DraftKings CEO Talks Online Lottery Potential To Grow Sports Betting

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Newly acquired iLottery app JackPocket will help DraftKings acquire customers at a fraction of the typical cost, CEO Jason Robins said during a webinar Thursday.

JackPocket, which acts as an internet middleman between lotto players and ticket retailers, acquired first-time depositors last year at an 80% more efficient rate than DraftKings, Robins said during the call hosted by Artisan Partners. Lowering customer acquisition costs to reach profitability has been a constant over the past year for DraftKings, which agreed to buy JackPocket for $750 million earlier this month.

“What’s great about JackPocket is they acquire customers incredibly efficiently, like way cheaper than we can get them on (online sports betting) or iGaming,” Robins said during the call.

Finding DraftKings customers without online betting

DraftKings spent $1.2 million on sales and marketing in 2023, a 1.2% jump from 2022, despite four state launches. That is versus 2022, when sales and marketing grew by 21% year-over-year with two state launches.

Robins said JackPocket enables his company to start acquiring customers even before their states legalize online sports betting or online casinos:

“In most of the states, much like daily fantasy sports, it can not only serve as something that acquires us and retains us customers once the state goes online, but also, prior to that, it will help us assemble a database.”

JackPocket is currently live in 18 states, including key markets where online sports betting is still illegal like Texas and Minnesota.

DraftKings plans to bring JackPocket to more states

Robins indicated plans to launch the online lottery in even more states soon.

“It’s very similar to daily fantasy sports because it doesn’t require legislative change in most states. It’s, getting a lottery director to say, ‘let’s go’. It’s a little more complicated than that, but it doesn’t require legislative change in most states.”

That broadens the scope to even bigger markets such as California and Florida, where DraftKings and FanDuel are only present through DFS, which both states are reviewing. Both would be among the costliest online sports betting launches, so acquiring a customer base for 80% of the price could give DraftKings a leg up on the competition.

DraftKings customers who also use JackPocket spent about 50% more with the online betting app than normal users, Robins added.

Future plans for lottery product

At the time of the acquisition, Robins alluded to “a lot we could do with the brand.” He ended Thursday’s conversation with more color on building out the product, a plan in line with how it has grown sports betting:

“If you look at betting products and adding different types of bets and things like that, it’s really the same concept here. Having more products, having more games for people to play, especially ones in large markets like this.

“Lottery is one of the largest participation markets in the world and the oldest form of gaming in the US. It has a huge audience and such a small percentage of those tickets are being bought digitally now. So there’s a ton of room to grow that audience and penetrate into the offline market.”