Despite the ongoing coronavirus outbreak’s disastrous impact on the sports betting industry, and the stock market as a whole, Boston-based DraftKings is still planning to go public this month.
In an email sent to Bloomberg on April 15, DraftKings’ chief financial officer Jason Park confirmed the daily fantasy sports (DFS) and sportsbook operator’s intention to press forward with an initial public offering (IPO) within weeks:
“We are pleased that our registration statement was declared effective by the U.S. Securities and Exchange Commission this morning, which brings us another step closer to our goal of becoming a public company in April.”
April IPO to Cap Off Multibillion Dollar Deal Struck Last December
In December, DraftKings announced its intention to complete a reverse merger with the Malta-based SBTech, an international provider of backend online / mobile sports betting platforms. The deal – which is being facilitated through the Los Angeles-based special purpose acquisition company (SPAC) Diamond Eagle Acquisition Corp. – is valued at $2.7 billion.
At the time, a jointly issued statement from the three companies described the newly formed DraftKings / SBTech as “the only vertically-integrated pure-play sports betting and online gaming company based in the United States.”
In his letter, Park revealed that Diamond Eagle shareholders will meet on April 23 to vote on the merger’s closure. From there, the new company will become incorporated in Nevada, retain the DraftKings name and brand, and go public on the NASDAQ Composite market under the ticker symbol “DKNG.”
Following a successful pivot from its original DFS focus, DraftKings has become an industry leader within America’s expanding state by state regulated sports betting market.
The company currently operates its DraftKings Sportsbook online / mobile app in Indiana, New Jersey, Pennsylvania, and West Virginia, along with brick and mortar sportsbooks in Iowa, Mississippi, New Jersey, and New York.
DraftKings Gambling Resurges After Coronavirus Crushes Sportsbooks
The aforementioned land-based DraftKings Sportsbook locations are all shuttered for the foreseeable future, after Governors nationwide ordered casinos to close until the coronavirus threat clears.
And while the company’s online / mobile app is still up in running, the global sports landscape was essentially erased last month when every major professional and collegiate league suspended, postponed, or cancelled their seasons.
As a result, DraftKings is currently operating in states where the sports betting industry is suffering across the board.
Pennsylvania, for example, recently saw its total monthly handle for March plummet to $131.3 million for a 60 percent month-on-month decline. DraftKings Pennsylvania itself had its handle of $73.7 million in February slashed to $29.2 million last month.
In line with an aggressive statewide expansion strategy, DraftKings posted losses of $142.7 million in 2019 – more than double what the company lost the year before – despite significant revenue growth.
Despite those setbacks, DraftKings co-founder and chief executive officer Jason Robins – who will retain his position with the new company along with co-founders Paul Liberman and Matt Kalish – told the Boston Globe this week that the coronavirus closures won’t knock the IPO off track:
“While we are focused on ensuring the health and safety of our employees, customers and communities during these extraordinary times, our plan remains for DraftKings to go public in April.
Upon close, the DraftKings’ leading and trusted brand, deep focus on customer experience and data science expertise will create a vertically-integrated powerhouse in the gaming industry.”
As part of the reverse merger deal, Diamond Eagle Acquisition Corp. will send DraftKings a $500 million cash infusion once the company goes public.