DraftKings Determined To Raise $1bn

October 12, 2020

- Grant Whittington

In the wake of Robert Kraft’s 10 per cent cashing out of his shares in the sports betting and fantasy betting giant, U.S.-focused DraftKings Inc. has just announced to shareholders the commencement of an underwritten public offering of a whopping 32 million Class A common shares. The goal, explained the operator, is to raise a stupendous $1 billion in working capital value.

The update, issued to investors early last week, confirmed that half the shares will come from the company’s side, and the other half from the existing shareholder-portfolio – i.e. out of the actual pockets of shareholders in terms of stock value. But on the mitigating end of the spectrum, the good news is that none of the proceeds as far as the shareholders’ half is concerned will be going back into DraftKings. That the funds raised will be put toward corporate purposes is heartening news as this implies plans and promises in terms of further expansion even in the face of a major investor offloading shares.

3 Key Priorities

DraftKings has in the meantime outlined three key priorities – all in terms of milestones locked in for future achievement. These have also been outlined as such in the bookie’s initial prospectus filed with the U.S. Securities and Exchange Commission (SEC).

The trio of outlined priorities are: (1) to make consistent reinvestments in its own platform and products, (2) to continue to look for new ways in which to successfully expand into newly regulated sports betting markets, and (3) to continue to enhance its customer offerings.

No Slump In Popularity So Far

DraftKings shares have remained highly popular among investors ever since the operator went public. And the operator has indicated an expectation of an even higher increase in year-on-year revenue once it’s Q3 results get published a little later on this month.

Preliminary projections for Q3 – the quarter ending September 30 – includes total revenue coming in at around $133 million, along with the costs of sales and marketing levelling out at between $200 million and $210 million. The projected revenue is a sweltering 97 per cent improvement when compared to last year’s performance.

As for the main driving force behind the improvements, DraftKings have credited customer acquisition and retention rates sparked by more people spending more time at home as a result of the global health crisis. To this end, it should be noted that DraftKings not only offers sports betting products, but also online casino entertainment and support services – a future prospect that will going forward be driven mainly be the result of its acquisition / merger-integration of SBTech.

The Present Vs. The Future

As for individual revenue performances, the operator has released initial figures along the lines of sports betting handle growth totalling a fantastic 355 per cent hike, and online casino coming in at approximately 460 per cent better than the same period in 2019.

Recent performances certainly indicate a long-term DraftKings vision of earning projections exceeding the $1 billion mark to be more than just realistic. If the operator were to continue in the same performance vein as what it has been doing over the course of the past 2+ years, the $1 billion goal is more of a probability than something that could or could not become a near-future possibility.

All of which will ultimately lead to DraftKings realising the ultimate immediate goal – which is to nab a phenomenal 25 per cent share in the U.S. sports betting market, and a 15 per cent stake in the online casino market. And these are both goals the operator is well on its way toward achieving given the three primary directives as set out before the SEC.

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