Sports betting and daily fantasy sports company DraftKings will likely go public sometime in the first half of 2020, thanks to a merger with gambling technology firm SBTech.

DraftKings SBTech Diamond Eagle merger
DraftKings announced it will merge with SBTech and Diamond Eagle Acquisition to form a publicly-traded company in 2020. (Image: DraftKings)

The merger is being facilitated by Diamond Eagle Acquisition, with all three companies combining to form a new firm that will take on the DraftKings name.

DraftKings to Inherit Publicly-Traded Status

The process is being handled through a special purpose acquisition. Diamond Eagle is a publicly-traded media and digital entertainment investment company founded by former CBS Entertainment president, Jeff Sagansky, and Harry Sloan, the former chairman and CEO of MGM.

Because Diamond Eagle is already a publicly-traded entity, the combined company will be able to continue to trade under that status. That means there won’t be an IPO when DraftKings goes public, though the new company is expected to trade under that name and a related, still-to-be-determined stock symbol.

The merger will create a company worth $3.3 billion with $500 million in cash on hand, according to DraftKings. Diamond Eagle will provide $400 million in investment to the new venture.

DraftKings co-founder and CEO Jason Robins will remain in control of the new firm, with co-founders Matt Kalish and Paul Liberman also expected to be a part of the management team.

“The combination of DraftKings’ leading and trusted brand, deep focus on customer experience and data science expertise, and SBTech’s highly innovative and proven technology platform creates a vertically-integrated powerhouse,” Robins said in a statement. “I look forward to building significantly upon our goals of continuing our state-by-state rollout, and creating the most entertaining and engaging customer experiences for sports fans globally.”

DraftKings currently operates mobile sports betting platforms in New Jersey, West Virginia, Pennsylvania, and Indiana, with retail operations in New Jersey, New York, Iowa, and Mississippi. The company will launch online sports betting in New Hampshire in January.

Relentless Gaming Industry Consolidation Continues

The merger continues the seemingly endless trend of consolidation in the gambling industry, particularly when it comes to online gaming. DraftKings and FanDuel attempted to merge in 2017, but called off those plans after the Federal Trade Commission sued in an effort to prevent what regulators feared could be a monopoly in the daily fantasy sports market.

That couldn’t stop the companies from looking for partners, though. FanDuel merged with Paddy Power Betfair last year, and the DraftKings merger should help the Boston-based company continue to go toe-to-toe with its old DFS rival.

DraftKings will continue to operate its headquarters in Boston. However, the brand will reincorporate in Nevada following approval of the merger.

The new company will give investors the opportunity to invest in a purely American sports betting firm. Most other publicly traded gaming companies are largely based overseas, while an investment in DraftKings is more or less a bet on the US sports betting industry, at least for now.

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