If timing is everything, what to make of DraftKings stock market debut at a time when sports competition is virtually nil. No matter. Shares of the sports fantasy and betting company rose 10.4 percent in the first day of trading, according to the Associated Press.
The arrival on the stock market stage coincided with the merger between DraftKings, Diamond Eagle Acquisition Corp. and supplier SBTech, giving the new company a market value of $3.3 billion. DraftKings gets the lion’s share of the transaction with $2.055 billion in cash and stock.
The combination creates one of the largest online sports betting, iGaming and daily fantasy sports platforms. DraftKings could produce between $2.9 billion and $4.7 billion in annual revenue, according to the investor presentation from December. That includes estimates of 20 percent to 30 percent market share for sportsbook and 10 percent to 20 percent market share for iGaming.
DraftKings reported a nearly-doubled net loss of $142.7 million last year despite revenues rising 43 percent to $323.4 million.
DraftKings co-founder and CEO Jason Robins leads the merged company. In an interview with the Associated Press, Robins said the long-term outlook for sports gambling remains strong and that the company may even benefit from pent-up fan enthusiasm when games return.
“I hope and believe that people will continue to have a strong appetite for sports,” Robins said. “If there is a trend away from being outdoors and going to the public places, you could actually see an increase in sports viewership once traditional sports are being played again. You could also see an increase in online activity.”
Moreover, states suffering revenue shortfalls may see sports betting as a way to offset some of the Covid-19 losses.
“We don’t have a big brick and mortar presence, where a lot of our employees are literally not able to go into work,” Robins said.
DraftKings’ 950 Boston-based employees now work from home. The only time Robins goes to the office was to record a video for the “virtual bell-ringing” on the NASDAQ market. The stock symbol is DKNG.
Making a smaller splash across headlines was the news that DraftKings settled a class-action lawsuit concerning the 2019 Sports Betting National Championship.
The company wound up paying out just $102,000, most of which went to lawyers. That’s far better than the $5.8 million in liabilities it previously warned the suit could bring.
Meanwhile, the Pennsylvania Gaming Control Board on April 29 approved a soft launch for DraftKings’ online casino. Chief Compliance Officer Tim Dent told PlayPennsylvania.com he didn’t anticipate any issues during the three-day testing period.
“We look forward to successfully completing this phase of the process and receiving our iGaming license so that we can be fully operational in Pennsylvania on May 1,” he said.
DraftKings would be the state’s 10th online casino, operating under the Hollywood Casino license.
FanDuel Casino was the highest-earning online casino in Pennsylvania during February, its first full month of operation, before falling behind PokerStars/Fox Bet and BetRivers in March. If DraftKings Casino does half the business of FanDuel, it will bring in $2.5 million in monthly gross revenue.
DraftKings Casino will offer an array of online slots, video poker, and table games like blackjack and roulette, similar to the one in New Jersey.
