Sports betting operator DraftKings expects to raise more than $1.66 billion through a stock announced earlier this week, but just a little more than $800 million will end up on the company’s balance sheet.
In a statement Wednesday, DraftKings said it would sell the stock – 16 million shares from the company and 16 million shares offered by certain company stockholders – for $56 per share. The Boston-based company will not receive any proceeds from the stockholders’ sale.
DraftKings said in a statement its proceeds from the stock sale – taking place six months after the company went public – would be used for general corporate purposes. At the end of the second quarter, DraftKings had $1.24 billion on its balance sheet with zero debt.
Shares of DraftKings, traded on Nasdaq, closed $53.33 Wednesday, down $3.45 or 6.08%..
In conjunction with the stock sale, DraftKings said in a filing with the Securities and Exchange Commission it would report revenue of between $131 million and $133 million for the quarter that ended Sept. 30.
The company’s market spending to acquire sports betting customers was between $200 million and $210 million, primarily because of its rapid expansion into new states, including Illinois. The company said in the filing it had more than 1 million customers playing on the DraftKings site every month.
DraftKings offers mobile and retail sports wagering in 10 states – Colorado, Illinois, Indiana, Iowa, Mississippi, New Hampshire, New Jersey, New York, Pennsylvania, and West Virginia.
Legal sports betting is currently available in 18 states and Washington D.C., is legal but has yet to launch in four more states, and is on the ballot for approval in three further states on Nov. 3.
The company went public through a merger with Diamond Eagle Acquisition Corp., a blank-check company, and the acquisition of sports gambling platform supplier SBTech, and the stock immediately jumped more than 10%. Shares have been up roughly 63% in the last six months.
According to the SEC filing, most company stockholders are associated with Diamond Eagle, although an entity associated with the Robert Kraft family – owners of the NFL’s New England Patriots – is among the sellers. Kraft was an early minority investor in DraftKings, going back to 2015 when the company was focused on daily fantasy sports.
None of DraftKings’ top executives, including CEO Jason Robins, are selling stock.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
