The Friday Line: DraftKings Buys Jackpocket, Penn Earnings With ESPN Bet
Here’s today’s quick rundown in the world of US gambling.
DraftKings + Jackpocket
DraftKings posted its earnings (and missed forecast) on Thursday, but that news was overshadowed by its purchase of digital lottery app Jackpocket for $750 million. I’ll echo the DKNG 0.00%↑ line that the acquisition makes sense on multiple fronts. 1. It provides DK with a new vertical that can drive meaningful revenue. 2. It comes with a valuable database to which DraftKings can cross-sell for casino, sportsbook, and DFS. If nothing else, this move demonstrates that DraftKings isn’t content resting on its laurels and will continue to invest when it sees an opportunity.
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Penn earnings go over like a lead balloon
Penn Entertainment released its Q4 earnings, and many were eager to hear the early returns on ESPN Bet, which launched in November. The results were not well received, leading to PENN 0.00%↑ trading at a near 52-week low of under $19 today. Revenue and adjusted EBITDA for the interactive division missed guidance, with the latter coming in at $334 million in losses, well off a predicted $100-$150 million loss. Most of that loss was tied up in rebranding Barstool Sportsbook as ESPN Bet. If you want to look at the quarter optimistically, Penn reported more than a million first-time depositors in the timeframe. The early results from January don’t paint a picture of growth beyond initial adoption, with promotional spending tailing off and share treading water or falling. If/when ESPN better integrates the sportsbook into its content and if/when the ESPN Bet product improves will be key milestones for potential growth moving forward.
ICYMI
I wrote yesterday about the very bad week for fantasy vs. the house apps, including the latest news that some operators would be pulling out of Florida.
The Alabama House passed a gambling expansion that would include sports betting. It heads to the Senate.
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