DraftKings’ Robins Celebrates ‘Cross-Sell’ Success Of Jackpocket Deal

Lottery is certainly not the central focus of online gaming giant DraftKings’ business model. But it is important enough that CEO Jason Robins addressed its role in the company’s big-picture plans during DraftKings’ quarterly earnings call on Friday.

Last May, DraftKings completed a $750 million deal to acquire Jackpocket, the most recognizable name among mobile lottery courier companies.

“The completion of the acquisition represents an exciting new chapter for Jackpocket and DraftKings alike,” then-Jackpocket CEO Peter Sullivan (now senior vice president of lottery at DraftKings) said at the time.

According to Robins, that “exciting new chapter” has indeed been productive in its first year or so (the DK-Jackpocket deal was first announced last February but took another three months to become official).

“Jackpocket has been great in terms of both cross-sell and, also, we have had really strong customer acquisition during its last $1 billion jackpot run,” Robins said Friday, referencing the Mega Millions jackpot that reached $1.22 billion before a California player won it two days after Christmas. “I do think that there’s room to invest more [in Jackpocket].”

‘More effective’ in iGaming states

DraftKings operates regulated online casino in five states and mobile and/or retail sports betting in 25 states plus Washington, D.C.

Robins drew a distinction between those jurisdictions and others without those products in terms of the value of the Jackpocket offering.

“For us,” he said, “it’s probably more effective in states where there’s legal sports betting and iGaming, because the [lifetime values] in the immediate term are going to be higher because we can cross-sell right away.

“If there are states that we think we can efficiently build a customer base, similar to what we’re doing in DFS (daily fantasy sports), I think that’s also a great opportunity. We want to make sure we’re prepared to add a lot of really efficient customers to that app.”

DraftKings projected at the time of the acquisition that Jackpocket would generate as much as $340 million in annual revenue.

On Friday’s earnings call, Robins and his fellow executives shared that the company overall did not reach its 2024 EBITDA guidance of $240-$280 million — which was a range that had already been lowered from DraftKings’ expectations heading into the year. The guidance was lowered due to “customer-friendly” sports betting results in Q3, and as it turned out, sports bettors did better than expected against DK in Q4 as well.

Lottery is a sector with far less volatility than sports betting, making projections for Jackpocket’s value to the company easier to predict from quarter to quarter.