DraftKings is set to become Boston’s newest publicly traded technology company, after completing a complex merger that will allow it to list its shares starting Friday.
The sports betting company will be listed on the Nasdaq stock exchange under the ticker symbol DKNG, marking a new chapter for the company founded eight years ago as an operator of paid daily fantasy sports contests.
Now a major player in the promising field of sports gambling, the company is hoping to appeal to public market investors as a mobile-heavy digital competitor in an industry attracting competitors from the existing casino industry and beyond.
In an interview, chief executive Jason Robins said the completion of the deal puts the company on solid financial footing for the foreseeable future ― despite turbulence in financial markets caused by the coronavirus pandemic.
“I don’t mind as much if there’s some volatility,” he said. “We’ll just have to get used to ignoring it and focusing on the long term.”
The company will become one of only a handful of consumer technology businesses to go public in a regional tech market that is heavy on business-to-business services and biotechnology. DraftKings is forgoing a traditional IPO through the three-company deal, which was announced in December and has survived the stock market turmoil that has attended the global coronavirus crisis.
DraftKings late Thursday announced the close of the transaction, which involves one company that is already publicly traded. That company, Diamond Eagle Acquisition Corp., was formed to finance such a deal. Its shareholders voted in favor of the transaction earlier in the day. The other company, SBTech, is based in Europe and makes technology to support digital sports books.
The parties have said the combined entity will have $500 million on hand to help it compete in a US sports betting industry whose expansion has been slowed by the cancellation of sporting events around the globe due to COVID-19. The company said it is valued at $5.9 billion after the close of the deal.
The company created by the merger will retain the DraftKings name, its leadership team, and its Back Bay headquarters. Robins said DraftKings has enough confidence in its future that it has continued to hire, even as other technology companies are laying off workers.
“We’re in a position as a company where we’re growing fast enough that we were going to be hiring a ton, anyway,” he said. “So maybe we slow down hiring a little bit, but it doesn’t make a lot of sense to, in my view, lay a bunch of people off, and then go back and hire a whole bunch of people a few months later.”
He acknowledged that the lack of major sports games is hurting revenues, but it is trying to be creative in drawing players with alternative events such as the NFL draft. And the slowdown also has allowed the company to draw down some of its spending to attract new customers, which blunts the effect on its bottom line.
DraftKings has been burning through money as a short-term strategy as it plows its revenue into growth.
Steve Murray, a managing partner at the investment firm Revolution Growth and a member of DraftKings’s board, said a sports betting company going public at a time when many sports are suspended definitely looks strange, at least on the surface.
“The irony of a company with sports as its key theme . . . going public now, when no one else can go public, isn’t lost on me or anyone else,” Murray said. But he said DraftKings holds a unique position in the industry, which should give it strong prospects as more states legalize sports betting. (Massachusetts lawmakers are still discussing whether to do so.)
“Everybody knows that’s a big opportunity, everybody knows it’s growing in front of us, and everybody knows we’re at the very beginning of that," Murray said of the US sports betting market.