Nasdaq-listed sports betting giant DraftKings is looking to raise $1.03bn through a new public offering of common stock.
The US group – formed by the combination of operator DraftKings and betting and gaming technology provider SBTech earlier this year – intends to use the net proceeds it receives from the offering for general corporate purposes.
DraftKings said the underwritten public offering, which commences today (5 October), consists of 16m shares, to be issued by the Boston-headquartered operator, and 16m shares that will be made available by certain selling stockholders, including SBTech founder Shalom Mekenzie.
DraftKings and the selling stockholders intend to grant the underwriters a 30-day option to purchase up to an additional 4.8m shares of Class A common stock, though the operator will not receive any proceeds from the selling shareholders’ common stock.
The group said the offering is subject to market and other conditions, and there can be no assurance as to whether or when the offering may be completed. Credit Suisse Securities and Goldman Sachs are acting as joint book-running managers and as representatives of the underwriters for the offering.
In its prospectus, DraftKings said its priorities are to continue to invest in products and platform; launch in new geographies; effectively integrate with SBTech to form a vertically integrated operation, and expand its consumer offerings.
DraftKings said it expects to announce significant year-on-year increases in revenue when it publishes its Q3 2020 results later this month. In the unofficial figures, it said revenue increased by approximately 97% to between $131-133m for the three months to the end of September, with the year-on-year rise at 41% on a like-for-like basis.
It added that its online sports betting handle for the period is expected to have grown approximately 460%. Online casino handle for the three months is expected to have grown approximately 335%.
DraftKings Inc was created earlier this year when Diamond Eagle Acquisition Corp acquired DraftKings for $2.10bn and SBTech for €590m ($634.1m). The deal was announced in December 2019 and completed in April 2020.
In March, Diamond Eagle revealed that the historic DraftKings operation made a loss of $147m for 2019. However, despite an earnings before tax, interest, depreciation and amortisation (EBITDA) loss of $99m for the year, the business said it was confident of earnings exceeding $1bn in the long term.
The group said at the time that this projection is based on 65% the US population living in jurisdictions with legal online sports betting, of which DraftKings has a 25% market share for $2.4bn in revenue, and 30% living in areas with legal igaming, of which DraftKings expects a 15% market share and $700m in revenue.