DraftKings Goes Public Amidst COVID-19 Outbreak

The whole world has seemingly shut down during the coronavirus outbreak, with businesses closing left and right. However, DraftKings certainly didn’t get that memo.
On Friday, a day after the first round of the NFL Draft, the sports betting and daily fantasy giant went public and started trading on the NASDAQ under the symbol DKNG. The company did not go with the traditional route of selling new stock through an initial public offering.
DraftKings merged with a special purpose acquisition company called Diamond Eagle Acquisition Corp (DEAC) and SBTech. DEAC was founded by Hollywood vets Harry Sloan, former CEO of MGM, and Jeff Sagansky, former head of CBS. Sloan will end up being the vice chairman of DraftKings.
“I felt it made a lot of sense at the time,” said Boston investor Ryan Moore, who ponied up $1 million before he left the room of the first meeting they ever had. “We were in the age of Twitter and Facebook, and people were clearly watching broadcast content with their phone in their hand craving authentic collaboration.”
Strange Times
DraftKings co-founder and CEO Jason Robins spoke to investors in a pre-recorded audio statement posted to the company’s website. Robbins admitted that the near-term outlook is complicated because of the coronavirus, and where the sports world is heading in the future.
Robins said the firm would be starting to publicly trade with $500 million in unrestricted cash to fund operations. The DraftKings’ investments in technology systems let them operate during the COVID-19 pandemic by accepting wagers on Esports and reality shows like Survivor and Top Chef in the meantime.
“We recognize these are extraordinary times, and we understand that state governments in the U.S. are prioritizing the response to COVID-19, as they absolutely should be,” said Robins.
“Eventually, we do expect to start and to return to a new normal. At that time, we expect that the demand in states for legal sports betting will resume.”
Despite the coronavirus outbreak, DraftKings still finds ways to have sports business coming in. The first round of the NFL Draft went off Thursday night, as the company took bets on that. In addition, DraftKings has also been taking bets on Taiwanese baseball and Russian ping pong.
“Sports betting is one of the emerging growth areas that technology and media investors are spending a lot of time on, and DraftKings is a pure-play early leader in legal betting,” said Mina Faltas, founder and chief investment officer of Washington Harbour Partners.
It is a scary time in the world right now, but props to DraftKings for having the guts to stick their necks out there and keep chugging along with business operating as usual. We really don’t know where we’ll be in the next few weeks, but we do know that betting (on sports or not) will always be part of our culture in one form or another.
It will be interesting also to see what happens to the stock market, in general. Business is good at the moment with DraftKings, already showing some profits immediately.