The daily fantasy sports provider turned US sports betting giant, DraftKings, now a publicly-traded company.
Diamond Eagle Acquisition Corp (DEAC) shareholders have approved the merger between DraftKings and SBTech and the public listing of the new entity, DraftKings Inc.
At a shareholder meeting held on 23 April, investors holding 99.7% od DEAC shares voted in favour of the merger while shareholders holding less than 0.04% voted against it.
From today (24 April) the company will begin publicly trading on the Nasdaq under the DKNG ticker symbol.
It is important to note that while shareholders have approved the deal, it is not the final step in the process. The business combination must still be completed, however, there is no set timeline for this. The merger between DraftKings and SBTech was initially confirmed in December 2019.
Acquisition details
Through the merger, DEAC will acquire DraftKings for $2.10bn and SBTech for €590m ($634.1m). The new business entity will be renamed as DraftKings Inc and will continue to be listed on the Nasdaq exchange.
DEAC shareholders also approved the new arrangement of shares for the combined business entity. DraftKings Inc. will have 2.10bn shares of stock which will consist of 900m Class A shares, worth one vote, 900m Class B shares, worth 10 votes, and 300m preferred shares. The preferred shares were valued at $0.0001 per share.
DraftKings CEO Jason Robins will receive all Class B shares, giving him approximately 90% of the capital stock voting power.
Shareholders with 86.6% of shares also voted in favour of moving its incorporation from the state of Delaware to Nevada.
Jason Robins co-founder and CEO of DraftKings said: “Today marks another milestone for DraftKings and the future of digital sports entertainment and gaming in America. By bringing together our leading consumer brand, data science expertise and industry-leading products with SBTech’s proven technology platform, we will accelerate our innovation, growth and scale. I am confident that the new DraftKings will progress our goal of offering the best, most innovative sports and gaming products to our customers.”
The merger will also see DraftKings split from Kambi, its previous technology supplier.
DEAC predicts significant growth for DraftKings
DEAC estimates that DraftKings should achieve a compound annual growth rate of more than 31% between 2017 and 2021, which translates into revenue growth of $460m. According to DEAC, the merger between DraftKings and SBTech establishes one of the largest online sports betting, online gambling and daily fantasy sports platforms.
It is estimated that online sports betting revenue will hit $18m at maturity, while US online gambling revenue will hit $21bn at maturity. According to the investor presentation form December, DraftKings has the potential to generate anywhere between $2.9bn and $4.7bn in annual revenue. This included estimates that DraftKings will have a 20% to 30% market share for sports betting and 10% to 20% market share for online gambling.
The new business entity is in a strong position to continue its growth in the US as it continues to offer services in more states. Currently, DraftKings DFS product has more than four million paid users across 43 states. DraftKings sportsbook also has a presence across eight US states.
However, in January, DEAC revealed that DraftKings made a loss of $114.1m in the first nine months of 2019, and in March this loss grew to $147m for the full year.
Despite reporting an earnings before tax, interest, depreciation and amortization (EBITDA) loss of $99m in 2019, the company said it was confident that EBITDA would exceed $1bn in the long term.
