Jackpocket Texas Could Be Modest Hit to DraftKings Revenue

• Texas controversies lead to the banning of lottery couriers
• DraftKings’ Jackpocket is one of the largest names in the space

Following a pair of controversies involving lottery couriers in Texas, the state banned that form of purchasing lottery scratchers and tickets. The move could result in a modest pinch to DraftKings’ (NASDAQ: DKNG) 2025 revenue.

DraftKings owns Jackpocket, which is one of the biggest names in the lottery courier space. The industry, which is still in its early innings, drew repudiation in Texas after a covert European consortium used a courier to buy 25.8 million tickets for a draw on April 22, 2023, that resulted in the group winning a $95 million jackpot and other prizes. The imbroglio was rehashed earlier this month when a bettor won an $83.5 million prize in Texas after purchasing a ticket on Jackpocket.

In a recent report, Eilers & Krejcik Gaming (EKG) estimated Texas would represent $57 million, or 25%, of US lottery courier revenue this year, trailing only New York.

We estimate DraftKings-owned Jackpocket had 60-70% revenue share of the Texas market, which puts the revenue impact at or around $34 million-$39 million. That represents <1% of DraftKings’ projected CY25 net revenue of $6.45 billion,” according to the research firm.

Jackpocket is operational in 17 states, Puerto Rico, and Washington, DC. The operator’s website doesn’t include Texas as part of that group.

Texas Could Be One-Off

One of the big issues pertaining to couriers such as Jackpocket is that in many states, they’re essentially operating in a gray area because those states haven’t explicitly permitted or banned lottery courier services.

Though it hadn’t outright banned couriers, Texas had a reputation for not being hospitable to the industry. However, the aforementioned controversies could serve the aim of prompting the industry to take steps to ensure collusive practices are eradicated.

“Given the furor in Texas, we suspect future syndicate coups will be prevented, and without this kind of explosive story, we suspect many states will be content to maintain the status quo or negotiate regulation, rather than pushing for outright bans,” adds EKG.

How DraftKings Came to Own Jackpocket

DraftKings is a year removed from announcing its $750 million acquisition of Jackpocket. Fifty-five percent of that purchase price was paid in cash with the remainder funded by the buyer’s equity. The deal was finalized last May.

The purchase, which has been accretive for the buyer, was viewed as an opportunity for DraftKings to cross-sell lottery bettors on iGaming and sports wagering.

However, it wasn’t free of controversy, albeit modest, because DraftKings co-founder and CEO Jason Robins was an investor in Jackpocket.