Sports betting goes public as DraftKing heads to the big leagues
Snacks / Tuesday, December 24, 2019
Who ya got?... Sports betting phenom DraftKings announced it's dropping out of college to join a publicly-traded company that will be worth $3.3B total. The daily fantasy sports app lets you bet real money — and claims it dominates 60% of the fantasy market.
The Flying V, the Hail Mary... Now add Triple Reverse Merger to the list of all-time great plays. Instead of IPO'ing like most private companies do to bring their stocks to public markets, DraftKings will take a different route to the pros: Merge with an already-public company. Here's the new team:
- DraftKings is the QB: Provides the core product — an app for new-school fantasy (bet $$$ on individual players) and old-school sports betting (wager that teams will win or beat-the-spread).
- SBTech is the lineman: Provides the fundamental technology for bookmakers to set the bets.
- Diamond Eagle is the coach: This is the already publicly-traded big shot with plenty of cash to spend on merging all 3 companies for (what it hopes will be) a game-winning lineup.
2 critical moments shaped DraftKings into the player it is today... and both were focused on American consumers:
- 2016: DraftKings tried to merge with rival FanDuel to dominate the fantasy sports market — but US regulators blocked the plan that would've created a sports betting monopoly as powerful as the '98 Yankees.
- 2018: The Supreme Court ends a federal ban on sports betting — since then, 13 states have legalized the industry and 6 more have legislation to join them.
- The future: The sports betting industry is expected to hit $13B in annual revenue by 2023.
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