AAA DraftKings drives itself to public listing

DraftKings drives itself to public listing

DraftKings, the US-based competitive fantasy sports platform backed by conglomerate Kraft Group and broadcaster Fox Sports, has agreed to go public through a merger deal.

The company will merge with a special purpose acquisition company called Diamond Eagle Acquisition in a deal that will also incorporate UK-based sports betting technology provider SBTech.

Institutional investors including Capital Research and Management Company, Wellington Management Company and Franklin Templeton are providing $304m in funding for the new entity, which is expected to have a $3.3bn market capitalisation once the transaction closes.

Founded in 2012, DraftKings operates a daily fantasy sports site where players can compete with each other on a range of sports, picking teams of players who score points according to their prowess in real-life matches.

The company raised $630m in venture capital and was valued at $1.2bn in its 2015 series D round. However, it has encountered a series of regulatory issues over whether its service can be classified as betting.

DraftKings agreed in 2016 to merge with its main rival, FanDuel, but the deal fell through the following year. Ironically, it launched a sports betting platform called DraftKings Sportsbook in August 2018, once a federal ban on sports betting was repealed.

Jason Robins, DraftKings’ co-founder and CEO, said: “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.”

Investment firm Eldridge Industries led the company’s last round, a $100m series E1 in early 2017 that followed a $153m round led by growth equity firm Revolution Growth the previous year.

Fox Sports provided half of the $300m DraftKings raised in 2015, investing with Kraft Group, professional sports leagues Major League Baseball, National Hockey League and Major League Soccer, VC firm Atlas Venture and merchant bank Raine Group.

Raine Group and Atlas Venture were existing investors in DraftKings, whose earlier backers also include Redpoint Ventures, GGV Capital, BDS Ventures, Boston Seed Capital, Hub Angels, Angel Street Capital and various individual investors.

By Robert Lavine

Robert Lavine is special features editor for Global Venturing.

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