Online gambling company DraftKings Inc. said Monday it will become a listed company via an acquisition by blank-check company Diamond Eagle Acquisition Corp. and SBTech, a provider of gaming technologies.
The new entity will be the only publicly traded pure-play sports betting and online gaming company in the U.S., with the deal expected to close in the first half of 2020, DraftKings said in a statement.
Diamond Eagle, a special-purpose acquisition company, will change its name to DraftKings Inc. and reincorporate in Nevada. The company will trade on Nasdaq under a new ticker symbol that was not disclosed. Institutional investors, including funds managed by Capital Research and Management Co., Wellington Management Co. and Franklin Templeton, have committed to investing $304 million in the new company, which is expected to have a market cap of about $3.3 billion upon the deal’s closing and more than $500 million of unrestricted cash on its balance sheet.
The company will continue to be headed by Jason Robins, its co-founder and chief executive, along with fellow founders Paul Liberman and Matt Kalish.
Robins told CNBC earlier that the company had originally intended to acquire SBTech and then go public, or go public first and then acquire the technology company. The acquisition vehicle allowed it to make both moves in one go.
DraftKings and rival FanDuel have steadily gained market share since a 2018 U.S. Supreme Court ruling that legalized sports betting in every state, should they decide to allow it. For now, sports bets can be made legally in 13 states, while sportsbooks are legal in another six but are not yet running, as the Associated Press reported last week. About a third of Americans live in a state where sports betting is legal.
DraftKings currently offers mobile and online sports betting in Indiana, New Jersey, Pennsylvania and West Virginia, and has retail outlets in Iowa, Mississippi, New Jersey and New York. The company says it has a more than 30% share of the online gambling market. Sports betting is expected to become a multibillion-dollar market over time.
Its daily fantasy sports product is available in 43 states and eight international markets, including Australia, Canada and the U.K. The company became the exclusive daily fantasy sports partner for the National Football League in September.
DraftKings’ “one platform” model allows customers to use a single sign-on, wallet and user profile to move between a fantasy contest, a sports bet and a hand of blackjack.
Diamond Eagle shares DEAC, +5.60% were up 5.1% early Monday and have gained 8% in the last three months, as the S&P 500 SPX, +0.14% has also risen about 8% and the Dow Jones Industrial Average DJIA, +0.40% has gained 6%.