DraftKings’ Next Move: Going Public
Mon Dec 23 2019
The daily fantasy giant and sports betting market leader merges with SB Tech as part of a monumental deal to list on Nasdaq
The question of what DraftKings might do to bolster their position in the U.S. Sports Betting market was answered Monday morning with the announcement that the company, in a transaction including sports betting platform provider SB Tech, would form a publicly-traded entity on the Nasdaq. Discussions between Draft Kings and SB Tech had been going on for some time, so this news doesn’t exactly come as a massive surprise to many, but we now know exactly how it will all come together.
Public without an IPO
As part of the deal, both DraftKings and SB Tech were acquired by the Diamond Eagle Corporation, a company that was already listed on the Nasdaq. This company will be renamed DraftKings and will now be the only sports betting company to be listed on the exchange.
In announcing the deal, Draft Kings CEO Jason Robins said “The combination of DraftKings’ leading and trusted brand, deep focus on customer experience and data science expertise and SBTech’s highly innovative and proven technology platform creates a vertically-integrated powerhouse,” He continued “I look forward to building significantly upon our goals of continuing our state-by-state rollout and creating the most entertaining and engaging customer experiences for sports fans globally.”
Combining strengths with funding
The U.S. sports betting landscape is highly competitive, and SB Tech and Draft Kings often found themselves battling each other for deals in individual states. The merger of the two firms allows Draft Kings to focus on their customer-facing strengths and using SB Tech’s long-standing successful platform to develop their U.S. sports further betting business.
Diamond Eagle has secured over $300 million in institutional investment in the newly-formed company as a part of this agreement, which will likely put the valuation of the company somewhere north of $3 Billion USD.
“DraftKings is already a premier online fantasy sports and betting platform. With the full integration of SBTech’s technology and innovative product expertise coupled with the right capitalization, DraftKings will be in a great position to continue its ambitious expansion plans in the United States. I have known Jason Robins for four years, and consider him a true entrepreneur. I believe our investors share my utmost respect for his vision and leadership,” said Harry Sloan, Founding Investor of Diamond Eagle in a press release announcing the deal.
More to come?
It is safe to say that flush with cash and a large share of the current U.S. market, this is only the beginning for the newly-formed company. Given their history, we should expect Draft Kings to now be in full acquisition mode as they try to corner market share in other betting verticals. The company already has a robust online casino, and with their continued daily fantasy presence, it is only a matter of time before they add other products like poker and skill gaming into the mix.
There will no doubt be more details to come from this announcement, so check back to this site often for news as it happens.
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