Sportsbook operator DraftKings, which went public in April, announced plans Monday to sell 32 million shares on the open market.
The announcement follows recent stock sales by Penn National Gaming and Caesars Entertainment, both of which centered on sports wagering expansion.
In a brief statement, the Boston-based DraftKings said the stock sale would consist of 16 million shares offered by the company and 16 million shares offered by certain company stockholders. Underwriters have a 30-day option to purchase an additional 4.8 million shares.
Pricing for the stock was not announced.
DraftKings said it would use the proceeds from the stock sale for “general corporate purposes,” but won’t receive any of the proceeds from the stockholders’ sale.
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.
Shares of DraftKings closed Monday at $60.55 on the Nasdaq, down $3.23 or 5.06%. DraftKings rose more than 10% on the day the company went public in April and are up roughly 63% in less than six months.
According to a Securities and Exchange Commission filing accompanying the announcement, 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.
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.
Last week, Penn National raised $932.1 million through a stock sale, with the casino company saying that the proceeds would help accelerate the launch of its Barstool sports betting app into new markets. The company launched the much-anticipated app in Pennsylvania during September, recording some 65,000 downloads on the opening weekend.
Meanwhile, Caesars raised roughly $1.7 billion through a stock sale to help fund its $3.7 billion acquisition of UK sports betting giant William Hill. Caesars already owns 20% of William Hill’s Las Vegas-based U.S. subsidiary.
A source close to DraftKings said the stock sale was being conducted because of the heightened interest in sports betting in the U.S. with the goal of bolstering the company’s balance sheet. At the end of the second quarter, DraftKings had $1.24 billion on its balance sheet with zero debt.
Last month, DraftKings became the official sports betting partner of the Chicago Cubs, a deal which includes the development of a retail sportsbook at Wrigley Field, the team’s iconic ballpark, with online access available in the surrounding Wrigleyville area.
A day earlier, DraftKings named basketball icon Michael Jordan as a special advisor to the board. Jordan, who won six championships as a player with the Chicago Bulls and is currently the majority owner of the NBA’s Charlotte Hornets, received an undisclosed equity stake in the company.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgamin.com. Follow @howardstutz on Twitter.
