DraftKings continues to grow, but perhaps not as fast as Wall Street would like.
The sports gambling company posted quarterly results Thursday that missed multiple estimates but still increased its revenue by 44% year over year. Later in the day, the company announced it was expanding into lottery games by buying Jackpocket, a lottery app in a cash and stock deal for $750 million.
“We are very excited to enter the rapidly growing U.S. digital lottery vertical with our acquisition of Jackpocket,” said Jason Robins, DraftKings CEO and cofounder.
“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 [online sportsbooks] and iGaming.”
DraftKings said it expects the Jackpocket deal to drive incremental revenue of roughly $260 million to $340 million in the 2026 fiscal year, and $350 million to $450 million by ’28.
The company continues to trend toward profitability after years of losses. In the fourth quarter of 2023, DraftKings reported a net loss of $44.6 million, down from $242.7 million in the same period of ’22. Losses per share improved from 53 cents in ’22 to 10 cents in ’23. While the Jackpocket purchase may not close in ’24, the company doesn’t see the acquisition impacting its plans or trajectory as it continues to build out.
“I think what you will see though is we’re going to stay very squarely on strategy,” Robins said on Friday’s earnings call. “We talked about how priority A is winning in the U.S., and I think Jackpocket is absolutely in line with that. Lottery is the oldest form of gaming in the U.S. It’s been around forever. The audience is massive.”
Excluding the Jackpocket deal, DraftKings increased its fiscal guidance for 2024 between $410 million and $510 million, compared to $350 million and $450 million in ’23.
