One of the big questions around the last few years’ massive increase in legalized sports betting in the U.S. is how that would tie into other forms of gaming and gambling. Those include everything from paid-entry fantasy and daily fantasy contests through horse racing through casino games and lotteries. And Thursday saw some massive news on that latter front, with DraftKings purchasing lottery app Jackpocket for $750 million:
Well, here's a new one: DraftKings is buying "the leading lottery app" in the U.S., Jackpocket, in a deal worth around $750 million:https://t.co/p260YPMvrZ pic.twitter.com/SF9FFVHh5c
— Geoff Zochodne (@GeoffZochodne) February 15, 2024
What exactly is Jackpocket? That release describes it as follows: “Jackpocket is on a mission to create a more convenient, fun, and responsible way to participate in the lottery. The first licensed third-party lottery app in the United States, Jackpocket provides an easy, secure way to order official state lottery tickets. Jackpocket is currently available in Arizona, Arkansas, Colorado, Idaho, Massachusetts, Minnesota, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New York, Ohio, Oregon, Puerto Rico, Texas, Washington D.C., and West Virginia.”
How Jackpocket works is a little unusual. Rather than specifically selling tickets for these lotteries (which are run by the states), their app has players upload funds to “buy” tickets, which are then actually bought by couriers and kept by Jackpocket. They upload physical scans of the tickets, inform winners within an hour of lotteries publishing the results, put winning balances under a state-mandated limit back in players’ accounts, and deliver winning tickets above that threshold (often around $600) to players so they can claim their prizes themselves. Jodi Reed of Providence, RI’s NBC 10 News wrote about the service last summer around its launch in Massachusetts:
“I always grew up embarrassed due to the fact that my dad had to get his daily numbers in and when I say that he finally got an iPhone and was starting to use it I thought, ‘why can’t he play his favorite games?'” said Peter Sullivan, the founder and CEO of Jackpocket.
Sullivan figured out a way to get around state rules.
His Jackpocket app allows you to load it with cash, taking a small % of whatever amount you deposit and his people do the rest.
“You can think of us like Uber Eats, essentially we’re the middleman operating on behalf of the consumer and we’re going and getting a ticket once that ticket has been ordered through the app,” Sullivan said.
Someone for Jackpocket actually goes to a convenience store, buys a ticket with your chosen numbers, sends you the photographic proof and the serial number, then holds the ticket in a fireproof safe in case you are picked a winner.
It makes sense that that’s a popular idea, especially in an era where people often have limited personal time and where delivery services like Uber Eats and GrubHub have taken off. There are some specific concerns there with lottery tickets, but Jackpocket has tried to address them on their website. One example:
How do I know that Jackpocket won’t just steal my ticket if I win?
A lot of people are skeptical when they first hear about Jackpocket’s service and we don’t blame them. But you can be assured that the lottery ticket you order is yours.
The Jackpocket app allows users to order lottery tickets that are then fulfilled on their behalf at a licensed lottery retailer.
When you place an order, we send you an email confirmation that includes all the details of your order. Then you receive another email once we’ve secured the ticket for you and you can even see a picture of your ticket within the app, which includes the serial number. The email receipts and ticket image are proof that you are the one who ordered the ticket. We are legally required to provide you with your winnings — we credit your account if the ticket wins a small prize, and we give you the ticket if it wins a large prize so you can claim it from the state lottery.
And the app’s clearly worked out, at least to a point where DraftKings is spending $750 million to acquire this service. And that may lead to further overlap between the sports betting, fantasy, and casino services DraftKings offers and conventional lottery tickets. And that may see more promotion of conventional lotteries on DraftKings’ media arms, both direct and sponsored. Here are some quotes from the release:
“We are very excited to enter the rapidly growing U.S. digital lottery vertical with our acquisition of Jackpocket,” said Jason Robins, Co-founder and CEO of DraftKings. “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.”
“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,” said Peter Sullivan, CEO of Jackpocket. “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.”
Interestingly enough, Canada has long seen more crossover between lotteries and sports betting, with provincial lotteries the only outlets allowed to provide most sports betting for a long time. Private operators are now permitted in Ontario, but the rest of the country has been slower there. And Quebec indicated this week they want to stick with their provincial lottery operator only. So it’s notable to see some U.S. lottery-sports betting crossover, even if it’s only through a third-party provider like Jackpocket rather than the official state legislatures.
