DraftKings Inc.

  • Active

Investigation
07/02/2021

Initial Lawsuit
07/02/2021

Lawsuit Progression
11/12/2021

Investigation

  • Continous Holding
    December 23, 2019 to June 15, 2021
  • Proposed Claim
    Securities Violation

Did DraftKings and merging entities mislead investors in connection with the going public transaction, the merger with SBTech and Diamond Eagle Acquisition Corp., and alleged unlawful operations in a short-seller report?

This post is open for investors to gather facts, and findings and track their exposure to related lawsuits. We invite investors and shareholders to contribute to this investigation for their own benefit, add events to the factual timeline below and vote on events’ pertinence.

A lawsuit was subsequently filed. We will update this post as it unfolds.

Main Event

Hiding a "Black Market"? (Short Thesis)

06/15/2021

Research Report (Short)

Hindenburg research publishes a short report alleging, among others, that the 3-way merger between Drakings, its special purpose acquisition company (SPAC) Diamond Eagle and SBTech brings exposure to unlawful black-market gaming, money laundering and organized crime:

“Former SBTech employees called BTi/CoreTech a “front”, and said the split preserved SBTech’s (and now DraftKings’) illicit business while shielding the public company from scrutiny. For all practical purposes, it appears that BTi/CoreTech functions as DraftKings’ undisclosed illegal gaming division.
We identified numerous black market clients of DraftKings’ “front” entity, through searches on social media and back-end web infrastructure. For example, an Asia-focused site tied to a triad kingpin at the center of a Swiss money laundering investigation advertises its use of BTi/CoreTech technology.”

The stock impact compares the closing price immediately preceding the date of the event and the following closing price. The price difference also reflects the overall mix of information.

Stock Impact

Close Previous close Price variation Percentage variation
$48.51 $50.62 $-2.11 -4.17%
See more on Factual Timeline

Initial Lawsuit

A shareholder filed this federal securities class action on behalf of a class consisting of all persons and entities other than defendants that purchased or otherwise acquired DraftKings securities between December 23, 2019 and June 15, 2021, both dates inclusive.

  • Filing Date
    07/02/2021
  • Class Period
    12/23/2019 to 06/15/2021
  • Transgression
    Securities Violation
  • Filing Firms
    Pomerantz LLP
  • Case Title
    Rodriguez v. Draftkings Inc. f/k/a Diamond Eagle Acquisition Corp. et al
  • Docket Number
    1:21-cv-05739
  • Court
    New York Southern District Court
  • Free File
    Complaint

Allegations

According to the complaint, defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the company’s business, operations, and prospects. Specifically, defendants allegedly failed to disclose to investors that:

(i) SBTech had a history of unlawful operations;
(ii) accordingly, DraftKings’ merger with SBTech exposed the company to dealings in black-market gaming;
(iii) the foregoing increased the company’s regulatory and criminal risks with respect to these transactions;
(iv) as a result of all the foregoing, the company’s revenues were, in part, derived from unlawful conduct and thus unsustainable;
(v) accordingly, the benefits of the business combination between DEAC NV Merger Corp., SBTech and DraftKings were overstated;
(vi) as a result, the company’s public statements were materially false and misleading at all relevant times.

Defendants

  • Company
    DraftKings Inc.
  • Chief Executive Officer
    Jason D. Robins
  • Chief Financial Officer
    Jason K. Park
  • Chief Executive Officer
    Jeff Sagansky
  • Chief Financial Officer
    Eli Baker

Lawsuit progression

  • Docket Number
    1:21-cv-05739
  • Court
    New York Southern District Court

Lead Counsel

11/12/2021

The court issued an order appointing the lead plaintiff and lead counsel.

  • Lead Counsel
    Robbins Geller Rudman & Dowd LLP
  • Lead Plaintiff
    Individual
  • Free File
    Order for lead

Second Amended Complaint

04/05/2022

Lead plaintiff filed this federal securities class action on behalf of a class consisting of all persons and entities other than defendants that purchased or otherwise acquired DraftKings securities between December 23, 2019 and June 15, 2021, both dates inclusive.

Motion to Dismiss

02/22/2022

A motion to dismiss was filed with the court.

[stockdio-historical-chart symbol=”DKNG” stockExchange=”NYSENasdaq” width=”500″ height=”330″ motif=”blinds” palette=”humanity” includeVolume=false]

Factual Timeline

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