Sports-Betting Operator DraftKings Set to Go Public
6:50 pm ET April 23, 2020 (Dow Jones) Print
By Katherine Sayre
DraftKings Inc. is set to begin public trading Friday after shareholders of a special-purpose acquisition company voted to approve its takeover of the sports-betting operator.
Shareholders of Diamond Eagle Acquisition Corp., which trades on the Nasdaq, on Thursday approved the merger with DraftKings, the online sports wagering and daily fantasy sports operator. Diamond Eagle, backed by former MGM Holdings Inc. movie studio Chief Executive Harry Sloan, is known as a blank-check company that is formed to find other companies to merge with or acquire.
The new DraftKings will trade on the Nasdaq Global Select Market under the ticker symbol "DKNG." The company's trading debut comes even as the sports-betting industry is upended by most sports being called off in response to t he coronavirus pandemic.
DraftKings, a dominant player in the U.S. sports-betting market, expected the combined company to have a market value of $3.3 billion at closing. The agreement also includes a merger with gambling-technology provider SBTech Global Limited, which provides online betting platforms and odds-making services.
Sports betting has been expanding in the U.S. after the Supreme Court in 2018 cleared the way for states beyond Nevada to legalize sports wagering. So far, 21 states and the District of Columbia have legalized sports betting.
Before the coronavirus pandemic shut down virtually all organized sports, DraftKings estimated that the market for online sports-betting and online casino games could reach about $40 billion in the U.S.
DraftKings co-founder and Chief Executive Jason Robins said with sports being out in the pandemic, the company has worked to create new content to keep users engaged. But the company's strategy has remained focused on going after an industry developing over a period of several years, Mr. Robins said.
The industry is anticipating the National Football League, one of the most popular sports for U.S. betting, to have some form of a 2020 season. If that doesn't happen, sportsbooks could find their longer-term plans disrupted, said Chris Grove, a gambling industry analyst and partner at Eilers & Krejcik Gaming.
The DraftKings deal is "built for a long-term opportunity and that makes it easier to stomach the disruptions generated by Covid-19, at least so far," Mr. Grove said.
Investors, including funds managed by Capital Research & Management Co., Wellington Management Co. and Franklin Templeton agreed to invest $304 million in the combined company's stock.
The new company will be led by Mr. Robins and is retaining DraftKings' management team, including co-founders Paul Liberman and Matt Kalish.
Write to Katherine Sayre at katherine.sayre@wsj.com
(END) Dow Jones Newswires
April 23, 2020 18:50 ET (22:50 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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