Sports Betting Firm DraftKings Acquired, Looks to Go Public Next Year

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Published: December 23, 2019 8:00 am

Last Updated: December 23, 2019 8:01 am

Diamond Eagle Acquisition Corp. (NASDAQ: DEAC), a special-purpose acquisition group, has entered a definitive business combination with DraftKings, operators of fantasy sports and mobile sports betting platforms, and technology provider SBTech. Under the terms of the deal, institutional investors have committed to a $304 million private investment in Class A common stock of the combined company when the deal closes in the first half of next year. The combined company is expected to have a market cap at closing of about $3.3 billion, with more than $500 million in unrestricted cash on hand.

The combined company will be the only vertically integrated, pure-play sports betting and online gambling company in the United States. Diamond Eagle plans to change its name to DraftKings, reincorporate in Nevada and remain listed on Nasdaq under a still-to-be-determined ticker symbol.

Sports betting is currently legal in 16 states and the District of Columbia, and DraftKings operates in six. Not all these states have legalized online and mobile sports betting. In those states, a physical location is required. DraftKings has locations in Iowa, Mississippi, New York and New Jersey. Online and mobile sports betting is available in Indiana, New Jersey, Pennsylvania and West Virginia. The remaining states have yet to finalize how the legal sports betting will operate.

Included in the combination is SBTech, a turnkey technology provider with omnichannel sports betting solutions, trading services and marketing and bonus tools, with more than 50 partners in more than 20 countries.

Harry E. Sloan, a founding investor with Diamond Eagle, said:

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.

The combined company will be lead by DraftKings co-founder and CEO Jason Robins, and the management team will include co-founders Paul Liberman and Matt Kalish. The SBTech management team also will be integrated into the new company.

Robins commented:

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. 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.

Diamond Eagle closed down 0.1% on Friday at $10.17, close to its post-IPO high of $10.31 posted Thursday. The company’s market cap is $508 million, and it came public in July. The post-IPO low is $9.76.

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