The rumoured deal between DraftKings and SBTech has finally been confirmed.
DraftKings has announced a deal that will see the company acquired by a publicly traded special purpose acquisition company, and the sports betting technology provider, SBTech.
Diamond Eagle Acquisition Corp will acquire the businesses to create a combined entity that will be listed on the Nasdaq Stock Exchange. According to the announcement, the combined entity will create “the only vertically-integrated pure-play sports betting and online gaming company based in the United States.”
Once the acquisition is finalized, which is expected to take place in the first half of 2020, Diamond Eagle will be renamed as DraftKings Inc. and reincorporate in Nevada. A new ticker symbol will also be used.
The combined DraftKings entity will receive $304m in investment from institutional investors. The company will also have a market cap of $3.3bn and more than $500m in unrestricted cash after the deal is complete.
The new entity will continue to be led by CEO and co-founder Jason Robins and will retain DraftKings’ existing management team.
Jason Robins 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.”
Benefits of the DraftKings and SBTech merger
In an investor presentation, DraftKings outlined several benefits of the merger. The larger entity will grant DraftKings the opportunity to innovate products more freely. SBTech’s suite of risk management tools will also allow for better odds which in turn will generate more revenue.
The merger also reduces a significant level of risk for both SBTech and DraftKings as the new company will benefit from a diversified revenue stream. DraftKings relies on the US market for the majority of its income whereas SBTech generates the majority of its revenue from European operations.
Gavin Isaacs, SBTech Chairman, said: “The combination of DraftKings and SBTech brings together two tech-native companies with the customer at their cores.
“SBTech will maintain its core business and continue its B2B focus. We are excited about the opportunity to join a company with a similar innovation DNA and create a unique and differentiated player in global sports betting and online gaming.”
DraftKings in the US
In just over a year, DraftKings has transitioned from a daily fantasy sports site to a fully-fledged multi-vertical gambling operator. DraftKings entered the US sports betting market in 2018 when it became the first sportsbook to launch a mobile app in the state of New Jersey. DraftKings also operates the land-based sportsbook at Resorts Casino in Atlantic City. The sports betting operator also runs an online casino platform in the Garden State.
DraftKings’ online sportsbook is now available in five states which includes New Hampshire, New Jersey, Pennsylvania, West Virginia and Indiana. In New York, DraftKings runs land-based sportsbook operations at Del Lago Resort. DraftKings also runs land-based sportsbook operations in Mississippi at the Scarlet Pearl Casino in Biloxi.
DraftKings also became the first company to receive approval to run daily fantasy sports contests in the state of Iowa.
Where does SBTech operate?
SBTech is somewhat of a powerhouse in the gambling space. The technology provider has more than 50 partners across more than 20 regulated jurisdictions around the globe.
SBTech currently operates in 15 European Countries which includes the UK, Ireland, Sweden, Denmark, Romania, Greece, Malta, Cyprus, Poland, Italy, Spain, Belgium, Portugal and the Czech Republic. In Asia, the company provides services in Georgia, Armenia and Azerbaijan.
In the US, SBTech has a presence in New Jersey, Pennsylvania, Mississippi, and Arkansas. The company also powers the Oregon Lottery’s mobile and online sports betting platform.