DraftKings pockets Jackpocket, misses on earnings
DraftKings pockets Jackpocket, misses on earningsDraftKings M&A and Q4 earnings, Penn earnings reaction, shares watch – DDI, sector watch – Bitcoin +More
I'd rather jack than Fleetwood Mac. DraftKings confirms Jackpocket buyoutPocket rocket: DraftKings has bought lottery reseller Jackpocket for $750m in cash and shares, as was predicted by Earnings+More on Tuesday. DraftKings said the deal would drive $260m-$340m in incremental revenue and $60m-$100m in adj. EBITDA by 2026.
Payday: The New York-based Jackpocket was founded in 2013 and its last funding round came in Nov. 2021 when it raised $120m in a Series D round led by Left Lane Capital. Also participating were the likes of Kevin Hart, Mark Cuban and previous investors including Greenspring Associates, Raine, Anchor Capital, Gaingels, Conductive Ventures and more.
Add value, stir: DraftKings CEO Jason Robins said the deal would “create significant value” for his company, giving its customers “another differentiated product” while also improving its marketing efficiency, “similar to how our daily fantasy sports database created an advantage” for DraftKings in OSB and iCasino. Analysts cautiously welcomed the news.
Scary monsters: The markets appeared less sure – or were maybe spooked by the albeit well-telegraphed earnings miss (see below) – with the shares dropping over 3% in after-hours trading. A miss – and a raiseMiss you: At the same time as the Jackpocket news, DraftKings released its Q4 earnings showing the predicted hold-related revenue shortfall. Revenues were up 44% YoY to $1.23bn but adj. EBITDA of $151m missed forecasts.
Habit of a lifetime: Despite the Q4 miss, DraftKings once again raised its midpoint estimates for 2024 revenue to $4.78bn (from $4.65bn) while the adj. EBITDA midpoint is now $460m, up from $400m. The upgrades are due to the upcoming launches in North Carolina and Puerto Rico.
Keep the customer satisfied: Ahead of the call later today (see Monday’s Cheat Sheet for reaction), analysts remained upbeat. “Adjusting for Q4 hold from favorable sport outcomes, DraftKings is a business that continues to surprise investors to the upside when it comes to profitability,” said the team at Macquarie.
BettingJobs is the global leading recruitment solution provider for the iGaming, Sports Betting, and Lottery sectors. Backed by a 20-year track record of successfully supporting the iGaming industry, it's no surprise BettingJobs is experiencing rapid growth and outstanding results. Does your company plan to expand its teams to cope with strong demand and growth? Contact BettingJobs today where their dedicated team members will help you find exactly what you are looking for. +MoreOff Keys: Both Underdog Fantasy and PrizePicks have said they will pull out of Florida under pressure from the regulator. See Compliance+More next Tuesday for more. What we’re reading: An already bad week for fantasy gets worse. Dustin Gouker’s The Closing Line. Tie-up: M&A advisory firm Tekkorp Capital has announced a new partnership with recently launched consultancy Circle Squared run by betting and gaming veterans Clyde Harris, Graham Cassell, Mick d’Ancona and Peter Sherman. Global appeal: Entain said betting on the Super Bowl across its UK- and European-facing brands increased 12%. Lottery.com has announced it has bought SportLocker in an all-stock transaction. As part of the acquisition, SportLocker will be rebranded as Sports.com and will immediately launch as a premier platform for sports fans worldwide.. By the numbersMassachesetts: GGR for January came in at $72.7m, up 17% MoM, on handle that was down 1% to $652m. DraftKings maintained its lead both in handle (49%) and GGR (52%), followed in both metrics by FanDuel on, respectively, 30% and 36%.
Penn earnings reactionCrumbs of comfort: The team at Macquarie neatly summarized the scale of ESPN Bet’s losses in Q4, pointing out the negative adj. EBITDA of $334m was “similar” to DraftKings’ largest quarterly loss of $314m but less than Caesars Q122 loss of $554m.
Not buying it: The team at Deutsche Bank were notably pessimistic about the online picture, suggesting that “despite all of the talk” about tech stacks, partnership relationships and UI, “one thing stands out with respect to the leaders in the OSB segment.”
Long and winding road: As such, the Deutsche Bank team added, despite the strong brand partnership Penn enjoys, the $700m-750m of cumulative losses it anticipates before breaking even, and with aspirations to garner greater than 10% market share in the OSB segment, “are not supported by historical experience.”
Tie-ins: On the call, CEO Jay Snowden was keen to stress the extent to which ESPN was bought into the project. Truist noted the Bet Mode, and ‘6-pack odds’ integrations are now active, and allow direct engagement through the ESPN app.
Side show: Not for the first time, discussions around online obscured Penn’s core regionals business, which the team at Jefferies characterized as being “solid.” Truist noted Penn provided guidance on the call for the B&M business, with adj. EBITDA for 2024 expected to come in at $1.91bn-$2.03bn.
🤮 Investors weren’t too keen on Penn’s Q4 earnings The shares weekDouble up: Social casino and now iCasino operator DoubleDown Interactive enjoyed a stellar week on the markets with its shares up nearly 40% as of market close in New York on Thursday.
🥳 At the double: DoubleDown Interactive up nearly 40% on the week Operators, how's your risk management for NFL or March Madness? Utilize the trading screen used by top operators in the US, Europe, and Australia. Optic Odds includes:
Also, our push format API offering real-time betting odds from 150+ sportsbooks: player props, alternate markets, injury data, historical odds, schedules, ranking, scores & more, is available upon request. Get in touch at ryan@opticodds.com. Sector watch – Bitcoin tradingBounce: Slightly delayed, perhaps, but the price of Bitcoin has breached the $50k mark in the past week in the wake of the launch of the Bitcoin ETFs. Recall, in late January the news of the approval from the SEC was deemed as disappointing, despite fund flows totaling $1.2bn.
Further, the banks are now lobbying for changes to the applicable accounting rules that currently make it more expensive for US banks to hold digital assets than their customers. The existing regulatory structure requires the banks to count crypto they custody as liabilities on their corporate balance sheets.
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Venture capital firm Yolo Investments manages in excess of €500m in capital across 100 exciting fintech, gaming and blockchain companies. The Yolo Investments' Gaming fund, regulated by the Guernsey Financial Services Commission, has taken positions in fast-growth suppliers and operators, including Dabble and Enteractive. Yolo Investments (yolo.io) wants to hear from readers of this newsletter. Get in touch with your pitch, or for a chat about innovative products which can plug into our investment ecosystem. An +More Media publication. For sponsorship inquiries email scott@andmore.media. |
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Rumors swirl over $750m Jackpocket bid
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