A Christmas week update sends shockwaves across the global sports betting marketplace, as US incumbent DraftKings agrees to a three-way combination with sports entertainment fund Diamond Eagle Acquisition Corp and leading industry platform and systems provider SBTech.
The respective boards of each company, have agreed to terms forming a new business entity which will trade under the domain ‘DraftKings INC‘, seeking to list on the US Nasdaq exchange by the first half of 2020.
Updating stakeholders, DraftKings governance states that the merger will create US betting’s ‘first vertically integrated pure-play sports betting and online gaming company based in the United States’.
The sanctioned merger will see the formation of a new US betting giant valued at an estimated $3.3 billion market cap. DraftKings will maintain its position as lead B2C brand, powered by SBTech’s wagering systems and tech provisions, with Diamond Eagle providing $300 million in working capital supporting the enterprise’s future development.
Jason Robins, co-founder and CEO of DraftKings, stated: “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.”
Diamond Eagle has confirmed that institutional investors have committed to a private investment of $30m in class A common stock, with the combined company to be valued at $3.3bn and have $500m on hand following the transaction.
Los Angles based Diamond Eagle, is the investment fund formed by top Hollywood financers Harry E Sloan and Jeff Sagansky, who were reported to be eyeing a reverse takeover of DraftKings, securing a leading wagering investment for disrupted US sports betting marketplace.
Harry E Sloan, the founding investor of Diamond Eagle, added: “We are pleased to bring DraftKings and SBTech together as one public company. DraftKings is already a premier online fantasy sports and betting platform.
“With the full integration of SBTech’s technology and innovative product expertise coupled with the right capitalization, DraftKings will be in a great position to continue its ambitious expansion plans in the United States. I have known Jason Robins for four years, and consider him a true entrepreneur. I believe our investors share my utmost respect for his vision and leadership.”
The new DraftKings INC enterprise will continue to be led by Jason Robins as CEO, who will retain DraftKings’ management team, including co-founders Paul Liberman and Matt Kalish.
SBTech’s management team, who bring a wealth of experience in regards to international markets, trading and risk management, will also be integrated into the organisation.
The business combination will have ramifications across the entire global betting landscape, in which SBTech services + 50 operator partners across 20 regulated marketplaces.
As a wagering technology incumbent, SBTech maintains a deep US presence operating within the six regulated states Arkansas, Indiana, Mississippi, New Jersey, Oregon and Pennsylvania, servicing legacy incumbents such as Pala Interactive and Churchill Downs.
“The combination of DraftKings and SBTech brings together two tech-native companies with the customer at their cores,” said Gavin Isaacs, SBTech’s Chairman.
“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.”