to drive $350 million to $450 million of incremental revenue and $100 million to $150 million of incremental Adjusted EBITDA in fiscal year 2028.
Under the terms of the merger agreement entered into on February 11, 2024, Jackpocket stockholders will receive a total consideration of approximately $750 million on a fully diluted basis, consisting of approximately $412.5 million in cash, subject to certain customary purchase price adjustments, and about $337.5 million in the Company’s Class A common stock, subject to the collar mechanism described below.
The merger and the proposed deal were approved by the Boards of Directors of each of DraftKings and Jackpocket, as well as Jackpocket’s stockholders.
Goldman Sachs & Co. served as exclusive financial advisor to DraftKings, and Sullivan & Cromwell LLP served as legal counsel to DraftKings. And the Raine Group served as exclusive financial advisor to Jackpocket, and Cooley LLP served as legal counsel to Jackpocket.
KEY QUOTES:
“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.”
- Jason Robins, Co-founder and CEO of DraftKings
“Together with DraftKings, we will be able to bring tremendous value to our customer base as we advance our mission to create a more convenient, fun, and responsible way to take part in the lottery. DraftKings’ broad footprint and exceptional mobile products present an opportunity to meaningfully expand the digital lottery vertical, and we could not be more excited to come together with DraftKings.”
- Peter Sullivan, CEO of Jackpocket
