NASDAQ-listed daily fantasy and sports betting operator DraftKings announced today it started an underwritten public offering of 32 million shares of its Class A common stock, looking to raise in excess of $1 billion.
DraftKings explained in the investor update it released on its website that half of the total amount of shares will be provided by the company, while the other half will be sold from other shareholders. The Boston-based sports book operator noted that it would not receive any proceeds from the sale of the stock owned by shareholders.
30-Day Purchase Option for 4.8 Million Shares
In addition to the 32 million of common stock, DraftKings outlined that both the company and the stock selling shareholders intend to give underwriters a 30-day option to acquire additional 4.8 million shares of the same type of common stock. The operator pointed out that the net proceeds from the underwritten public offering would be used for general corporate purposes.
DraftKings noted Credit Suisse Securities (USA) LLC and Goldman Sachs & Co. LLC would be acting as joint book-running managers for the offering that is subject to market and other conditions, with no assurance provided by the company as to whether or when the offering may be completed.
Offering Made By Means of a Prospectus
For the commenced public offering DraftKings already filed a preliminary prospectus with the Securities and Exchange Commission (SEC), as the offering would be made only by means of a prospectus, the company outlined.
In the prospectus, the sports betting and iGaming operator highlighted its priorities built on three premises: to continue to invest in products and platform, to continue to expand geographically into new regulated jurisdictions, and to boost its consumer offerings. And all these while integrating with its technology provider SBTech, which the fantasy sports and sports betting operator acquired in April.
Q3 Company Expectations
Regarding financials, DraftKings said its Q3 results which would be released later this month would post significant increase in revenues year-on-year. The operator expects a revenue in the range of $131 million to $133 million for the quarter ending September 30, a figure that would represent 97% rise in revenue. On a like-for-like basis, DraftKings said 41% increase can be announced.
The company’s expectations are based on its sports betting and online casino handles for the third quarter which, according to the operator, have grown approximately 460% and 335% for sports betting and online casino, respectively.
Long-term, DraftKings is projecting its earnings to exceed $1 billion, as it expects 65% of the US population to live in jurisdictions where betting is legal, and 30% living in states where iGaming is allowed, as DraftKings is aiming for 25% market share in sports wagering and 15% market share in online casino.