DraftKings Shares Up 10.3% on First Day of Trading on the NASDAQ
Denise Truscello/Getty Images for DraftKings.
You can now bet on DraftKings … as a company.
The sports betting and daily fantasy operator, which was combined with betting tech platform SBTech to create a first-of-its-kind entity based in the U.S., started trading on the NASDAQ under the symbol DKNG on Friday morning.
Shares opened at $17.81 on Friday morning and closed at $19.35, up 10.3%.
That makes Jason Robins’ stake worth $164 million. Robins is a DraftKings co-founder and CEO of the new company. The shares of co-founders Matt Kalish and Paul Liberman were worth $78 million and $90.4 million, respectively, at the close.
The big winner is SB Tech co-founder Shalom McKenzie, whose shares are now worth $672 million.
On a recorded call Friday morning, Robins said that the deal to go public included a $304 million investment from Capital Research and Management Co, Wellington Management Co and Franklin Templeton. The company will also pick up $500 million in cash to further invest in the rollout of sports betting across America, Robins noted.
Robins noted it was eight years ago this week that he, along with Kalish and Liberman, founded DraftKings in Watertown, Mass. … in Liberman’s spare bedroom. DraftKings hosted its first DFS contest on April 27, 2012.
Kalish becomes the president of DraftKings’ North American business, while Liberman will be the president of global technology.
DraftKings got its first money in November 2011 from Boston investor Ryan Moore, who committed $1 million before he left the room of their first meeting.
“I felt it made a lot of sense at the time,” Moore told The Action Network on Friday morning. “We were in the age of Twitter and Facebook and people were clearly watching broadcast content with their phone in their hand craving authentic collaboration.”
Moore put in another $6 million a year later and in the summer of 2013 personally guaranteed the cash that enabled DraftKings to do its sponsorship deal Major League Baseball.
Moore’s shares were worth $202 million when the market closed on Friday.
When the deal was first announced in December, DraftKings said it expected to do $540 million in revenue. Robins said that the revenue number is largely dependent on what sports return and how truncated seasons might be.
While COVID-19 has slowed down the business significantly, Robins said on CNBC on Friday morning that it could present an opportunity, as states need to cover costs.
“There might be an opportunity to engage with states that previously had been on the fence about passing [sports betting] legislation and there could be more openness now.”
Online sports betting was not included in New York’s budget that closed April 1, but could be fast-tracked in a fall session.
While DraftKings runs brick-and-mortar sportsbooks in four states — Iowa, Mississippi, New Jersey and New York — they merely operate them, which gives them an advantage over other national gaming operators, who have upkeep costs of physical locations. Shares of largely physical Penn National Gaming and Eldorado Resorts, for example, are down 46% and 73%, respectively, year to date.
The road to going public has been a long one for the original executives, as they faced an assault on the legality of daily fantasy ahead of the Supreme Court’s reversal of the Professional and Amateur Sports Protection Act (PASPA) of 1992 in May 2018.
The news comes on the same day that shareholders of the UK-based The Stars Group are holding a vote to approve its acquisition by Flutter, which owns DraftKings main competitor FanDuel as well as bookmakers Paddy Power and Betfair. The Stars Group, which owns PokerStars and SkyBet currently trades as TSG on the NASDAQ.
High profile investors in DraftKings include Dallas Cowboys owner Jerry Jones, New England Patriots owner Robert Kraft and Washington Capitals and Wizards owner Ted Leonsis as a high profile shareholder. Their stakes have not been reported.