SBTech founder to sell 8.5million DraftKings shares in latest public offering
Operator reports expected Q3 online betting handle growth of 460% on return of professional sports
SBTech founder and DraftKings’ largest shareholder Shalom Meckenzie is selling 8.5 million shares as the operator seeks to raise a further $1.66bn in public funds.
Meckenzie currently holds an 8.6% stake in the sports betting company and is set to earn more than $420m from his latest sell off.
A further 5.4 million shares will be sold by second largest shareholder John Salter of the Raine Group, who owns a 6.1% stake in DraftKings.
A total of 16 million shares overall will be sold by current shareholders at $52, with an additional 16 million to be sold by the operator.
DraftKings expects to spend the approximately $800m proceeds on “general corporate purposes.”
In an SEC filing detailing the share offering, DraftKings said it expected Q3 revenue of $131-133m, up 97% on the previous year.
NFL hold percentage during the three months resulted in $15m in revenue losses, while sales and marketing costs are expected to be $200-210m.
“Increased time spent at home due to Covid-19 has resulted in increased response rates to our advertising spending and, even with our scaled-up spending on customer acquisition, recent customer acquisition costs have been better than our expectations,” the operator said.
“We expect our B2C monthly unique players (MUPs) for the three months ended September 30, 2020 to be approximately 1,020,000, representing growth of approximately 64% compared to the same period last year,” it added.
Online betting handle for Q3 is expected to have grown 460% on the previous year, with New Jersey handle up 110%.
Igaming handle is also up 335% year on year, and 150% in New Jersey.
On early trading, DKNG shares were up to $62 before dropping by 6%.
UK industry analysts Regulus Partners said: “DK is demonstrating that hype can pay for itself: by offering up just 5% of its stock it can afford to dominate US online betting and gaming market share before focus switches to the barriers to revenue growth or the barriers to profitable growth.
“Operators (as distinct from suppliers) hoping to monetize a US market that has settled into more normal trading patterns and ‘economic rationality’ may have to wait a few years longer – or miss the bus completely,” Regulus added.