The announcement that DraftKings is going public is great news for both the company and the online gambling industry.
The deal will see DraftKings merge with SBTech, a B2B technology and trading services provider for gaming companies, and Diamond Eagle Acquisition, a special purpose acquisition company.
The company will trade on the Nasdaq Stock Market with an estimated market cap of $3.3 billion. Read on as we take a look at the latest state of play with DraftKings.
DraftKings enjoying phenomenal rise
DraftKings started life in the daily fantasy sports sector, but this new deal will see their betting platform become the only vertically integrated US-based online gambling and sports wagering company.
The decision by the Supreme Court back in 2018 to legalize sports betting has opened the door for the companies like DraftKings to cash in and it is an opportunity they are grabbing with both hands.
The company has already enjoyed considerable success in New Jersey and other states, and has bold plans to develop its offering on a much wider scale.
The newly-structured company will be led by Jason Robins, the co-founder and Chief Executive Officer of DraftKings. Co-founders Paul Liberman and Matt Kalish will remain on board, while SBTech’s management team will be integrated into the business.
“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,” Robins said.
“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.”
Investors grabbing the DraftKings opportunity
The new deal is expected to give DraftKings much greater financial muscle, with investors already queuing up to grab a piece of the action.
Capital Research and Management, Franklin Templeton and Wellington Management have already committed more than $300 million to the new set-up and further investment could see that figure doubled over the coming months.
With betting experts predicting that the industry could eventually be worth over $40 billion in the US, its appeal to potential investors is easy to see.
Harry E. Sloan, Founding Investor of Diamond Eagle, believes the deal will help to establish DraftKings as the leading name in the sports betting industry in the US.
“DraftKings is already a premier online fantasy sports and betting platform,” he said. “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.”
Deal gives DraftKings the power to expand
In addition to its presence in New Jersey, DraftKings is also rapidly growing its operations in both West Virginia and Indiana.
The company also recently announced an exciting deal to provide sports betting services in New Hampshire which is set to launch in early 2020.
The agreement will see DraftKings pay 51% of its revenue from mobile sports betting and 40% of its retail revenues to the New Hampshire Lottery.
The deal gives them a monopoly on sports betting in New Hampshire, giving them unchallenged access to more than 1.35m customers.
Although some experts believe that the lack of choice will prove detrimental to customers, the success of the monopolized lottery in the state suggests this may not be the case.
With significant new investment behind them and expansion in the sports betting industry already underway, these are clearly exciting times for DraftKings.