DraftKings Merges with SBTech; Combined Company Goes Public on Nasdaq
In a merger valued at $3.3 billion, sportsbook operator DraftKings and sports betting technology provider SBTech have agreed to be sold together as a combined company.
The Boston-based DraftKings and the Malta-based SBTech will be acquired by Diamond Eagle Acquisition Corp., a Los Angeles-based special purpose acquisition company (SPAC). A group of Diamond Eagle’s institutional investors have committed $304 million in funding for the newly combined sports betting industry titan.
Once the deal is closed, Diamond Eagle – which was founded earlier this year and is listed publicly on the Nasdaq Stock Market – will change its name to DraftKings and reincorporate in Nevada with an as yet unknown new ticker symbol.
DraftKings Continues to Capitalize on US Sports Betting Regulation
In a jointly issued press release, DraftKings co-founder and chief executive officer Jason Robins ushered in his company’s latest expansion coup: “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.”
Originally conceived as a daily fantasy sports (DFS) provider online, DraftKings began an ambitious pivot to sportsbook operator in August of 2018 by becoming the first online / mobile bookmaker to launch in New Jersey. Since then, DraftKings has added online / mobile sportsbooks in Indiana, New Jersey, Pennsylvania, and West Virginia, along with brick and mortar venues in Iowa, Mississippi, New Jersey, and New York.
Last month, the National Basketball Association (NBA) named DraftKings as the league’s latest official sports betting partner.
Back in June, reports emerged linking DraftKings to a potential acquisition of SBTech, with the former eyeing the latter’s proprietary backend sportsbook and iGaming platforms as prized assets.
In addition to the company’s presence in 50 regulated national markets worldwide, SBTech currently services sportsbooks and/or online / mobile casinos in Arkansas, Indiana, Mississippi, New Jersey, Oregon, and Pennsylvania.
In the company’s statement, SBTech chairman Gavin Isaacs praised DraftKings as the perfect partner to form a potential kingpin in America’s rapidly emerging regulated sports betting industry:
“The combination of DraftKings and SBTech brings together two tech-native companies with the customer at their cores.
SBTech will maintain its core business and continue its B2B focus.
We are excited about the opportunity to join a company with a similar innovation DNA and create a unique and differentiated player in global sports betting and online gaming.”
New Company Opts for SPAC Over IPO to Go Public
Diamond Eagle was founded earlier this year as the fifth SPAC created by former Hollywood executive turned investor Jeff Sagansky.
In the aforementioned press release, Harry E. Sloan – a founding investor of Diamond Eagle – offered further insight into the SPAC’s objective in taking DraftKings / SBTech public:
“We are pleased to bring DraftKings and SBTech together as one public company.
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.”
In public comments on the deal, Robins explained why DraftKings elected to go public via an SPAC deal rather than a traditional initial public offering (IPO):
“A lot of companies wait to go public until they’ve hit the end of what is their very obvious growth phase, when they’re already at their scale level.
We’re going public in the early days of what we hope will be a very expansive and large market in the U.S. that develops over the coming years, so it gives public shareholders a real opportunity to ride that growth.”