Feb 16, 2024 - Economy

DraftKings makes bet of its own

Someone holds a smartphone in their left hand with the screen showing the DraftKings app to download

Photo: Tiffany Hagler-Geard/Bloomberg via Getty Images

DraftKings yesterday plunked down a $750 million bet that a lottery app will help it win the fierce battle for customers in its own core business, Axios' Pete Gannon writes.

Catch up fast: The sports-betting giant said yesterday it would buy Jackpocket, a company that allows users to buy state lottery tickets from their phones.

In one sense the rationale is simple — DraftKings can branch into the massive U.S. lottery industry.

  • But "more importantly" (its words), the deal is about acquiring customers cheaply, who will drive increased value on DraftKings' sportsbook and iGaming business.

What they're saying: "It's a very efficient way to acquire customers in mass," DraftKings CEO Jason Robins said on a conference call about the deal. "And we know from overlap analysis that those customers will cross-sell very effectively" to higher spend on DraftKings' core businesses.

Zoom in: Customer lifetime value is an important metric in the online gaming industry, as is the cost of winning new customers.

  • By increasing the first metric and lowering the second, DraftKings believes it's made a very good bet.

This story was an excerpt from Axios Closer, a recap on the day's biggest business stories.

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