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DraftKings Plans Public Listing Via Reverse Merger

23rd December, 16:07

DraftKings, a fantasy sports and mobile sports betting platform, this morning announced plans to list on the public market through a reverse merger with a publicly traded shell company.

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Boston-based DraftKings also said it is raising $304 million from a group of institutional investors and acquiring SBTech, a provider of sports betting and gaming technologies. Capital Research & Management, Wellington Management and Franklin Templeton are putting up the cash to fund that deal.

The combined company, according to DraftKings, will become the only vertically integrated pure-play sports betting and online gaming company based in the United States. It also will (upon closing of the deal) have a market cap of about $3.3 billion and over $500 million of unrestricted cash on the balance sheet, according to the company.

The publicly traded shell company, Diamond Eagle, will change its name to DraftKings and remain listed on the Nasdaq under a new ticker symbol. DraftKings CEO and co-founder Jason Robins will continue at the helm of the new publicly-traded company.

Founded in 2012, DraftKings had raised nearly $645 million in total venture funding. Eldridge Industries, a firm led by an L.A. Dodgers part-owner, led its $119 million Series E in March 2017.

DraftKings currently offers mobile and online sports betting in Indiana, New Jersey, Pennsylvania and West Virginia, and retail locations in Iowa, Mississippi, New Jersey and New York. Its daily fantasy sports product is available in 43 U.S. states and eight global markets including Australia, Canada and the U.K.

According to Axios, this is a big deal because: "sports betting is now legal in 11 states, with dozens of others considering legislation."

While we haven't covered sports betting in too much depth, back in June we wrote about online betting in eSports. At that time, Rahul Sood, CEO of Mark Cuban-based esports startup Unikrn, told me that esports presents a big opportunity considering that so many people "haven't figured out how to monetize it."

His company recently launched streamer betting with a system that uses AI trading bots, based on computer vision technology and predictive analytics, to come up with live odds.